1
Exhibit 1
_______________ Shares
MCM CAPITAL GROUP, INC.
Common Stock
UNDERWRITING AGREEMENT
______________, 1999
CIBC World Markets Corp.
U.S. Bancorp Xxxxx Xxxxxxx Inc.
c/o CIBC World Markets Corp.
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
On behalf of the Several Underwriters named on Schedule I attached hereto.
Ladies and Gentlemen:
MCM Capital Group, Inc., a Delaware corporation (the "Company")
proposes, subject to the terms and conditions contained herein, to sell to you
and the other underwriters named on Schedule I to this Agreement (the
"Underwriters"), for whom you are acting as representatives (the
"Representatives"), an aggregate of __________ shares (the "Firm Shares") of the
Company's Common Stock, $0.01 par value per share (the "Common Stock"). The
respective amounts of the Firm Shares to be purchased by each of the several
Underwriters are set forth opposite their names on Schedule I hereto. In
addition, the Company proposes to grant to the Underwriters an option to
purchase up to an additional _______ shares (the "Option Shares") of Common
Stock, for the purpose of covering over-allotments in connection with the sale
of the Firm Shares. The Firm Shares and the Option Shares are together called
the "Shares."
1. Sale and Purchase of the Shares.
On the basis of the representations, warranties and agreements
contained in, and subject to the terms and conditions of, this Agreement:
(a) The Company agrees to sell to each of the
Underwriters, and each of the Underwriters agrees, severally and
not jointly, to purchase from the Company, at a price of $_____ per
share (the "Initial Price"), the number of Firm Shares set forth
opposite the name of such Underwriter under the column "Number of
Firm Shares to
-1-
2
be Purchased from the Company" on Schedule I to this Agreement, subject
to adjustment in accordance with Section 11 hereof.
(b) The Company grants to the several Underwriters an
option to purchase, severally and not jointly, all or any part of
the Option Shares at the Initial Price. The number of Option Shares
to be purchased by each Underwriter shall be the same percentage
(adjusted by the Representatives to eliminate fractions) of the
total number of Option Shares to be purchased by the Underwriters
as such Underwriter is purchasing of the Firm Shares. Such option
may be exercised only to cover over-allotments in the sales of the
Firm Shares by the Underwriters and may be exercised in whole or in
part at any time on or before 12:00 noon, New York City time, on
the business day before the Firm Shares Closing Date (as defined
below), and thereafter from time to time within 30 days after the
date of this Agreement, in each case upon written or telegraphic
notice, or oral or telephonic notice confirmed by written or
telegraphic notice, by the Representatives to the Company no later
than 12:00 noon, New York City time, on the business day before the
Firm Shares Closing Date or at least two business days before the
Option Shares Closing Date (as defined below), as the case may be,
setting forth the number of Option Shares to be purchased and the
time and date (if other than the Firm Shares Closing Date) of such
purchase.
2. Delivery and Payment. The Shares shall be represented by definitive
certificates and shall be registered in such names and shall be in such
denominations as the Representatives shall request at least two full business
days before the Firm Shares Closing Date or, in the case of Option Shares, on
the day of notice of exercise of the option as described in Section 1(b). The
Firm Shares shall be delivered by or on behalf of the Company, with any transfer
taxes thereon duly paid by the Company to the Representatives through the
facilities of The Depository Trust Company ("DTC"), for the respective accounts
of the several Underwriters, against payment of the purchase price to the
Company by wire transfer of Federal or other funds immediately available in New
York City. The certificates representing the Firm Shares shall be made available
for inspection not later than 9:30 a.m., New York City time, on the business day
prior to the Firm Shares Closing Date at the office of DTC or its designated
custodian. The time and date of delivery and payment for the Firm Shares shall
be 9:00 a.m., New York City time, on the third business day following the date
of this Agreement, or at such time on such other date, not later than ten
business days after the date of this Agreement, as shall be agreed upon by the
Company and the Representatives (such time and date of delivery and payment are
called the "Firm Shares Closing Date"). The documents to be delivered on the
Firm Shares Closing Date on behalf of the parties hereto shall be delivered at
the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000 and the Firm Shares shall be delivered at the office of DTC
or its designated custodian on the Firm Shares Closing Date.
In the event the option with respect to the Option Shares is exercised,
delivery by the Company of the Option Shares to the Representatives for the
respective accounts of the Underwriters and payment of the purchase price to the
Company shall take place as specified above with respect to the Firm Shares at
the time and on the date (which may be the same date as, but in no event shall
be earlier than, the Firm Shares Closing Date) specified in the notice referred
-2-
3
to in Section 1(b) (such time and date of delivery and payment are called the
"Option Shares Closing Date"). The Firm Shares Closing Date and the Option
Shares Closing Date are called, individually, a "Closing Date" and, together,
the "Closing Dates."
3. Registration Statement and Prospectus; Public Offering. The Company
has prepared and filed in conformity with the requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and the published rules and
regulations thereunder (the "Rules") adopted by the Securities and Exchange
Commission (the "Commission") a Registration Statement (as hereinafter defined)
on Form S-1 (No. 333-77483), including a preliminary prospectus relating to the
Shares, and such amendments thereto as may have been required to the date of
this Agreement. Copies of such Registration Statement (including all amendments
thereof) and of the related Preliminary Prospectus (as hereinafter defined) have
heretofore been delivered by the Company to you. The term "Preliminary
Prospectus" means any preliminary prospectus (as described in Rule 430 of the
Rules) included at any time as a part of the Registration Statement or filed
with the Commission by the Company with the consent of the Representatives
pursuant to Rule 424(a) of the Rules. The term "Registration Statement" as used
in this Agreement means the initial registration statement (including all
exhibits and financial schedules), as amended at the time and on the date it
becomes effective (the "Effective Date"), including the information (if any)
deemed to be part thereof at the time of effectiveness pursuant to Rule 430A of
the Rules. If the Company has filed an abbreviated registration statement to
register additional Shares pursuant to Rule 462(b) under the Rules (the "462(b)
Registration Statement") then any reference herein to the Registration Statement
shall also be deemed to include such 462(b) Registration Statement. The term
"Prospectus" as used in this Agreement means the prospectus included in the
Registration Statement in the form first used to confirm sales of the Shares.
The Company understands that the Underwriters propose to make a public
offering of the Shares, as set forth in and pursuant to the Prospectus, as soon
after the Effective Date and the date of this Agreement as the Representatives
deem advisable. The Company hereby confirms that the Underwriters and dealers
have been authorized to distribute or cause to be distributed each Preliminary
Prospectus and are authorized to distribute the Prospectus (as from time to time
amended or supplemented if the Company furnishes amendments or supplements
thereto to the Underwriters).
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to each Underwriter as follows:
(a) On the Effective Date, the Registration Statement
complied, and on the date of the Prospectus, the date any
post-effective amendment to the Registration Statement becomes
effective, the date any supplement or amendment to the Prospectus
is filed with the Commission and each Closing Date, the
Registration Statement and the Prospectus (and any amendment
thereof or supplement thereto) will comply, in all material
respects, with the applicable provisions of the Securities Act and
the Rules and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules
-3-
4
and regulations of the Commission thereunder. The Registration
Statement did not, as of the Effective Date, 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 and on the
other dates referred to above, the Prospectus did not and will not
contain 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.
When any Preliminary Prospectus was first filed with the Commission
(whether filed as part of the Registration Statement or any amendment
thereto or pursuant to Rule 424(a) of the Rules) and when any amendment
thereof or supplement thereto was first filed with the Commission, such
preliminary prospectus as amended or supplemented complied in all
material respects with the applicable provisions of the Securities Act
and the Rules and did not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. Notwithstanding the foregoing, none of the
representations and warranties in this paragraph 4(a) shall apply to
statements in, or omissions from, the Registration Statement or the
Prospectus made in reliance upon, and in conformity with, information
herein or otherwise furnished in writing with respect to the
representations and warranties made in this paragraph 4(a) to any
Underwriter, by the Representatives on behalf of the several
Underwriters for use in the Registration Statement or the Prospectus.
With respect to the preceding sentence, the Company acknowledges that
the only information furnished in writing by the Representatives on
behalf of the several Underwriters for use in the Registration
Statement or the Prospectus are the following paragraphs contained
under the caption "Underwriting" in the Prospectus: (A) the table in
the second full paragraph; (B) the fourth full paragraph, concerning
the terms of the offering, excluding the first sentence thereof; (C)
the tenth full paragraph, concerning discretionary sales; (D) the
twelfth full paragraph and (E) the thirteenth full paragraph, including
the text set forth in bullet points, concerning stabilization and
syndicate covering transactions.
(b) The Registration Statement is effective under the
Securities Act and no stop order preventing or suspending the
effectiveness of the Registration Statement or suspending or preventing
the use of the Prospectus has been issued and no proceedings for that
purpose have been instituted or are threatened under the Securities
Act. Any required filing of the Prospectus and any supplement thereto
pursuant to Rule 424(b) of the Rules has been or will be made in the
manner and within the time period required by such Rule 424(b).
(c) The financial statements of the Company (including all
notes and schedules thereto) included in the Registration Statement and
Prospectus present fairly the financial condition, the results of
operations, the statements of cash flows and the statements of
stockholders' equity and the other information purported to be shown
therein of the Company at the respective dates and for the respective
periods to which they apply; and such financial statements and related
schedules and notes have been prepared in conformity with generally
accepted accounting principles, consistently
-4-
5
applied throughout the periods involved, and all adjustments necessary
for a fair presentation of the results for such periods have been made.
The summary and selected financial data included in the
Prospectus present fairly the information shown therein as at the
respective dates and for the respective periods specified and the
summary and selected financial data have been presented on a basis
consistent with the consolidated financial statements so set forth in
the Prospectus and other financial information.
(d) Ernst & Young LLP, whose reports are filed with the
Commission as a part of the Registration Statement are, and during the
periods covered by their reports, were independent public accountants
as required by the Securities Act and the Rules.
(e) Each of the Company and each of its Subsidiaries (as
hereinafter defined) is a corporation duly incorporated, validly
existing and in good standing under the laws of its respective
jurisdiction of incorporation. Each of the Company and each such
subsidiary or other entity controlled directly or indirectly by the
Company, as set forth on Schedule II hereto (collectively, the
"Subsidiaries") is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which the
nature of the business conducted by it or location of the assets or
properties owned, leased or licensed by it requires such qualification,
except for such jurisdictions where the failure to so qualify
individually or in the aggregate would not have a material adverse
effect on the assets or properties, business, results of operations or
financial condition of the Company (a "Material Adverse Effect"). The
Company does not own, lease or license any asset or property or conduct
any business outside the United States of America. The Company and each
of its Subsidiaries have all requisite corporate power and authority,
and all necessary authorizations, approvals, consents, orders,
licenses, certificates and permits of and from all governmental or
regulatory bodies or any other person or entity (collectively, the
"Permits"), to own, lease and license its assets and properties and
conduct its business, all of which are valid and in full force and
effect, as described in the Registration Statement and the Prospectus,
except where the lack of such Permits individually or in the aggregate
would not have a Material Adverse Effect. The Company and each of its
Subsidiaries have fulfilled and performed in all material respects all
of their material obligations with respect to such Permits and no event
has occurred that allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material
impairment of the rights of the Company thereunder. Except as may be
required under the Securities Act and state and foreign Blue Sky laws,
no other Permits are required to enter into, deliver and perform this
Agreement and to issue and sell the Shares.
(f) Each of the Company and its Subsidiaries owns or possesses
adequate and enforceable rights to use all trademarks, trademark
applications, trade names, service marks, copyrights, copyright
applications, licenses, know-how and other similar rights and
proprietary knowledge (collectively, "Intangibles") described in the
Prospectus as being owned by it and necessary for the conduct of its
business. Neither
-5-
6
the Company nor any of its Subsidiaries has received any notice of, or
is aware of, any infringement of or conflict with asserted rights of
others with respect to any Intangibles, which infringement or conflict
would have a Material Adverse Effect.
(g) Each of the Company and each of its Subsidiaries has good
and marketable title in fee simple to all items of real property and
good and marketable title to all personal property described in the
Prospectus as being owned by it, in each case except for (A) personal
property disposed of since the date of the consolidated statement of
financial condition included in the Registration Statement in the
ordinary course of business and (B) such liens, encumbrances and
defects as are described in the Prospectus, or which do not materially
interfere with the use made of such property by the Company or its
Subsidiaries. Any real property and buildings described in the
Prospectus as being held under lease by the Company and each of its
Subsidiaries is held by it under valid, existing and enforceable
leases, free and clear of all liens, encumbrances, claims, security
interests and defects, except such as are described in the Registration
Statement and the Prospectus or would not individually or in the
aggregate have a Material Adverse Effect.
(h) There is no litigation or governmental proceeding to which
the Company or its Subsidiaries is subject or which is pending or, to
the knowledge of the Company, threatened, against the Company or any of
its Subsidiaries, which, if determined adversely to the Company or any
of its Subsidiaries, could reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect or affect the
consummation of this Agreement or which is required to be disclosed in
the Registration Statement and the Prospectus that is not so disclosed.
(i) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as
described therein: (A) there has not been any material adverse change
with regard to the assets or properties, business, results of
operations or financial condition of the Company; (B) neither the
Company nor its Subsidiaries has sustained any loss or interference
with its assets, businesses or properties (whether owned or leased)
from fire, explosion, earthquake, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree which would
have a Material Adverse Effect; and (C) since the date of the latest
balance sheet included in the Registration Statement and the
Prospectus, except as reflected therein, neither the Company nor its
Subsidiaries has (i) issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money, except such
liabilities or obligations incurred in the ordinary course of business
or set forth or contemplated in the Prospectus, (ii) entered into any
transaction not in the ordinary course of business or (iii) declared or
paid any dividend or made any distribution on any shares of its stock
or redeemed, purchased or otherwise acquired or agreed to redeem,
purchase or otherwise acquire any shares of its stock.
(j) There is no document, contract or other agreement of a
character
-6-
7
required to be described in the Registration Statement or Prospectus or
to be filed as an exhibit to the Registration Statement which is not
described or filed as required by the Securities Act or the Rules. Each
description of a contract, document or other agreement in the
Registration Statement and the Prospectus accurately reflects in all
material respects the terms of the underlying document, contract or
agreement as required to be described by the Rules. Each agreement
described in the Registration Statement and Prospectus or listed in the
Exhibits to the Registration Statement is in full force and effect and
is valid and enforceable against and, to the Company's knowledge by,
the Company or one or more of its Subsidiaries, as the case may be, in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally
and by general equitable principles. Neither the Company nor any of its
Subsidiaries, if any Subsidiary is a party, nor to the Company's
knowledge, any other party, is in default in the observance or
performance of any term or obligation to be performed by it under any
such agreement, and no event has occurred which with notice or lapse of
time or both would constitute such a default by the Company or any of
its Subsidiaries, nor to the Company's knowledge, any other party, in
any such case which default or event individually or in the aggregate
would have a Material Adverse Effect. No default exists, and no event
has occurred which with notice or lapse of time or both would
constitute a default, in the due performance and observance of any
term, covenant or condition, by the Company or any of its Subsidiaries,
if any Subsidiary is a party thereto, of any other agreement or
instrument to which the Company or any of its Subsidiaries is a party
or by which it or its properties or business may be bound or affected
which default or event individually or in the aggregate would have a
Material Adverse Effect.
(k) Neither the Company nor any of its Subsidiaries is in
violation of any term or provision of its charter or by-laws or of any
franchise, license, permit, judgment, decree, order, statute, rule or
regulation, where the consequences of such violation individually or in
the aggregate would have a Material Adverse Effect.
(l) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including the issuance and sale of
the Shares) will give rise to a right to terminate or accelerate the
due date of any payment due under, or conflict with or result in the
breach of any term or provision of, or constitute a default (or an
event which with notice or lapse of time or both would constitute a
default) under, or require any consent or waiver under, or result in
the execution or imposition of any lien, charge or encumbrance upon any
properties or assets of the Company or any of its Subsidiaries pursuant
to the terms of, any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or any of its Subsidiaries
is a party or by which either the Company or any of its Subsidiaries or
any of their properties or businesses is bound, or any franchise,
license, permit, judgment, decree, order, statute, rule or regulation
applicable to the Company or any of its Subsidiaries or violate any
provision of the charter or by-laws of the Company or any of its
Subsidiaries, in each case except
-7-
8
for such consents or waivers which have already been obtained and are
in full force and effect.
(m) The Company has authorized and outstanding capital stock
as set forth under the caption "Capitalization" in the Prospectus. The
certificates evidencing the Shares are in due and proper legal form and
have been duly authorized for issuance by the Company. All of the
issued and outstanding shares of Common Stock have been duly and
validly issued and are fully paid and nonassessable. There are no
statutory preemptive or other similar rights to subscribe for or to
purchase or acquire any shares of Common Stock of the Company or its
Subsidiaries or any such rights pursuant to its respective Certificate
of Incorporation or by-laws or any agreement or instrument to or by
which the Company or any of its Subsidiaries is a party or bound,
except for options to acquire shares of Common Stock as disclosed in
the Prospectus and Registration Statement. The Shares, when issued and
sold pursuant to this Agreement, will be duly and validly issued, fully
paid and nonassessable and none of them will be issued in violation of
any preemptive or other similar right. Except as disclosed in the
Registration Statement and the Prospectus, there is no outstanding
option, warrant or other right calling for the issuance of, and there
is no commitment, plan or arrangement to issue, any share of stock of
the Company or its Subsidiaries or any security convertible into, or
exercisable or exchangeable for, such stock. The Common Stock and the
Shares conform in all material respects to all statements in relation
thereto contained in the Registration Statement and the Prospectus. All
outstanding shares of capital stock of each Subsidiary have been duly
authorized and validly issued, and are fully paid and nonassessable and
are owned directly by the Company or by another wholly-owned subsidiary
of the Company, free and clear of any security interests, liens,
encumbrances, equities or claims.
(n) No holder of any security of the Company has the right to
have any security owned by such holder included in the Registration
Statement or to demand registration of any security owned by such
holder during the period ending 180 days after the date of this
Agreement. Each stockholder, director and executive officer of the
Company has delivered to the Representatives his enforceable written
lock-up agreement in the form attached to this Agreement as Schedule
III (the "Lock-Up Agreement").
(o) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of the Shares.
This Agreement has been duly and validly authorized, executed and
delivered by the Company and constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally
and by general equitable principles.
(p) Neither the Company nor any of its Subsidiaries is
involved in any labor
-8-
9
dispute nor, to the knowledge of the Company, is any such dispute
threatened, which dispute individually or in the aggregate would have a
Material Adverse Effect. The Company is not aware of any existing or
imminent labor disturbance by the employees of any of its principal
suppliers or contractors which individually or in the aggregate would
have a Material Adverse Effect. The Company is not aware of any
threatened or pending litigation between the Company or its
Subsidiaries and any of its executive officers which individually or in
the aggregate, if adversely determined, could have a Material Adverse
Effect and has received no notice that such officers will not remain in
the employment of the Company.
(q) No transaction has occurred between or among the Company
and any of its officers, directors or 5% or greater stockholders or any
affiliate or affiliates of any such officer, director or 5% or greater
stockholder that is required to be described in and is not described in
the Registration Statement and the Prospectus.
(r) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be
expected to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation
of the price of the Common Stock to facilitate the sale or resale of
any of the Shares.
(s) The Company and its Subsidiaries have filed all material
Federal, state, local and foreign tax returns which are required to be
filed through the date hereof, or have received extensions thereof, and
have paid all taxes shown on such returns and all assessments received
by them to the extent that the same are material and have become due.
There are no tax audits or investigations pending which if adversely
determined would have a Material Adverse Effect; nor are there any
material proposed additional tax assessments against the Company and
any of its Subsidiaries.
(t) The Shares have been duly authorized for quotation on the
Nasdaq National Market ("Nasdaq") of The Nasdaq Stock Market, Inc. A
registration statement has been filed on Form 8-A pursuant to Section
12 of the Exchange Act, which registration statement complies in all
material respects with the Exchange Act.
(u) The books, records and accounts of the Company and its
Subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the results of
operations of, the Company and its Subsidiaries. The Company and each
of its Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally
accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to
-9-
10
any differences.
(v) The Company and its Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks
and in such amounts as are customary in the businesses in which they
are engaged or propose to engage after giving effect to the
transactions described in the Prospectus and neither the Company nor
any Subsidiary has since January 1, 1996 been denied any insurance
coverage which it has sought or for which it has applied. Neither the
Company nor any Subsidiary has any 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 would not have
a Material Adverse Effect.
(w) Each approval, consent, order, authorization, designation,
declaration or filing of, by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of the
transactions herein contemplated required to be obtained or performed
by the Company (except such additional steps as may be necessary to
qualify the Shares for public offering by the Underwriters under the
state securities or Blue Sky laws) has been obtained or made and is in
full force and effect.
(x) There are no affiliations with the National Association of
Securities Dealers, Inc. (the "NASD") among the Company's officers,
directors or, to the best knowledge of the Company, any stockholder of
the Company, except as set forth in the Registration Statement.
(y) (i) Each of the Company and its Subsidiaries is in
compliance in all material respects with all rules, laws and
regulations relating to the use, treatment, storage and disposal of
toxic substances and protection of health or the environment
("Environmental Laws") which are applicable to its business; (ii) none
of the Company or its Subsidiaries has received any notice from any
governmental authority or third party of an asserted claim under
Environmental Laws; (iii) each of the Company and its Subsidiaries has
received all permits, licenses or other approvals required of it under
applicable Environmental Laws to conduct its business and is in
compliance with all terms and conditions of any such permit, license or
approval, except where the lack of any such permits, licenses or
approvals, individually or in the aggregate, would not have a Material
Adverse Effect; (iv) to the Company's knowledge, no facts currently
exist that will require the Company or its Subsidiaries to make future
material capital expenditures to comply with Environmental Laws; and
(v) no property which is or has been owned, leased or occupied by the
Company or its Subsidiaries has been designated as a Superfund site
pursuant to the Comprehensive Environmental Response, Compensation of
Liability Act of 1980, as amended (42 U.S.C. Section 9601, et. seq.) or
otherwise designated as a contaminated site under any other
Environmental Law.
-10-
11
(z) The Company is not and, after giving effect to the
offering and sale of the Shares and the application of proceeds
thereof as described in the Prospectus, will not be an "investment
company" or an entity controlled by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act").
(aa) Neither the Company, its Subsidiaries nor, to the
knowledge of the Company, any other person associated with or
acting on behalf of the Company or its Subsidiaries, including any
director, officer, agent or employee of the Company or its
Subsidiaries has, directly or indirectly, while acting on behalf of
the Company or its Subsidiaries (i) used any corporate funds for
unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity; (ii) made any unlawful
payment to foreign or domestic government officials or employees or
to foreign or domestic political parties or campaigns from
corporate funds; (iii) violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any other
unlawful payment.
(bb) All material disclosure regarding year 2000 compliance
that is required to be described under the Securities Act and the
regulations and pronouncements of the Commission has been included
in the Prospectus. Neither the Company nor any Subsidiary
reasonably believes that it will incur material operating expenses
or costs to ensure that its information systems will be year 2000
complaint, other than as disclosed in the Prospectus.
5. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters under this Agreement are several and not joint. The respective
obligations of the Underwriters to purchase the Shares are subject to each of
the following terms and conditions:
(a) Notification that the Registration Statement has
become effective shall have been received by the Representatives
and the Prospectus shall have been timely filed with the Commission
in accordance with Section 6(a)(i) of this Agreement.
(b) No order preventing or suspending the use of any
preliminary prospectus or the Prospectus shall be in effect and no
order suspending the effectiveness of the Registration Statement
shall be in effect and no proceedings for such purpose shall be
pending before or threatened by the Commission, and any requests
for additional information on the part of the Commission (to be
included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the satisfaction of the
Commission and the Representatives.
(c) The representations and warranties of the Company
contained in this Agreement and in the certificate delivered
pursuant to Section 5(d) shall be true and correct when made and on
and as of each Closing Date as if made on such date. The Company
shall have performed all covenants and agreements and satisfied all
the conditions contained in this Agreement required to be performed
or satisfied by it at or
-11-
12
before such Closing Date.
(d) The Representatives shall have received on each
Closing Date a certificate, addressed to the Representatives and
dated such Closing Date, of the chief executive officer and the
chief financial officer of the Company to the effect that (i) they
have carefully examined the Registration Statement, the Prospectus
and this Agreement and that 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 performed all covenants and agreements and
satisfied all conditions contained in this Agreement required to be
performed or satisfied by it at or prior to such Closing Date, and
(ii) no stop order suspending the effectiveness of the Registration
Statement has been issued and to the best of their knowledge, no
proceedings for that purpose have been instituted or are pending
under the Securities Act.
(e) The Representatives shall have received at the time
this Agreement is executed and on each Closing Date a signed letter
from Ernst & Young LLP addressed to the Representatives and dated,
respectively, the date of this Agreement and each such Closing
Date, in form and substance reasonably satisfactory to the
Representatives, confirming that they are independent accountants
within the meaning of the Securities Act and the Rules, that the
response to Item 10 of the Registration Statement is correct
insofar as it relates to them and stating in effect that:
(i) in their opinion the audited financial
statements and financial statement schedules included in
the Registration Statement and the Prospectus and reported
on by them comply as to form in all material respects with
the applicable accounting requirements of the Securities
Act and the Rules;
(ii) on the basis of a reading of the amounts
included in the Registration Statement and the Prospectus
under the headings "Prospectus Summary Summary Financial
Data" and "Selected Financial Data," carrying out other
procedures which do not constitute an audit conducted in
accordance with generally accepted auditing standards and
would not necessarily reveal matters of significance with
respect to the comments set forth in such letter, a reading
of the minutes of the meetings of the stockholders and
directors of the Company, and inquiries of certain
officials of the Company who have responsibility for
financial and accounting matters of the Company as to
transactions and events subsequent to the date of the
latest audited financial statements, except as disclosed in
the Registration Statement and the Prospectus, nothing came
to their attention which caused them to believe that:
(A) the amounts in "Prospectus Summary -
Summary Financial Data," and "Selected Financial
Data" included in the Registration Statement and
the Prospectus do not agree with the corresponding
amounts in the audited and unaudited financial
statements from which
-12-
13
such amounts were derived; or
(B) with respect to the Company, there
were, at a specified date not more than five
business days prior to the date of the letter, any
increases in the current liabilities and long-term
liabilities of the Company or any decreases in net
income or in working capital or the stockholders'
equity in the Company, as compared with the
amounts shown on the Company's audited balance
sheet for the year ended December 31, 1998 and the
unaudited balance sheet for the three months ended
March 31, 1999 included in the Registration
Statement;
(iii) they have performed certain other procedures
as may be permitted under Generally Acceptable Auditing
Standards as a result of which they determined that
certain information of an accounting, financial or
statistical nature (which is limited to accounting,
financial or statistical information derived from the
general accounting records of the Company) set forth in
the Registration Statement and the Prospectus and
reasonably specified by the Representatives agrees with
the accounting records of the Company; and
(iv) based upon the procedures set forth in
clauses (ii) and (iii) above and a reading of the amounts
included in the Registration Statement under the headings
"Prospectus Summary - Summary Financial Data" and
"Selected Financial Data" included in the Registration
Statement and Prospectus and a reading of the financial
statements from which certain of such data were derived,
nothing has come to their attention that gives them reason
to believe that the "Prospectus Summary Summary Financial
Data" and "Selected Financial Data" included in the
Registration Statement and Prospectus do not comply as to
form in all material respects with the applicable
accounting requirements of the Securities Act and the
Rules or that the information set forth therein is not
fairly stated in relation to the financial statements
included in the Registration Statement or Prospectus from
which certain of such data were derived and is not in
conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of
the audited financial statements included in the
Registration Statement and Prospectus.
References to the Registration Statement and the
Prospectus in this paragraph (e) are to such documents as amended
and supplemented at the date of the letter.
(f) The Representatives shall have received on each Closing
Date from Xxxxx & Xxxxxx L.L.P., counsel for the Company, an
opinion, addressed to the Representatives and dated such Closing
Date, and stating in effect that:
(i) The Company and each of Midland Receivables
98-1 Corporation, a Delaware corporation, and Midland
Funding 98-A Corporation, a Delaware corporation
(collectively, the "Delaware Subsidiaries"), has been duly
organized
-13-
14
and is validly existing as a corporation in good
standing under the laws of the State of Delaware. Each of
the Company and the Delaware Subsidiaries is duly
qualified and in good standing as a foreign corporation in
each jurisdiction in which the character or location of
its assets or properties (owned, leased or licensed) or
the nature of its businesses makes such qualification
necessary, except for such jurisdictions where the failure
to so qualify individually or in the aggregate would not
have a Material Adverse Effect.
(ii) Each of the Company and the Delaware
Subsidiaries has all requisite corporate power and
authority to own, lease and license its assets and
properties and conduct its business as now being conducted
and as described in the Registration Statement and the
Prospectus and, with respect to the Company, to enter
into, deliver and perform this Agreement and to issue and
sell the Shares.
(iii) The Company has authorized and issued
capital stock as set forth in the Registration Statement
and the Prospectus under the caption "Capitalization"; the
certificates evidencing the Shares are in due and proper
legal form and have been duly authorized for issuance by
the Company; all of the outstanding shares of Common Stock
of the Company have been duly and validly authorized and
issued and are fully paid and nonassessable and, to our
knowledge, none of them was issued in violation of any
preemptive or other similar right. The Shares, when issued
and sold pursuant to this Agreement, will be duly and
validly issued, outstanding, fully paid and nonassessable
and, to such counsel's knowledge, none of them will have
been issued in violation of any preemptive or other
similar right. There are no preemptive rights or any
restrictions upon the voting or transfer of any securities
of the Company pursuant to the Company's Certificate of
Incorporation or by-laws or other governing documents or
any other instrument known to us to which the Company is a
party or by which it may be bound. To such counsel's
knowledge, except as disclosed in the Registration
Statement and the Prospectus, there is no outstanding
option, warrant or other right calling for the issuance
of, and no commitment, plan or arrangement to issue, any
share of stock of the Company or any security convertible
into, exercisable for, or exchangeable for stock of the
Company. The capital stock of the Company, including the
Common Stock and the Shares, conforms in all material
respects to the descriptions thereof contained in the
Registration Statement and the Prospectus. The issued and
outstanding shares of capital stock of each of the
Delaware Subsidiaries have been duly authorized and
validly issued, are fully paid and nonassessable and are
owned by Midland Credit Management, Inc., a Kansas
corporation, free and clear of any perfected security
interest or, to the knowledge of such counsel, any other
security interests, liens, encumbrances, equities or
claims, other than those contained in the Registration
Statement and the Prospectus.
-14-
15
(iv) All necessary corporate action has been duly
and validly taken by the Company to authorize the
execution, delivery and performance of this Agreement and
the issuance and sale of the Shares. This Agreement has
been duly and validly authorized, executed and delivered
by the Company.
(v) Neither the execution, delivery and
performance of this Agreement by the Company nor the
consummation of any of the transactions contemplated
hereby (including the issuance and sale by the Company of
the Shares) will (A) give rise to a right to terminate or
accelerate the due date of any payment due under, or
conflict with or result in the breach of any term or
provision of, or constitute a default (or any event which
with notice or lapse of time, or both, would constitute a
default) under, or require consent or waiver under, or
result in the execution or imposition of any lien, charge
or encumbrance upon any properties or assets of the
Company or any Subsidiary pursuant to (x) the terms of any
material indenture, mortgage, deed of trust, note or other
agreement or instrument of which such counsel is aware and
to which the Company or any Subsidiary is a party or by
which the Company or any Subsidiary or any of their
properties or businesses is bound, or (y) any judgment,
decree, order, statute, rule or regulation of which such
counsel is aware, in the case of this clause (y) only,
which would have a Material Adverse Effect, or (B) violate
any provision of the charter or by-laws of the Company or
any Subsidiary.
(vi) No consent, approval, authorization or order
of any court or governmental agency or regulatory body of
the United States of America is required for the
execution, delivery or performance of this Agreement by
the Company or the consummation of the transactions
contemplated hereby, except such as have been obtained
under the Securities Act and such as may be required under
state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the several
Underwriters.
(vii) To such counsel's knowledge, except as
described in the Registration Statement and the
Prospectus, there is no litigation or governmental or
other proceeding or investigation, before any court or
before or by any public body or board pending or
threatened against, or involving the assets, properties or
businesses of, the Company or its Subsidiaries which
individually or in the aggregate could have a Material
Adverse Effect.
(viii) The statements in the Prospectus under the
captions "Business Government Regulation," "Management -
Employment Agreements," "Management Compensation Under
Plans," "Certain Transactions - Stockholders' Agreements"
(as to those agreements to which the Company is a party),
"Description of Capital Stock" and "Shares Eligible for
Future Sale," and the statements describing the Company's
warehouse facility and revolving line of credit under
"Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and
Capital Resources," insofar
-15-
16
as such statements constitute a summary of documents
referred to therein or matters of law, are fair summaries
in all material respects and accurately present the
information called for with respect to such documents and
matters (provided that such counsel need express no
opinion with respect the completeness of the descriptions
of such documents or matters of law). To our knowledge,
accurate copies of all contracts and other documents
required to be filed as exhibits to, or described in, the
Registration Statement have been so filed with the
Commission or are fairly described in the Registration
Statement, as the case may be.
(ix) The Registration Statement, the Preliminary
Prospectus dated June 14, 1999 and the Prospectus and each
post-effective amendment or supplement thereto (except for
the financial statements and schedules and other financial
and statistical data included therein, as to which such
counsel expresses no opinion) comply as to form in all
material respects with the requirements of the Securities
Act and the Rules.
(x) The Registration Statement is effective under
the Securities Act, and no stop order suspending the
effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been
instituted or, to such counsel's knowledge, are
threatened, pending or contemplated. Any required filing
of the Prospectus and any supplement thereto pursuant to
Rule 424(b) under the Securities Act has been made in the
manner and within the time period required by such Rule
424(b).
(xi) The Shares have been approved for listing on
the Nasdaq National Market.
(xii) The Company is not an "investment company"
or an entity controlled by an "investment company" as such
terms are defined in the Investment Company Act of 1940,
as amended.
To the extent deemed advisable by such counsel, it may
rely as to matters of fact on certificates of responsible officers
of the Company and public officials. Copies of such certificates
shall be furnished to the Representatives and counsel for the
Underwriters. Such counsel's opinion shall be limited as to matters
which are governed by the laws of the State of Arizona, the State
of Delaware and the laws of the United States.
In addition, such counsel shall state that such counsel
has participated in conferences with officers and other
representatives of the Company, representatives of the
Representatives and representatives of the independent certified
public accountants of the Company, at which conferences the
contents of the Registration Statement and the Prospectus and
related matters were discussed and, although such counsel is not
passing upon and does not assume any responsibility for the
accuracy, completeness or
-16-
17
fairness of the statements contained in the Registration Statement
and the Prospectus (except as specified in the foregoing opinions),
on the basis of the foregoing, no facts have come to the attention
of such counsel which lead such counsel to believe that the
Registration Statement at the time it became effective (except with
respect to the financial statements and schedules and other
financial and statistical data, as to which such counsel need
express no belief) 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,
or that the Prospectus as amended or supplemented (except with
respect to the financial statements and schedules and other
financial and statistical data, as to which such counsel need make
no statement) on the date thereof contained any untrue statement of
a material fact or omitted 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.
(g) The Representatives shall have received on each
Closing Date from Xxxxxxx X. Xxxxxxxx, Esquire, general counsel for
the Company, an opinion, addressed to the Representatives and dated
such Closing Date, and stating in effect that:
(i) The only Subsidiaries of the Company are
Midland Credit Management, Inc., a Kansas corporation
("Midland Credit Management"); Midland Receivables 98-1
Corporation, a Delaware corporation; Midland Funding 98-A
Corporation, a Delaware corporation; and Midland Financial
Services, Inc., a Kansas corporation ("Financial").
Financial has no assets, no revenues and no operations of
any kind. Midland Credit Management has been duly
organized and is validly existing as a corporation in good
standing under the laws of the State of Kansas. Midland
Credit Management is duly qualified and in good standing
as a foreign corporation in each jurisdiction in which the
character or location of its assets or properties (owned,
leased or licensed) or the nature of its businesses makes
such qualification necessary, except for such
jurisdictions where the failure to so qualify individually
or in the aggregate would not have a Material Adverse
Effect.
(ii) Midland Credit Management has all requisite
corporate power and authority to own, lease and license
its assets and properties and conduct its business as now
being conducted and as described in the Registration
Statement and the Prospectus.
(iii) The issued and outstanding shares of capital
stock of Midland Credit Management have been duly
authorized and validly issued, are fully paid and
nonassessable and are owned by the Company free and clear
of any perfected security interest or, to the knowledge of
such counsel, any other security interests, liens,
encumbrances, equities or claims, other than those
described in the Registration Statement and the
Prospectus.
(iv) Neither the execution, delivery and
performance of this Agreement
-17-
18
by the Company nor the consummation of any of the
transactions contemplated hereby (including the issuance
and sale by the Company of the Shares) will give rise to a
right to terminate or accelerate the due date of any
payment due under, or conflict with or result in the
breach of any term or provision of, or constitute a
default (or any event which with notice or lapse of time,
or both, would constitute a default) under, or require
consent or waiver under, or result in the execution or
imposition of any lien, charge or encumbrance upon any
properties or assets of the Company or any Subsidiary
pursuant to the terms of any franchise, license or permit
of which such counsel is aware.
(v) To the best of such counsel's knowledge, no
default exists, and no event has occurred which with
notice or lapse of time, or both, would constitute a
default in the due performance and observance of any term,
covenant or condition by the Company or any Subsidiary of
any indenture, mortgage, deed of trust, note or any other
agreement or instrument to which the Company or any
Subsidiary is a party or by which any of them or their
assets, properties or businesses may be bound or affected,
where the consequences of such default individually or in
the aggregate would have a Material Adverse Effect.
(vi) To the best of such counsel's knowledge,
neither the Company nor any of its Subsidiaries is in
violation of any (A) term or provision of its charter or
by-laws or (B) any judgment, decree, order, statute, rule
or regulation of the United States of America (except
where the consequences of any violation of this subsection
(B), individually or in the aggregate, would not have a
Material Adverse Effect).
(h) All proceedings taken in connection with the sale of
the Firm Shares and the Option Shares as herein contemplated shall
be reasonably satisfactory in form and substance to the
Representatives and their counsel and the Underwriters shall have
received from Xxxxxx, Xxxx & Xxxxxxxx LLP a favorable opinion,
addressed to the Representatives and dated such Closing Date, with
respect to the Shares, the Registration Statement and the
Prospectus, and such other related matters, as the Representatives
may reasonably request, and the Company shall have furnished to
Xxxxxx, Xxxx & Xxxxxxxx LLP such documents as they may reasonably
request for the purpose of enabling them to pass upon such matters.
(i) The Representatives shall have received copies of the
Lock-Up Agreements executed by each entity or person described in
Section 4(n).
(j) The Company shall have furnished or caused to be
furnished to the Representatives such further certificates or
documents as the Representatives shall have reasonably requested.
6. Covenants of the Company.
-18-
19
(a) The Company covenants and agrees with each Underwriter
as follows:
(i) The Company shall prepare the Prospectus in a
form approved by the Representatives and file such Prospectus
pursuant to Rule 424(b) under the Securities Act not later
than the Commission's close of business on the second business
day following the execution and delivery of this Agreement,
or, if applicable, such earlier time as may be required by
Rule 430A(a)(3) under the Securities Act.
(ii) The Company shall promptly advise the
Representatives in writing (A) when any amendment to the
Registration Statement shall have become effective, (B) of any
request by the Commission for any amendment of the
Registration Statement or the Prospectus or for any additional
information, (C) of the prevention or suspension of the use of
any preliminary prospectus or the Prospectus or of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution
or threatening of any proceeding for that purpose and (D) of
the receipt by the Company of any notification with respect to
the suspension of the qualification of the Shares for sale in
any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company shall not file any
amendment of the Registration Statement or supplement to the
Prospectus unless the Company has furnished the
Representatives a copy for their review prior to filing and
shall not file any such proposed amendment or supplement to
which the Representatives reasonably object. The Company shall
use its best efforts to prevent the issuance of any such stop
order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(iii) If, at any time when a prospectus relating to
the Shares is required to be delivered under the Securities
Act and the Rules, 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 or supplement
the Prospectus to comply with the Securities Act or the Rules,
the Company promptly shall prepare and file with the
Commission, subject to the second sentence of paragraph (ii)
of this Section 6(a), an amendment or supplement which shall
correct such statement or omission or an amendment which shall
effect such compliance.
(iv) The Company shall make generally available to
its security holders and to the Representatives as soon as
practicable, but not later than 45 days after the end of the
12-month period beginning at the end of the fiscal quarter of
the Company during which the Effective Date occurs (or 90 days
if such 12-month period coincides with the Company's fiscal
year), an earning statement (which need not be audited) of the
Company, covering such 12-month period, which shall satisfy
the provisions of Section 11(a) of the Securities Act or Rule
158 of the Rules.
-19-
20
(v) The Company shall furnish to the Representatives
and counsel for the Underwriters, without charge, signed
copies of the Registration Statement (including all exhibits
thereto and amendments thereof) and to each other Underwriter
a copy of the Registration Statement (without exhibits
thereto) and all amendments thereof and, so long as delivery
of a prospectus by an Underwriter or dealer may be required by
the Securities Act or the Rules, as many copies of any
preliminary prospectus and the Prospectus and any amendments
thereof and supplements thereto as the Representatives may
reasonably request.
(vi) The Company shall cooperate with the
Representatives and their counsel in endeavoring to qualify
the Shares for offer and sale in connection with the offering
under the laws of such jurisdictions as the Representatives
may designate and shall maintain such qualifications in effect
so long as required for the distribution of the Shares;
provided, however, that the Company shall not be required in
connection therewith, as a condition thereof, to qualify as a
foreign corporation or to execute a general consent to service
of process in any jurisdiction or subject itself to taxation
as doing business in any jurisdiction.
(vii) Without the prior written consent of CIBC World
Markets Corp., for a period of 180 days after the date of this
Agreement, the Company shall not (A) issue, register with the
Commission (other than on Form S-8 or on any successor form),
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 or
otherwise transfer or dispose of, directly or indirectly, any
equity securities of the Company or any securities convertible
into, exercisable for or exchangeable for equity securities of
the Company, or (B) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the
economic consequences of ownership of equity securities in the
Company, whether any such transaction described in clause (A)
or (B) above is to be settled by delivery of Common Stock or
other equity securities, in cash or otherwise. The foregoing
sentence shall not apply to the issuance of the Shares
pursuant to the Registration Statement and the issuance of
shares pursuant to the Company's stock option plan as
described in the Registration Statement and the Prospectus or
pursuant to the exercise of existing options described in the
Prospectus. In the event that during this period, (1) any
shares are issued pursuant to the Company's existing stock
option plan that are exercisable during such 180-day period or
(2) any registration is effected on Form S-8 or on any
successor form relating to shares that are exercisable during
such 180-day period, the Company shall cause each such grantee
or purchaser or holder of such registered securities to enter
into a Lock-Up Agreement in the form set forth on Schedule III
hereto.
(viii) On or before completion of this offering, the
Company shall make all filings required under applicable
securities laws and by the Nasdaq National Market (including
any required registration under the Exchange Act).
-20-
21
(ix) The Company shall file timely and accurate
reports in accordance with the provisions of Florida Statutes
Section 517.075, or any successor provision, and any
regulation promulgated thereunder, if at any time after the
Effective Date, the Company or any of its affiliates commences
engaging in business with the government of Cuba or any person
or affiliate located in Cuba.
(x) The Company will apply the net proceeds from the
offering of the Shares in the manner set forth under "Use of
Proceeds" in the Prospectus.
(b) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated
hereby are consummated or this Agreement is terminated, all costs
and expenses incident to the public offering of the Shares and the
performance of the obligations of the Company under this Agreement,
including those relating to: (i) the preparation, printing, filing
and distribution of the Registration Statement, including all
exhibits thereto, each preliminary prospectus, the Prospectus, all
amendments and supplements to the Registration Statement and the
Prospectus, and the printing, filing and distribution of this
Agreement; (ii) the preparation and delivery of certificates for
the Shares to the Underwriters; (iii) the registration or
qualification of the Shares for offer and sale under the securities
or Blue Sky laws of the various jurisdictions referred to in
Section 6(a)(vi), including the reasonable fees and disbursements
of counsel for the Underwriters in connection with such
registration and qualification and the preparation, printing,
distribution and shipment of preliminary and supplementary Blue Sky
memoranda; (iv) the furnishing (including costs of shipping and
mailing) to the Representatives and to the Underwriters of copies
of each preliminary prospectus, the Prospectus and all amendments
or supplements to the Prospectus, and of the several documents
required by this Section to be so furnished, as may be reasonably
requested for use in connection with the offering and sale of the
Shares by the Underwriters or by dealers to whom Shares may be
sold; (v) the filing fees of the NASD in connection with its review
of the terms of the public offering and reasonable fees and
disbursements of counsel for the Underwriters in connection with
such review; (vi) inclusion of the Shares for quotation on the
Nasdaq National Market; and (vii) all transfer taxes, if any, with
respect to the sale and delivery of the Shares by the Company to
the Underwriters. Subject to the provisions of Section 9, the
Underwriters agree to pay, whether or not the transactions
contemplated hereby are consummated or this Agreement is
terminated, all costs and expenses incident to the performance of
the obligations of the Underwriters under this Agreement not
payable by the Company pursuant to the preceding sentence,
including the fees and disbursements of counsel for the
Underwriters.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section
-21-
22
15 of the Securities Act or Section 20 of the Exchange Act against
any and all losses, claims, damages and liabilities, joint or
several (including any reasonable investigation, legal and other
expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under
the Securities Act, the Exchange Act or other Federal or state law
or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus, the Registration Statement
or the Prospectus or any amendment thereof or supplement thereto,
or arise out of or are based upon 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; provided,
however, that such indemnity shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) on account
of any losses, claims, damages or liabilities arising from the sale
of the Shares to any person by such Underwriter if such untrue
statement or omission or alleged untrue statement or omission was
made in such preliminary prospectus, the Registration Statement or
the Prospectus, or such amendment or supplement, in reliance upon
and in conformity with information furnished in writing to the
Company by the Representatives on behalf of any Underwriter
specifically for use therein. Nothing herein shall affect the
Company's indemnification obligations as to the information in such
sections. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company and each person, if any,
who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, each director of
the Company, and each officer of the Company who signs the
Registration Statement, to the same extent as the foregoing
indemnity from the Company to each Underwriter, but only insofar as
such losses, claims, damages or liabilities arise out of or are
based upon any untrue statement or omission or alleged untrue
statement or omission with respect to such Underwriter which was
made in any preliminary prospectus, the Registration Statement or
the Prospectus, or any amendment thereof or supplement thereto,
contained in the following paragraphs appearing under the caption
"Underwriting" in the Prospectus: (i) the table in the second full
paragraph; (ii) the fourth full paragraph, concerning the terms of
the offering, excluding the first sentence thereof; (iii) the tenth
full paragraph, concerning discretionary sales; (iv) the twelfth
full paragraph; and (v) the thirteenth full paragraph, including
the text set forth in the bullet points, concerning stabilization
and syndicate covering transactions.
(c) Any party that proposes to assert the right to be
indemnified under this Section will, promptly after receipt of
notice of commencement of any action, suit or proceeding against
such party in respect of which a claim is to be made against an
indemnifying party or parties under this Section, notify each such
indemnifying party of the commencement of such action, suit or
proceeding, enclosing a copy of all papers
-22-
23
served. No indemnification provided for in Section 7(a) or 7(b)
shall be available to any party who shall fail to give notice as
provided in this Section 7(c) if the party to whom notice was not
given was unaware of the proceeding to which such notice would have
related and was prejudiced by the failure to give such notice, but
the omission so to notify such indemnifying party of any such
action, suit or proceeding shall not relieve it from any liability
that it may have to any indemnified party for contribution or
otherwise than under this Section. In case any such action, suit or
proceeding shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in, and, to
the extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof and the approval
by the indemnified party of such counsel, the indemnifying party
shall not be liable to such indemnified party for any legal or
other expenses, except as provided below and except for the
reasonable costs of investigation subsequently incurred by such
indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its counsel in any
such action, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the employment of
counsel by such indemnified party has been authorized in writing by
the indemnifying parties, (ii) the indemnified party shall have
been advised by counsel that there may be one or more legal
defenses available to it which are different from or additional to
those available to the indemnifying party (in which case the
indemnifying parties shall not have the right to direct the defense
of such action on behalf of the indemnified party) or (iii) the
indemnifying parties shall not have employed counsel to assume the
defense of such action within a reasonable time after notice of the
commencement thereof, in each of which cases the fees and expenses
of counsel shall be at the expense of the indemnifying parties. An
indemnifying party shall not be liable for any settlement of any
action, suit, proceeding or claim effected without its written
consent.
8. Contribution. In order to provide for just and
equitable contribution in circumstances in which the indemnification provided
for in Section 7(a) or 7(b) for any reason is held to be unavailable to or
insufficient to hold harmless an indemnified party under Section 7(a) or 7(b),
then each indemnifying party shall contribute to the aggregate losses, claims,
damages and liabilities (including any investigation, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claims asserted, but after deducting any
contribution received by any person entitled hereunder to contribution from any
person who may be liable for contribution) to which the indemnified party may be
subject in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other from
the offering of the Shares or, if such allocation is not permitted by applicable
law or indemnification is not available as a result of the indemnifying party
not having received notice as provided in Section 7 hereof, in such proportion
as is appropriate to reflect not only the relative benefits referred to above
but also the relative fault of the Company on the one hand and the Underwriters
on the other in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or
-23-
24
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Underwriters shall be deemed to be in
the same proportion as (x) the total proceeds from the offering (net of
underwriting discounts but before deducting expenses) received by the Company,
as set forth in the table on the cover page of the Prospectus, bear to (y) the
underwriting discounts received by the Underwriters, as set forth in the table
on the cover page of the Prospectus. The relative fault of the Company or the
Underwriters shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact related to information
supplied by the Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 8 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 which does not take account
of the equitable considerations referred to above. Notwithstanding the
provisions of this Section 8, (i) in no case shall any Underwriter (except as
may be provided in the Agreement Among Underwriters) be liable or responsible
for any amount in excess of the underwriting discount applicable to the Shares
purchased by such Underwriter hereunder; and (ii) the Company shall be liable
and responsible for any amount in excess of such underwriting discount;
provided, however, that no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Securities Act
or Section 20(a) of the Exchange Act shall have the same rights to contribution
as such Underwriter, and each person, if any, who controls the Company within
the meaning of the Section 15 of the Securities Act or Section 20(a) of the
Exchange Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to clauses (i) and (ii) in the
immediately preceding sentence of this Section 8. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section,
notify such party or parties from whom contribution may be sought, but the
omission so to notify such party or parties from whom contribution may be sought
shall not relieve the party or parties from whom contribution may be sought from
any other obligation it or they may have hereunder or otherwise than under this
Section. No party shall be liable for contribution with respect to any action,
suit, proceeding or claim settled without its written consent. The Underwriter's
obligations to contribute pursuant to this Section 8 are several in proportion
to their respective underwriting commitments and not joint.
9. Termination. This Agreement may be terminated with
respect to the Shares to be purchased on a Closing Date by the Representatives
by notifying the Company at any time:
(a) in the absolute discretion of the Representatives at
or before any Closing Date: (i) if on or prior to such date, any
domestic or international event or act or occurrence has materially
disrupted, or in the opinion of the Representatives will in the
future materially disrupt, the securities markets; (ii) if there
has occurred any new
-24-
25
outbreak or material escalation of hostilities or other calamity or
crisis the effect of which on the financial markets of the United
States is such as to make it, in the judgment of the
Representatives, inadvisable to proceed with the offering; (iii) if
there shall be such a material adverse change in general financial,
political or economic conditions or the effect of international
conditions on the financial markets in the United States is such as
to make it, in the judgment of the Representatives, inadvisable or
impracticable to market the Shares; (iv) if trading in the Shares
has been suspended by the Commission or trading generally on the
New York Stock Exchange, Inc., on the American Stock Exchange, Inc.
or the Nasdaq National Market has been suspended or limited, or
minimum or maximum ranges for prices for securities shall have been
fixed, or maximum ranges for prices for securities have been
required, by said exchanges or by order of the Commission, the NASD
or any other governmental or regulatory authority; (v) if a banking
moratorium has been declared by any state or Federal authority; or
(vi) if, in the judgment of the Representatives, there has occurred
a Material Adverse Effect; or
(b) at or before any Closing Date, that any of the
conditions specified in Section 5 shall not have been fulfilled
when and as required by this Agreement.
If this Agreement is terminated pursuant to any of its
provisions, the Company shall be under any liability to any Underwriter, and no
Underwriter shall be under any liability to the Company, except that (y) if this
Agreement is terminated by the Representatives or the Underwriters because of
any failure, refusal or inability on the part of the Company to comply with the
terms or to fulfill any of the conditions of this Agreement, the Company will
reimburse the Underwriters for all out-of-pocket expenses (including the
reasonable fees and disbursements of their counsel) incurred by them in
connection with the proposed purchase and sale of the Shares or in contemplation
of performing their obligations hereunder and (z) no Underwriter who shall have
failed or refused to purchase the Shares agreed to be purchased by it under this
Agreement, without some reason sufficient hereunder to justify cancellation or
termination of its obligations under this Agreement, shall be relieved of
liability to the Company or to the other Underwriters for damages occasioned by
its failure or refusal.
10. Substitution of Underwriters. If one or more of the
Underwriters shall fail (other than for a reason sufficient to justify the
cancellation or termination of this Agreement under Section 9) to purchase on
any Closing Date the Shares agreed to be purchased on such Closing Date by such
Underwriter or Underwriters, the Representatives may find one or more substitute
underwriters to purchase such Shares or make such other arrangements as the
Representatives may deem advisable or one or more of the remaining Underwriters
may agree to purchase such Shares in such proportions as may be approved by the
Representatives, in each case upon the terms set forth in this Agreement. If no
such arrangements have been made by the close of business on the business day
following such Closing Date,
(a) if the number of Shares to be purchased by the
defaulting Underwriters on such Closing Date shall not exceed 10%
of the Shares that all the Underwriters are obligated to purchase
on such Closing Date, then each of the nondefaulting
-25-
26
Underwriters shall be obligated to purchase such Shares on the
terms herein set forth in proportion to their respective
obligations hereunder; provided, that in no event shall the maximum
number of Shares that any Underwriter has agreed to purchase
pursuant to Section 1 be increased pursuant to this Section 10 by
more than one-ninth of such number of Shares without the written
consent of such Underwriter, or
(b) if the number of Shares to be purchased by the
defaulting Underwriters on such Closing Date shall exceed 10% of
the Shares that all the Underwriters are obligated to purchase on
such Closing Date, then the Company shall be entitled to one
additional business day within which it may, but is not obligated
to, find one or more substitute underwriters reasonably
satisfactory to the Representatives to purchase such Shares upon
the terms set forth in this Agreement.
In any such case, either the Representatives or the
Company shall have the right to postpone the applicable Closing Date for a
period of not more than five business days in order that necessary changes and
arrangements (including any necessary amendments or supplements to the
Registration Statement or Prospectus) may be effected by the Representatives and
the Company. If the number of Shares to be purchased on such Closing Date by
such defaulting Underwriter or Underwriters shall exceed 10% of the Shares that
all the Underwriters are obligated to purchase on such Closing Date, and none of
the nondefaulting Underwriters or the Company shall make arrangements pursuant
to this Section within the period stated for the purchase of the Shares that the
defaulting Underwriters agreed to purchase, this Agreement shall terminate with
respect to the Shares to be purchased on such Closing Date without liability on
the part of any nondefaulting Underwriter to the Company and without liability
on the part of the Company, except in both cases as provided in Sections 6(b),
7, 9 and 10. The provisions of this Section shall not in any way affect the
liability of any defaulting Underwriter to the Company or the nondefaulting
Underwriters arising out of such default. A substitute underwriter hereunder
shall become an Underwriter for all purposes of this Agreement.
11. Miscellaneous. The respective agreements,
representations, warranties, indemnities and other statements of the Company or
its officers and of the Underwriters set forth in or made pursuant to this
Agreement shall remain in full force and effect, regardless of any investigation
made by or on behalf of any Underwriter or the Company or any of the officers,
directors or controlling persons referred to in Sections 7 and 8 hereof, and
shall survive delivery of and payment for the Shares. The provisions of Sections
6(b), 7, 8 and 9 shall survive the termination or cancellation of this
Agreement.
This Agreement has been and is made for the benefit of the
Underwriters, the Company and their respective successors and assigns, and, to
the extent expressed herein, for the benefit of persons controlling any of the
Underwriters or the Company, and directors and officers of the Company, and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser of Shares from any Underwriter merely
because of such purchase.
All notices and communications hereunder shall be in
writing and mailed or
-26-
27
delivered or by telephone or telegraph if subsequently confirmed in writing, (a)
if to the Representatives, c/o CIBC World Markets Corp., CIBC Xxxxxxxxxxx Xxxxx,
Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X.
XxXxxxxxxx, with a copy to Xxxxxx, Xxxx & Xxxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxxxx, and (b) if to the Company, to
its agent for service as such agent's address appears on the cover page of the
Registration Statement with a copy to Xxxxx & Xxxxxx, L.L.P., Xxx Xxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxx. Any such notices
or communications shall take effect when so delivered personally, or if mailed,
on the date of receipt thereof; or if by telephone or telegraph, when written
confirmation is delivered personally or if such confirmation is mailed, on the
date of receipt thereof. The Company shall be entitled to act and rely upon any
notice or communication given or made on behalf of the Underwriters by CIBC
World Markets Corp. on behalf of the Representatives.
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflict of laws.
This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
-27-
28
Please confirm that the foregoing correctly sets forth the
agreement among us.
Very truly yours,
MCM CAPITAL GROUP, INC.
By:
--------------------------------
Title:
Confirmed:
CIBC WORLD MARKETS CORP.
Acting severally on behalf of itself
and as representative of the several
Underwriters named in Schedule I annexed
hereto.
By: CIBC WORLD MARKETS CORP.
By:
------------------------
Title:
29
SCHEDULE I
Number of Firm Shares to be Purchased
Name From the Company
---- ----------------
CIBC World Markets Corp.
U.S. Bancorp Xxxxx Xxxxxxx Inc.
[others]
Total
30
SCHEDULE II
SUBSIDIARIES OF THE COMPANY
Midland Credit Management, Inc., a Kansas corporation
Midland Receivables 98-1 Corporation, a Delaware corporation
Midland Funding 98-A Corporation, a Delaware corporation
Midland Financial Services, Inc., a Kansas corporation
31
SCHEDULE III
[FORM OF LOCK-UP AGREEMENT FOR OFFICERS, DIRECTORS AND STOCKHOLDERS]
__________ __, 1999
CIBC World Markets Corp.
U.S. Bancorp Xxxxx Xxxxxxx Inc.
c/o CIBC World Markets Corp.
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The undersigned understands and agrees as follows:
1. CIBC World Markets Corp. ("CIBC") and U.S. Bancorp Xxxxx
Xxxxxxx Inc. ("Piper") propose to enter into an Underwriting Agreement
(the "Underwriting Agreement") with MCM Capital Group, Inc., a Delaware
corporation (the "Company"), providing for the public offering (the
"Public Offering") by the several Underwriters, including CIBC and
Piper (the "Underwriters"), of ___________ shares (the "Shares") of the
Common Stock, $0.01 par value, of the Company (the "Common Stock"), and
in connection therewith, the Company has filed a registration
statement, File No. 333-77483 (the "Registration Statement") with the
Securities and Exchange Commission.
2. After consultation, the Company and CIBC and Piper, acting
as representatives of the Underwriters for the Public Offering, have
agreed that sales by the officers, directors and stockholders of the
Company within the 180-day period after the date of effectiveness of
the Registration Statement could have an adverse effect on the market
price for the Common Stock and that the public to whom the Common Stock
is being offered should be protected for a reasonable time from the
impact of such sales.
3. It is in the best interest of the Company and its officers,
directors and stockholders to have a successful public offering and
stable and orderly public market thereafter.
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 CIBC on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 180 days after the date of the final prospectus relating
to the Public Offering, (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, or otherwise transfer or dispose
of, directly or indirectly, any equity securities of the Company or any
securities convertible into or exercisable or exchangeable for equity securities
of
32
the Company 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
equity securities of the Company, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of Common Stock or other
securities, in cash or otherwise.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflict of
laws.
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.
Very truly yours,
-----------------------------------
(Name)
-----------------------------------
-----------------------------------
(Address)
