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EXHIBIT 1.1
3,200,000 SHARES
RENT-A-CENTER, INC.
COMMON STOCK, PAR VALUE $.01 PER SHARE
UNDERWRITING AGREEMENT
__________, 2001
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_____________, 2001
Xxxxxx Xxxxxxx & Co. Incorporated
Bear Xxxxxxx & Co. Inc.
Xxxxxx Brothers Inc.
The Xxxxxxxx-Xxxxxxxx Company, LLC
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Rent-A-Center, Inc., a Delaware corporation (the "COMPANY"), proposes
to issue and sell to the several Underwriters named in Schedule II hereto (the
"UNDERWRITERS"), and certain shareholders of the Company (the "SELLING
SHAREHOLDERS") named in Schedule I hereto severally propose to sell to the
several Underwriters, an aggregate of 3,200,000 shares of the Common Stock, par
value $.01 per share, of the Company (the "FIRM SHARES"), of which 1,000,000
shares are to be issued and sold by the Company and 2,200,000 shares are to be
sold by the Selling Shareholders, each Selling Shareholder selling the amount
set forth opposite such Selling Shareholder's name in Schedule I hereto.
The Company also proposes to issue and sell to the several
Underwriters, and certain Selling Shareholders named in Schedule I hereto
severally propose to sell to the several Underwriters an aggregate of not more
than an additional 480,000 shares of the Common Stock, par value $.01 per share
(the "ADDITIONAL SHARES"), if and to the extent that you, as Managers of the
offering, shall have determined to exercise, on behalf of the Underwriters, the
right to purchase such shares of common stock granted to the Underwriters in
Section 3 hereof. To the extent the Underwriters elect to purchase the full
number of Additional Shares, up to 150,000 shares will be issued and sold by the
Company and up to 330,000 shares will be sold by the Selling Shareholders as set
forth in Schedule I. To the extent the Underwriters elect to purchase less than
the full number of Additional Shares, such shares shall be sold pro rata,
subject to rounding, by each of the Company and the Selling Shareholders selling
Additional Shares. The Firm Shares and the Additional Shares are hereinafter
collectively referred to as the "SHARES." The shares of Common Stock, par value
$.01 per share, of the Company to be outstanding after giving effect to the
sales contemplated hereby are hereinafter
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referred to as the "COMMON STOCK." The Company and the Selling Shareholders are
hereinafter sometimes collectively referred to as the "SELLERS."
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement, including a prospectus, relating to the
Shares. The registration statement as amended at the time it becomes effective,
including the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), is hereinafter
referred to as the "REGISTRATION STATEMENT"; the prospectus in the form first
used to confirm sales of Shares is hereinafter referred to as the "PROSPECTUS"
(all references herein to the Registration Statement and the Prospectus shall
include all documents incorporated therein by reference (the "INCORPORATED
DOCUMENTS")). If the Company has filed an abbreviated registration statement to
register additional shares of Common Stock pursuant to Rule 462(b) under the
Securities Act (the "RULE 462 REGISTRATION STATEMENT"), then any reference
herein to the term "REGISTRATION STATEMENT" shall be deemed to include such Rule
462 Registration Statement.
1. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or
threatened by the Commission.
(b) (i) The Registration Statement, when it became effective,
did not contain and, as amended or supplemented, if applicable, will
not contain any 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, (ii) the Registration Statement and
the Prospectus comply and, as amended or supplemented, if applicable,
will comply in all material respects with the Securities Act and, in
the case of the Incorporated Documents, the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), and the applicable rules and
regulations of the Commission thereunder and (iii) the Prospectus does
not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except
that the representations and warranties set forth in this paragraph do
not apply to statements or omissions in the Registration Statement or
the Prospectus based upon
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information relating to any Underwriter furnished to the Company in
writing by such Underwriter through you expressly for use therein.
(c) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business
or its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(d) Each subsidiary of the Company named in Schedule III
hereto (each, a "SUBSIDIARY") has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business
or its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and
its Subsidiaries, taken as a whole; all of the issued shares of capital
stock of each Subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned
directly by the Company, free and clear of all liens, encumbrances,
equities or claims, except those liens and encumbrances securing the
Company's obligations under that certain Credit Agreement, dated August
5, 1999, as amended and restated as of June 29, 2000, among the
Company, and the lenders and the agents named therein, as amended from
time to time (the "SENIOR CREDIT FACILITIES").
(e) This Agreement has been duly authorized, executed and
delivered by the Company.
(f) The authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus.
(g) The shares of Common Stock (including the Shares to be
sold by the Selling Shareholders) outstanding prior to the issuance of
the Shares to be sold by the Company have been duly authorized and are
validly issued, fully paid and non-assessable.
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(h) The Shares to be sold by the Company have been duly
authorized and, when issued and delivered in accordance with the terms
of this Agreement, will be validly issued, fully paid and
non-assessable, and the issuance of such Shares will not be subject to
any preemptive or similar rights.
(i) Except for the provisions of certain agreements that have
been duly and properly waived by the parties thereto, the execution and
delivery by the Company of, and the performance by the Company of its
obligations under, this Agreement will not contravene any provision of
applicable law or the certificate of incorporation or by-laws of the
Company or any agreement or other instrument binding upon the Company
or any of its Subsidiaries that is material to the Company and its
Subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company
or any Subsidiary, and no consent, approval, authorization or order of,
or qualification with, any governmental body, agency or court is
required for the execution, delivery and performance by the Company of
its obligations under this Agreement, except such as may be required by
the securities or Blue Sky laws of the various states in connection
with the offer and sale of the Shares.
(j) Since the date as of which information is given in the
Prospectus, except as otherwise stated therein, (i) there has been no
material adverse change or any development involving a prospective
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs, management or business prospects of the
Company or any of its Subsidiaries, whether or not arising in the
ordinary course of business, (ii) the Company and its Subsidiaries have
not incurred any material liability or obligation, direct or
contingent, other than in the ordinary course of business, (iii) the
Company and its Subsidiaries have not entered into any material
transaction other than in the ordinary course of business and (iv)
there has not been any change in the capital stock or long-term debt of
the Company or any of its Subsidiaries, or any dividend or distribution
of any kind declared, paid or made by the Company on any class of its
capital stock.
(k) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its Subsidiaries is a party
or to which any of the properties of the Company or any of its
Subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or
any statutes, regulations, contracts or other documents that are
required to be described in the
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Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement that are not described or filed as required.
(l) The financial statements, including the notes thereto,
included in the Registration Statement and the Prospectus present
fairly in all material respects the financial position of the entities
purported to be shown thereby at the respective dates indicated and the
results of operations for the respective periods specified, and, except
as otherwise stated in the Registration Statement, such financial
statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis.
(m) The Company and its Subsidiaries possess all material
licenses, certificates, authorizations and permits issued by, and have
made all declarations and filings with, the appropriate federal, state
or foreign regulatory agencies or bodies that are necessary or
desirable for the ownership of their respective properties or the
conduct of their respective businesses as described in the Prospectus,
except where the failure to possess or make the same would not,
singularly or in the aggregate, have a material adverse effect on the
Company and its Subsidiaries taken as a whole, and neither the Company
nor any of its Subsidiaries has received notification of any revocation
or modification of any such license, certificate, authorization or
permit or has any reason to believe that any such license, certificate,
authorization or permit will not be renewed in the ordinary course.
(n) The Company and its Subsidiaries have filed all federal,
state, local and foreign income and franchise tax returns required to
be filed through the date hereof and have paid all taxes due thereon,
except such returns, which individually or in the aggregate, do not
involve material amounts or where the failure to file such returns by
the Company and its Subsidiaries, as the case may be, would not,
individually or in the aggregate have a material adverse effect on such
entity, and no tax deficiency has been determined adversely to the
Company or any of its Subsidiaries, as the case may be, which has had
(nor does the Company or any of its Subsidiaries have any knowledge of
any tax deficiency which, if determined adversely to the Company or any
of its Subsidiaries, as the case may be, could reasonably be expected
to have) a material adverse effect on the Company and its Subsidiaries
taken as a whole, except to the extent that the validity thereof is
being contested in good faith pursuant to appropriate proceedings.
(o) Each preliminary prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed
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pursuant to Rule 424 under the Securities Act (each, a "PRELIMINARY
PROSPECTUS"), complied when so filed in all material respects with the
Securities Act and the applicable rules and regulations of the
Commission thereunder.
(p) The Company is not, and after giving effect to the
offering and sale of the Shares and the application of the proceeds
thereof as described in the Prospectus will not be, required to
register as an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
(q) The Company and its Subsidiaries maintain insurance of the
types and in the amounts generally deemed adequate for their businesses
and consistent with insurance coverage maintained by similar companies
and businesses, all of which insurance is in full force and effect.
(r) The Company and its Subsidiaries own or possess adequate
rights to use all material patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service xxxx
registrations, copyrights, licenses and know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) necessary for the
conduct of their respective businesses; and the Company and its
Subsidiaries have not received any notice of any claim of conflict
with, any such rights of others, except for such notices of conflicts,
which, if individually or in the aggregate determined adversely to the
Company or any of its Subsidiaries, as the case may be, would not have
a material adverse effect on the Company and its Subsidiaries taken as
a whole.
(s) The Company and its Subsidiaries have good and marketable
title to, or have valid rights to lease or otherwise use, all items of
real and personal property which are material to the business of the
Company and, in each case free and clear of all liens, encumbrances,
claims and defects and imperfections of title except such as (i) do not
materially interfere with the use made and proposed to be made of such
property by the Company and its Subsidiaries, (ii) could not reasonably
be expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole or (iii) are securing the Senior Credit
Facilities.
(t) No forward-looking statement (within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act)
contained in a Preliminary Prospectus or the Prospectus has been made
or reaffirmed without, in light of the circumstances under which such
statements were made, a reasonable basis or has been disclosed other
than
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in good faith or (iii) are securing the Company's and the Subsidiaries'
obligations under the Senior Credit Facilities.
(u) There are no costs or liabilities associated with any
applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
("ENVIRONMENTAL LAWS") (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate,
have a material adverse effect on the Company and its Subsidiaries,
taken as a whole.
(v) Except as otherwise disclosed in the Registration
Statement or the Prospectus, there are no contracts, agreements or
understandings between the Company and any person granting such person
the right to require the Company to file a registration statement under
the Securities Act with respect to any securities of the Company or,
except to the extent properly waived, to require the Company to include
such securities with the Shares registered pursuant to the Registration
Statement.
2. Representations and Warranties of the Selling Shareholders. Each of
the Selling Shareholders severally represents and warrants to and agrees with
each of the Underwriters that:
(a) This Agreement has been duly authorized, executed and
delivered by or on behalf of such Selling Shareholder.
(b) The execution and delivery by such Selling Shareholder of,
and the performance by such Selling Shareholder of its obligations
under, this Agreement, the Custody Agreement signed by such Selling
Shareholder and Mellon Investor Services LLC, as Custodian, relating to
the deposit of the Shares to be sold by such Selling Shareholder (the
"CUSTODY AGREEMENT") and the Power of Attorney appointing certain
individuals as such Selling Shareholder's attorneys-in-fact to the
extent set forth therein, relating to the transactions contemplated
hereby and by the Registration Statement (the "POWER OF ATTORNEY") will
not contravene any provision of applicable law, or the certificate of
incorporation or by-laws of such Selling Shareholder (if such Selling
Shareholder is a corporation), or the limited partnership agreement of
such Selling Shareholder (if such Selling Shareholder is a limited
partnership) or any agreement or other instrument binding upon such
Selling Shareholder or any judgment, order or decree of any
governmental body, agency or court having jurisdiction
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over such Selling Shareholder, and no consent, approval, authorization
or order of, or qualification with, any governmental body or agency is
required for the performance by such Selling Shareholder of its
obligations under this Agreement or the Custody Agreement or Power of
Attorney of such Selling Shareholder, except such as may be required by
the securities or Blue Sky laws of the various states in connection
with the offer and sale of the Shares.
(c) Such Selling Shareholder has, and on the Closing Date will
have, valid title to the Shares to be sold by such Selling Shareholder
and the legal right and power, and all authorization and approval
required by law, to enter into this Agreement, the Custody Agreement
and the Power of Attorney and to sell, transfer and deliver the Shares
to be sold by such Selling Shareholder.
(d) The Custody Agreement and the Power of Attorney have been
duly authorized, executed and delivered by such Selling Shareholder and
are valid and binding agreements of such Selling Shareholder.
(e) Delivery of the Shares to be sold by such Selling
Shareholder pursuant to this Agreement will pass title to such Shares
free and clear of any security interests, claims, liens, equities and
other encumbrances.
(f) (i) To the knowledge of such Selling Shareholder, the
Registration Statement, when it became effective, did not contain and,
as amended or supplemented, if applicable, will not contain any 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, (ii) the Registration Statement and the Prospectus comply
and, as amended or supplemented, if applicable, will comply in all
material respects with the Securities Act and, in the case of the
Incorporated Documents, the Exchange Act and the applicable rules and
regulations of the Commission thereunder and (iii) the Prospectus does
not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except
that the representations and warranties set forth in this paragraph
2(f) do not apply to statements or omissions in the Registration
Statement or the Prospectus based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter
through you expressly for use therein.
3. Agreements to Sell and Purchase. Each Seller, severally and not
jointly, hereby agrees to sell to the several Underwriters, and each
Underwriter,
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upon the basis of the representations and warranties herein contained, but
subject to the conditions hereinafter stated, agrees, severally and not jointly,
to purchase from such Seller at $______ a share (the "PURCHASE PRICE") the
number of Firm Shares (subject to such adjustments to eliminate fractional
shares as you may determine) that bears the same proportion to the number of
Firm Shares to be sold by such Seller as the number of Firm Shares set forth in
Schedule II hereto opposite the name of such Underwriter bears to the total
number of Firm Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Sellers, severally agree
to sell to the Underwriters the Additional Shares as set forth on Schedule I,
and the Underwriters shall have a one-time right to purchase, severally and not
jointly, such Additional Shares at the Purchase Price. To the extent the
Underwriters elect to purchase less than the full number of Additional Shares,
such shares shall be sold pro rata, subject to rounding, by each of the Company
and the Selling Shareholders selling Additional Shares. If you, on behalf of the
Underwriters, elect to exercise such option, you shall so notify the Company in
writing not later than 30 days after the date of this Agreement, which notice
shall specify the number of Additional Shares to be purchased by the
Underwriters and the date on which such shares are to be purchased. Such date
may be the same as the Closing Date (as defined below) but not earlier than the
Closing Date nor later than ten business days after the date of such notice.
Additional Shares may be purchased as provided in Section 5 hereof solely for
the purpose of covering over-allotments made in connection with the offering of
the Firm Shares. If any Additional Shares are to be purchased, each Underwriter
agrees, severally and not jointly, to purchase the number of Additional Shares
(subject to such adjustments to eliminate fractional shares as you may
determine) that bears the same proportion to the total number of Additional
Shares to be purchased as the number of Firm Shares set forth in Schedule II
hereto opposite the name of such Underwriter bears to the total number of Firm
Shares.
Each Seller hereby agrees that, without the prior written consent of
Xxxxxx Xxxxxxx & Co. Incorporated on behalf of the Underwriters, it will not,
during the period ending 90 days after the date of the Prospectus, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, distribute to members or partners or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or (ii) enter
into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the Common Stock, whether
any such transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to (A) the Shares to be sold hereunder, (B)
transactions by any person other than the
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Company relating to shares of Common Stock or other securities acquired in open
market transactions after the completion of the offering of the Shares, (C) the
Common Stock issuable upon conversion of the Company's Series A preferred stock,
par value $.01 per share (the "SERIES A PREFERRED STOCK"), (D) options granted
or stock issued upon the exercise of outstanding stock options or otherwise
pursuant to the Company's stock incentive or employee stock purchase plans, (E)
bona fide gifts of Common Stock; provided that each recipient of any such gift
shall deliver an executed copy of this Agreement to the Underwriters prior to or
contemporaneously with such transaction, (F) the sale or transfer of shares of
securities, in connection with a sale of the Company pursuant to an offer made
on substantially the same terms to all Company shareholders of which the
Underwriters have been advised in writing or (G) with the prior consent of
Xxxxxx Xxxxxxx & Co. Incorporated, securities issued by the Company in
connection with an acquisition of a business or assets; provided that Xxxxxx
Xxxxxxx & Co. Incorporated agrees to respond to any request for its consent
pursuant to this clause (G) as soon as reasonably practicable after its Equity
Capital Markets Desk has been notified of such request. In addition, each
Selling Shareholder, agrees that, without the prior written consent of Xxxxxx
Xxxxxxx & Co. Incorporated on behalf of the Underwriters, it will not, during
the period ending 90 days after the date of the Prospectus, make any demand for,
or exercise any right with respect to, the registration of any shares of Common
Stock or any security convertible into or exercisable or exchangeable for Common
Stock.
4. Terms of Public Offering. The Sellers are advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Sellers are further
advised by you that the Shares are to be offered to the public initially at $___
a share (the "PUBLIC OFFERING PRICE") and to certain dealers selected by you at
a price that represents a concession not in excess of $____ a share under the
Public Offering Price, and that any Underwriter may allow, and such dealers may
allow, a concession, not in excess of $___ a share, to any Underwriter or to
certain other dealers.
5. Payment and Delivery. Payment for the Firm Shares to be sold by each
Seller shall be made to such Seller in Federal or other funds immediately
available in New York City against delivery of such Firm Shares for the
respective accounts of the several Underwriters at 10:00 a.m., New York City
time, on ____________, 2001, or at such other time on the same or such other
date, not later than _________, 2001, as shall be designated in writing by you.
The time and date of such payment are hereinafter referred to as the "CLOSING
DATE."
Payment for any Additional Shares shall be made to the Company in
Federal or other funds immediately available in New York City against delivery
of such Additional Shares for the respective accounts of the several
Underwriters at
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10:00 a.m., New York City time, on the date specified in the notice described in
Section 3 or at such other time on the same or on such other date, in any event
not later than _______, 2001, as shall be designated in writing by you. The time
and date of such payment are hereinafter referred to as the "OPTION CLOSING
DATE."
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
6. Conditions to the Underwriters' Obligations. The obligations of the
Sellers to sell the Shares to the Underwriters and the several obligations of
the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the condition that the Registration Statement shall have become
effective not later than 4:00 p.m. (New York City time) on the date hereof.
The several obligations of the Underwriters are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date:
(i) there shall not have occurred any downgrading,
nor shall any notice have been given of any intended or
potential downgrading or of any review for a possible change
that does not indicate the direction of the possible change,
in the rating accorded any of the Company's securities by any
"nationally recognized statistical rating organization," as
such term is defined for purposes of Rule 436(g)(2) under the
Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or
operations of the Company and its Subsidiaries, taken as a
whole, from that set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of
this Agreement) that, in your judgment, is material and
adverse and that makes it, in your judgment, impracticable to
market the Shares on the terms and in the manner contemplated
in the Prospectus.
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(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer
of the Company, to the effect set forth in Section 6(a)(i) above and to
the effect that the representations and warranties of the Company
contained in this Agreement are true and correct as of the Closing Date
and that the Company has complied with all of the agreements and
satisfied all of the conditions on its part to be performed or
satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely
upon the best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date
an opinion of Xxxxxxxx Xxxxxxxx & Xxxxxx P.C., outside counsel for the
Company, dated the Closing Date, to the effect that:
(i) the Company has been duly incorporated, is
validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is
duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be
in good standing would not have a material adverse effect on
the Company and its Subsidiaries, taken as a whole;
(ii) each Subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own
its property and to conduct its business as described in the
Prospectus and is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property requires
such qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a
material adverse effect on the Company and its Subsidiaries,
taken as a whole;
(iii) the authorized capital stock of the Company
conforms as to legal matters to the description thereof
contained in the Prospectus;
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(iv) the shares of Common Stock (including the Shares
to be sold by the Selling Shareholders) outstanding prior to
the issuance of the Shares to be sold by the Company have been
duly authorized and are validly issued, fully paid and
non-assessable;
(v) all of the issued shares of capital stock of each
Subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and
are owned directly by the Company, free and clear of all
liens, encumbrances, equities or claims, except those liens
and encumbrances securing the Company's obligations under the
Senior Credit Facilities;
(vi) the Shares to be sold by the Company have been
duly authorized and, when issued and delivered in accordance
with the terms of this Agreement, will be validly issued,
fully paid and non-assessable, and the issuance of such Shares
will not be subject to any preemptive or similar rights;
(vii) this Agreement has been duly authorized,
executed and delivered by the Company;
(viii) the execution and delivery by the Company of,
and the performance by the Company of its obligations under,
this Agreement will not contravene any provision of applicable
law or the certificate of incorporation or by-laws of the
Company or, to the best of such counsel's knowledge, any
agreement or other instrument binding upon the Company or any
of its Subsidiaries that is material to the Company and its
Subsidiaries, taken as a whole, or, to the best of such
counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over
the Company or any Subsidiary, and no consent, approval,
authorization or order of, or qualification with, any
governmental body or agency is required for the performance by
the Company of its obligations under this Agreement, except
such as may be required by the securities or Blue Sky laws of
the various states in connection with the offer and sale of
the Shares;
(ix) the statements (A) in the Prospectus under the
captions "Management's Discussion and Analysis of Financial
Condition and Results of Operations-Liquidity and Capital
Resources-Senior Credit Facilities," "Management's Discussion
and Analysis of Financial Condition and Results of
Operations-Liquidity and Capital Resources-Senior Subordinated
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Notes," "Business-Government Regulation," "Business-Legal
Proceedings," "Description of Capital Stock," and
"Underwriters" and (B) in the Registration Statement in Item
15, in each case insofar as such statements constitute
summaries of the legal matters, documents or proceedings
referred to therein pertaining to the Company or any of its
Subsidiaries, fairly present the information called for with
respect to such legal matters, documents and proceedings and
fairly summarize the matters referred to therein;
(x) such counsel shall also state, after due inquiry,
such counsel does not know of any legal or governmental
proceedings pending or threatened to which the Company or any
of its Subsidiaries is a party or to which any of the
properties of the Company or any of its Subsidiaries is
subject that are required to be described in the Registration
Statement or the Prospectus and are not so described or of any
statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration
Statement that are not described or filed as required;
(xi) that the Company and its Subsidiaries possess
all material licenses, certificates, authorizations and
permits issued by, and have made all declarations and filings
with, the appropriate federal, state or foreign regulatory
agencies or bodies which are necessary or desirable for the
ownership of their respective properties or the conduct of
their respective businesses as described in the Prospectus,
except where the failure to possess or make the same would
not, singularly or in the aggregate, have a material adverse
effect on the Company and its Subsidiaries taken as a whole,
and neither the Company nor any of its Subsidiaries has
received notification of any revocation or modification of any
such license, certificate, authorization or permit or has any
reason to believe that any such license, certificate,
authorization or permit will not be renewed in the ordinary
course;
(xii) the Company is not, and after giving effect to
the offering and sale of the Shares and the application of the
proceeds thereof as described in the Prospectus will not be,
required to register as an "investment company" as such term
is defined in the Investment Company Act of 1940, as amended;
(xiii) such counsel shall also state that (A) such
counsel believes that the Registration Statement and
Prospectus (except for
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financial statements and schedules and other financial and
statistical data included therein as to which such counsel
need not express any belief) comply as to form in all material
respects with the Securities Act and, in the case of the
Incorporated Documents, the Exchange Act and the applicable
rules and regulations of the Commission thereunder, (B) such
counsel has no reason to believe that (except for financial
statements and schedules and other financial and statistical
data included therein as to which such counsel need not
express any belief) the Registration Statement and the
Prospectus included therein at the time the Registration
Statement became effective contained any untrue statement of a
material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein
not misleading and (C) such counsel has no reason to believe
that (except for financial statements and schedules and other
financial and statistical data included therein as to which
such counsel need not express any belief) the Prospectus
contains any untrue statement of a material fact or omits 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
(xiv) the Conversion Price (as defined in the
Certificate of Designations, Preferences and Relative Rights
and Limitations relating to the Series A Preferred Stock) as
of the date hereof is $27.935.
(d) The Underwriters shall have received on the Closing Date
an opinion of Xxxxxxxx Xxxxxxxx & Xxxxxx P.C., counsel for the Selling
Shareholders, dated the Closing Date, to the effect that:
(i) this Agreement has been duly authorized, executed
and delivered by or on behalf of each of the Selling
Shareholders;
(ii) the execution and delivery by each Selling
Shareholder of, and the performance by such Selling
Shareholder of its obligations under, this Agreement and the
Custody Agreement and Powers of Attorney of such Selling
Shareholder will not contravene any provision of applicable
law, or the certificate of incorporation or by-laws of such
Selling Shareholder (if such Selling Shareholder is a
corporation), or the limited partnership agreement of such
Selling Shareholder (if such Selling Shareholder is a limited
partnership) or, to the best of such counsel's knowledge, any
agreement or other instrument binding upon such Selling
Shareholder or, to the best of such counsel's knowledge, any
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judgment, order or decree of any governmental body, agency or
court having jurisdiction over such Selling Shareholder, and
no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is
required for the performance by such Selling Shareholder of
its obligations under this Agreement or the Custody Agreement
or Power of Attorney of such Selling Shareholder, except such
as may be required by the securities or Blue Sky laws of the
various states in connection with offer and sale of the
Shares;
(iii) each of the Selling Shareholders has valid
title to the Shares to be sold by such Selling Shareholder and
the legal right and power, and all authorization and approval
required by law, to enter into this Agreement and the Custody
Agreement and Power of Attorney of such Selling Shareholder
and to sell, transfer and deliver the Shares to be sold by
such Selling Shareholder;
(iv) the Custody Agreement and the Power of Attorney
of each Selling Shareholder have been duly authorized,
executed and delivered by such Selling Shareholder and are
valid and binding agreements of such Selling Shareholder;
(v) delivery of the Shares to be sold by each Selling
Shareholder pursuant to this Agreement will pass title to such
Shares free and clear of any security interests, claims,
liens, equities and other encumbrances; and
(vi) such counsel shall also state that (A) such
counsel believes that the Registration Statement and
Prospectus (except for financial statements and schedules and
other financial and statistical data included therein as to
which such counsel need not express any belief) comply as to
form in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder,
(B) such counsel has no reason to believe that (except for
financial statements and schedules and other financial and
statistical data included therein as to which such counsel
need not express any belief) the Registration Statement and
the Prospectus included therein at the time the Registration
Statement became effective contained any untrue statement of a
material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein
not misleading and (C) such counsel has no reason to believe
that (except for financial statements and schedules and other
financial and statistical data included therein as to which
such counsel need not express any
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belief) the Prospectus contains any untrue statement of a
material fact or omits 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.
(e) The Underwriters shall have received on the Closing Date
an opinion of Xxxxx Xxxx & Xxxxxxxx, counsel for the Underwriters,
dated the Closing Date, covering the matters referred to in Sections
6(c)(vi), 6(c)(vii), 6(c)(ix) (but only as to the statements in the
Prospectus under "Description of Capital Stock" and "Underwriters") and
6(c)(xiii)(B) and (C) above.
With respect to Section 6(c)(xiii) above, Xxxxxxxx Xxxxxxxx &
Xxxxxx P.C. and Xxxxx Xxxx & Xxxxxxxx and with respect to Section
6(d)(vi) above, Xxxxxxxx Schrest & Xxxxxx P.C., may state that their
opinion and belief are based upon their participation in the
preparation of the Incorporated Documents (in the case of Xxxxxxxx
Xxxxxxxx & Xxxxxx P.C.), the Registration Statement and Prospectus and
any amendments or supplements thereto and review and discussion of the
contents thereof, but are without independent check or verification,
except as specified. With respect to Section 4(c) above, Xxxxxxxx
Xxxxxxxx & Xxxxxx P.C. may, with respect to factual matters and to the
extent such counsel deems appropriate, upon representations of the
Company contained herein and in the Custody Agreement of officers of
the Company. With respect to Section 6(d) above, Xxxxxxxx Xxxxxxxx &
Xxxxxx P.C. may rely upon an opinion or opinions of counsel for any
Selling Shareholders and, with respect to factual matters and to the
extent such counsel deems appropriate, upon the representations of each
Selling Shareholder contained herein and in the Custody Agreement and
Power of Attorney of such Selling Shareholder and in other documents
and instruments; provided that (A) each such counsel for the Selling
Shareholders is satisfactory to your counsel, (B) a copy of each
opinion so relied upon is delivered to you and is in form and substance
satisfactory to your counsel, (C) copies of such Custody Agreements and
Powers of Attorney and of any such other documents and instruments
shall be delivered to you and shall be in form and substance
satisfactory to your counsel and (D)Xxxxxxxx Xxxxxxxx & Xxxxxx P.C.
shall state in their opinion that they are justified in relying on each
such other opinion.
The opinions of Xxxxxxxx Xxxxxxxx & Xxxxxx P.C. described in
Sections 6(c) and 6(d) above (and any opinions of counsel for any
Selling Shareholder referred to in the immediately preceding paragraph)
shall be rendered to the Underwriters at the request of the Company or
one or
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more of the Selling Shareholders, as the case may be, and shall so
state therein.
(f) The Underwriters shall have received, on each of the date
hereof and the Closing Date, a letter dated the date hereof or the
Closing Date, as the case may be, in form and substance satisfactory to
the Underwriters, from Xxxxx Xxxxxxxx LLP, independent certified public
accountants, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus;
provided that the letter delivered on the Closing Date shall use a
"cut-off date" not earlier than the date hereof; provided further that
such letter shall include as an attachment a copy of a report issued by
such accountants under Standards for Attestation Engagements 8 on the
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" section of the Prospectus.
(g) The "lock-up" agreements, each substantially in the form
of Exhibit A hereto, between you and certain shareholders, executive
officers and directors of the Company relating to sales and certain
other dispositions of shares of Common Stock or certain other
securities, delivered to you on or before the date hereof, shall be in
full force and effect on the Closing Date.
(h) The Underwriters shall have received on the Closing Date
(i) a letter from the holders of the Series A Preferred Stock stating
that no conversion of the Company's Series B Preferred Stock into
Series A Preferred Stock prior to the date hereof has constituted or
will constitute an event triggering an adjustment to the Conversion
Price (as defined in the Certificate of Designations, Preferences and
Relative Rights and Limitations relating to the Series A Preferred
Stock) and that payment-in-kind dividends issued to such holders with
respect to such Series A Preferred Stock have not constituted and will
not constitute an event triggering an adjustment to the Conversion
Price, which letter shall contain an undertaking by the holders of
outstanding shares of the Series A Preferred Stock as of the date
hereof to inform all subsequent holders thereof.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the delivery to you on the Option Closing Date
of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Additional
Shares and other matters related to the issuance of the Additional Shares.
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7. Covenants of the Company. In further consideration of the agreements
of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, four signed copies of
the Registration Statement (including exhibits thereto and the
Incorporated Documents) and for delivery to each other Underwriter a
conformed copy of the Registration Statement (without exhibits thereto
but including the Incorporated Documents) and to furnish to you in New
York City, without charge, prior to 10:00 a.m. New York City time on
the business day next succeeding the date of this Agreement and during
the period mentioned in Section 7(c) below, as many copies of the
Prospectus, any Incorporated Documents and any supplements and
amendments thereto or to the Registration Statement as you may
reasonably request. The terms "supplement" and "amendment" or "amend"
as used in this Agreement shall include the Incorporated Documents.
(b) Before amending or supplementing the Registration
Statement or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement and not to file any such proposed
amendment or supplement to which you reasonably object, and to file
with the Commission within the applicable period specified in Rule
424(b) under the Securities Act any prospectus required to be filed
pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the
Underwriters the Prospectus is required by law to be delivered in
connection with sales by an Underwriter or dealer, any event shall
occur or condition exist as a result of which it is necessary to amend
or supplement the Prospectus in order to make the statements therein,
in the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if, in the opinion of counsel for the
Underwriters, it is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to prepare, file with the
Commission and furnish, at its own expense, to the Underwriters and to
the dealers (whose names and addresses you will furnish to the Company)
to which Shares may have been sold by you on behalf of the Underwriters
and to any other dealers upon request, either amendments or supplements
to the Prospectus so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the circumstances
when the Prospectus is delivered to a purchaser, be misleading or so
that the Prospectus, as amended or supplemented, will comply with law.
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(d) To endeavor to qualify the Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as you shall
reasonably request.
(e) To make generally available to the Company's security
holders and to you as soon as practicable an earning statement covering
the twelve-month period ending June 30, 2002 that satisfies the
provisions of Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder.
8. Expenses. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Sellers agree to
pay or cause to be paid all expenses incident to the performance of their
obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company's counsel, the Company's accountants and counsel for the
Selling Shareholders in connection with the registration and delivery of the
Shares under the Securities Act and all other fees or expenses in connection
with the preparation and filing of the Registration Statement, any preliminary
prospectus, the Prospectus and amendments and supplements to any of the
foregoing, including all printing costs associated therewith, and the mailing
and delivering of copies thereof to the Underwriters and dealers, in the
quantities hereinabove specified, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters, including any transfer
or other taxes payable thereon, (iii) the cost of printing or producing any Blue
Sky or Legal Investment memorandum in connection with the offer and sale of the
Shares under state securities laws and all expenses in connection with the
qualification of the Shares for offer and sale under state securities laws as
provided in Section 7(d) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky or Legal Investment
memorandum, (iv) all filing fees and the reasonable fees and disbursements of
counsel to the Underwriters incurred in connection with the review and
qualification of the offering of the Shares by the National Association of
Securities Dealers, Inc., (v) all costs and expenses incident to listing the
Shares on the Nasdaq National Market, (vi) the cost of printing certificates
representing the Shares, (vii) the costs and charges of any transfer agent,
registrar or depositary, (viii) the costs and expenses of the Company relating
to investor presentations on any "road show" undertaken in connection with the
marketing of the offering of the Shares, including, without limitation, expenses
associated with the production of road show slides and graphics, fees and
expenses of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and lodging
expenses of the representatives and officers of the Company and any such
consultants, and the cost of any aircraft chartered in connection with the road
show, and (ix) all other costs and expenses incident to the performance of the
obligations of the Company
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hereunder for which provision is not otherwise made in this Section. It is
understood, however, that except as provided in this Section, Section 9 entitled
"Indemnity and Contribution", and the last paragraph of Section 11 below, the
Underwriters will pay all of their costs and expenses, including fees and
disbursements of their counsel, stock transfer taxes payable on resale of any of
the Shares by them and any advertising expenses connected with any offers they
may make.
The provisions of this Section shall not supersede or otherwise affect
any agreement that the Sellers may otherwise have for the allocation of such
expenses among themselves.
9. Indemnity and Contribution. (a) The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use therein; provided that the foregoing indemnity agreement with respect to
any preliminary prospectus shall not inure to the benefit of any Underwriter
from whom the person asserting any such losses, claims, damages or liabilities
purchased Shares, or any person controlling such Underwriter, if a copy of the
Prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given by or on behalf of
such Underwriter to such person, if required by law so to have been delivered,
at or prior to the written confirmation of the sale of the Shares to such
person, and if the Prospectus (as so amended or supplemented) would have cured
the defect giving rise to such losses, claims, damages or liabilities, unless
such failure is the result of noncompliance by the Company, with Section 7(a)
hereof.
(b) Each Selling Shareholder agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement, the Underwriters, and each person, if any, who
controls the Company or the Underwriters, as the case may be, within the meaning
of either
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Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof, any preliminary prospectus or
the Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only with reference
to information relating to such Selling Shareholder furnished in writing by or
on behalf of such Selling Shareholder expressly for use in the Registration
Statement, any preliminary prospectus, the Prospectus or any amendments or
supplements thereto.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Selling Shareholders, the directors of the
Company, the officers of the Company who sign the Registration Statement and
each person, if any, who controls the Company or any Selling Shareholder within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
but only with reference to information relating to such Underwriter furnished to
the Company in writing by such Underwriter through you expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 9(a), 9(b) or 9(c), such person (the "INDEMNIFIED
PARTY") shall promptly notify the person against whom such indemnity may be
sought (the "INDEMNIFYING PARTY") in writing and the indemnifying party, upon
request of the indemnified party, shall retain counsel reasonably satisfactory
to the indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party
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unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in respect of the
legal expenses of any indemnified party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for (i) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all Underwriters and all persons, if any, who control any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act, (ii) the fees and expenses of more than one separate firm (in addition to
any local counsel) for the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of either such Section and (iii) the fees and expenses of more than
one separate firm (in addition to any local counsel) for all Selling
Shareholders and all persons, if any, who control any Selling Shareholder within
the meaning of either such Section, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Underwriters and such control persons of any Underwriters, such firm shall be
designated in writing by Xxxxxx Xxxxxxx & Co. Incorporated. In the case of any
such separate firm for the Company, and such directors, officers and control
persons of the Company, such firm shall be designated in writing by the Company.
In the case of any such separate firm for the Selling Shareholders and such
control persons of any Selling Shareholders, such firm shall be designated in
writing by the persons named as attorneys-in-fact for the Selling Shareholders
under the Powers of Attorney. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by the second and third sentences of this paragraph,
the indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
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(e) To the extent the indemnification provided for in Section 9(a),
9(b) or 9(c) is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause 9(e)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 9(e)(i) above but also the relative
fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Sellers on the one hand and the Underwriters on the other hand
in connection with the offering of the Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by each Seller and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate Public
Offering Price of the Shares. The relative fault of the Sellers on the one hand
and the Underwriters 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 Sellers or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 9 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint.
(f) The Sellers and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 9 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 9(e). The amount paid or payable
by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 9, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter
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has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 9 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(g) The indemnity and contribution provisions contained in this Section
9 and the representations, warranties and other statements of the Company and
the Selling Shareholders contained in this Agreement shall remain operative and
in full force and effect regardless of (i) any termination of this Agreement,
(ii) any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, any Selling Shareholder or any person controlling
any Selling Shareholder, or the Company, its officers or directors or any person
controlling the Company and (iii) acceptance of and payment for any of the
Shares.
10. Termination. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 10(a)(i) through 10(a)(iv), such event, singly
or together with any other such event, makes it, in your judgment, impracticable
to market the Shares on the terms and in the manner contemplated in the
Prospectus.
11. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase Shares that
it has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their
25
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respective names in Schedule II bears to the aggregate number of Firm Shares set
forth opposite the names of all such non-defaulting Underwriters, or in such
other proportions as you may specify, to purchase the Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
on such date; provided that in no event shall the number of Shares that any
Underwriter has agreed to purchase pursuant to this Agreement be increased
pursuant to this Section 11 by an amount in excess of one-ninth of such number
of Shares without the written consent of such Underwriter. If, on the Closing
Date, any Underwriter or Underwriters shall fail or refuse to purchase Firm
Shares and the aggregate number of Firm Shares with respect to which such
default occurs is more than one-tenth of the aggregate number of Firm Shares to
be purchased, and arrangements satisfactory to you, the Company and the Selling
Shareholders for the purchase of such Firm Shares are not made within 36 hours
after such default, this Agreement shall terminate without liability on the part
of any non-defaulting Underwriter, the Company or the Selling Shareholders. In
any such case either you or the relevant Sellers shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement and in the
Prospectus or in any other documents or arrangements may be effected. If, on the
Option Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Additional Shares and the aggregate number of Additional Shares with
respect to which such default occurs is more than one-tenth of the aggregate
number of Additional Shares to be purchased, the non-defaulting Underwriters
shall have the option to (i) terminate their obligation hereunder to purchase
Additional Shares or (ii) purchase not less than the number of Additional Shares
that such non-defaulting Underwriters would have been obligated to purchase in
the absence of such default. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of any Seller to comply with
the terms or to fulfill any of the conditions of this Agreement, or if for any
reason any Seller shall be unable to perform its obligations under this
Agreement, the Sellers will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
12. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
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13. Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
14. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
Very truly yours,
RENT-A-CENTER, INC.
By:
--------------------------------------
Name:
Title:
The Selling Shareholders named in
Schedule I hereto, acting severally
By:
--------------------------------------
Attorney-in-Fact
Accepted as of the date hereof
Xxxxxx Xxxxxxx & Co. Incorporated
Bear, Xxxxxxx & Co. Inc.
Xxxxxx Brothers Inc.
The Xxxxxxxx-Xxxxxxxx Company, LLC
Acting severally on behalf of themselves and
the several Underwriters named in
Schedule II hereto.
By: Xxxxxx Xxxxxxx & Co. Incorporated
By:
------------------------------------
Name:
Title:
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SCHEDULE I
NUMBER OF FIRM SHARES NUMBER OF ADDITIONAL
SELLING SHAREHOLDER TO BE SOLD SHARES TO BE SOLD
------------------- --------------------- --------------------
Mr. J. Xxxxxx Xxxxxx 700,000 255,000
Xxxxxx Partners, Ltd. 1,000,000 0
Xx. Xxxx X. Xxxxxx 500,000 75,000
--------------------- --------------------
Total:.......................... 2,200,000 330,000
===================== ====================
30
SCHEDULE II
NUMBER OF FIRM SHARES TO BE
UNDERWRITER PURCHASED
----------- ---------------------------
Xxxxxx Xxxxxxx & Co. Incorporated
Bear, Xxxxxxx & Co. Inc.
Xxxxxx Brothers Inc.
The Xxxxxxxx-Xxxxxxxx Company, LLC
[NAMES OF OTHER UNDERWRITERS]...........
---------------------------
Total:.......................... [3,200,000]
===========================
31
SCHEDULE III
SUBSIDIARIES
Advantage Companies, Inc.
ColorTyme, Inc.
32
EXHIBIT A
[FORM OF LOCK-UP LETTER]
____________, 2001
Xxxxxx Xxxxxxx & Co. Incorporated
Bear Xxxxxxx & Co. Inc.
Xxxxxx Brothers Inc.
The Xxxxxxxx-Xxxxxxxx Company, LLC
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated
("XXXXXX XXXXXXX") proposes to enter into an Underwriting Agreement (the
"UNDERWRITING AGREEMENT") with Rent-A-Center, Inc., a Delaware corporation (the
"COMPANY"), providing for the public offering (the "PUBLIC OFFERING") by the
several Underwriters, including Xxxxxx Xxxxxxx (the "UNDERWRITERS"), of
3,200,000 shares (the "SHARES") of the Common Stock , $.01 par value per share,
of the Company (the "COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of Xxxxxx
Xxxxxxx on behalf of the Underwriters, it will not, during the period commencing
on the date hereof and ending 90 days after the date of the final prospectus
relating to the Public Offering (the "PROSPECTUS"), (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend,
distribute to members or partners or otherwise transfer or dispose of, directly
or indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, or (2) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the Shares to be sold pursuant to the
Underwriting Agreement, (B) shares of Common Stock or other securities acquired
in open market transactions after the completion of the Public Offering,
33
(C) bona fide gifts of Common Stock by the undersigned; provided that each
recipient of any such gift shall deliver an executed copy of this Agreement to
the Underwriters prior to or contemporaneously with such transaction, (D) the
sale or transfer of shares of securities, in connection with a sale of the
Company pursuant to an offer made on substantially the same terms to all Company
shareholders of which the Underwriters have been advised in writing or (E) with
the prior consent of Xxxxxx Xxxxxxx, securities issued by the Company in
connection with an acquisition of a business or assets; provided that Xxxxxx
Xxxxxxx agrees to respond to any request for its consent pursuant to this clause
(E) as soon as reasonably practicable after its Equity Capital Markets Desk has
been notified of such request. In addition, the undersigned agrees that, without
the prior written consent of Xxxxxx Xxxxxxx on behalf of the Underwriters, it
will not, during the period commencing on the date hereof and ending 90 days
after the date of the Prospectus, make any demand for or exercise any right with
respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock. The
undersigned also agrees and consents to the entry of stop transfer instructions
with the Company's transfer agent and registrar against the transfer of the
undersigned's share of Common Stock except in compliance with the foregoing
restrictions.
The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
Public Offering. The undersigned further understands that this Lock-Up Agreement
is irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors and assigns.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters. Notwithstanding anything
to the contrary herein, this Lock-Up Agreement shall expire if the Public
Offering is not consummated on or before July 31, 2001.
Very truly yours,
-----------------------------------------
(Name)
-----------------------------------------
(Address)
2
