6,565,000 Shares
NCO GROUP, INC.
Common Stock
Underwriting Agreement
dated May [___], 1998
Table of Contents
Section 1. Representations and Warranties.................................................................2
A. Representations and Warranties of the Company
and the Significant Selling Shareholders................................................2
Compliance with Registration Requirements..................................................2
Offering Materials Furnished to Underwriters...............................................3
Distribution of Offering Material By the Company...........................................3
The Underwriting Agreement.................................................................3
Authorization of the Common Shares.........................................................4
No Applicable Registration or Other Similar Rights.........................................4
No Material Adverse Change.................................................................4
Independent Accountants....................................................................4
Preparation of the Financial Statements....................................................4
Incorporation and Good Standing of the Company and its Subsidiaries........................5
Capitalization and Other Capital Stock Matters.............................................6
Stock Exchange Listing.....................................................................6
Non-Contravention of Existing Instruments;
No Further Authorizations or Approvals Required.........................................6
No Material Actions or Proceedings.........................................................7
Intellectual Property Rights...............................................................7
All Necessary Permits, etc.................................................................7
Title to Properties........................................................................8
Tax Law Compliance.........................................................................8
Company Not an "Investment Company"........................................................8
Insurance..................................................................................8
No Price Stabilization or Manipulation.....................................................8
Related Party Transactions.................................................................9
No Unlawful Contributions or Other Payments................................................9
Regulatory Compliance......................................................................9
Recent Acquisitions........................................................................9
B. Representations and Warranties of the Selling Shareholders..................................10
The Underwriting Agreement.................................................................10
The Custody Agreement and Power of Attorney................................................10
Title to Common Shares to be Sold; All Authorizations Obtained.............................10
Delivery of the Common Shares to be Sold...................................................11
Non-Contravention; No Further Authorizations or Approvals Required.........................11
No Registration or Other Similar Rights....................................................11
No Further Consents, etc...................................................................11
Disclosure Made by Such Selling Shareholder in the Prospectus..............................12
No Price Stabilization or Manipulation.....................................................12
Confirmation of Company Representations and Warranties.....................................12
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Section 2. Purchase, Sale and Delivery of the Common Shares...............................................12
The Firm Common Shares.....................................................................12
The First Closing Date.....................................................................12
The Optional Common Shares; the Second Closing Date........................................13
Public Offering of the Common Shares.......................................................14
Payment for the Common Shares..............................................................14
Delivery of the Common Shares..............................................................14
Delivery of Prospectus to the Underwriters.................................................15
Section 3. Additional Covenants...........................................................................15
Underwriters' Review of Proposed Amendments and Supplements................................15
Securities Act Compliance..................................................................15
Amendments and Supplements to the Prospectus
and Other Securities Act Matters........................................................16
Copies of any Amendments and Supplements to the Prospectus.................................16
Blue Sky Compliance........................................................................16
Use of Proceeds............................................................................16
Transfer Agent.............................................................................17
Earnings Statement.........................................................................17
Periodic Reporting Obligations.............................................................17
Agreement Not To Offer or Sell Additional Securities.......................................17
Future Reports to the Underwriters.........................................................17
Exchange Act Compliance....................................................................17
Covenants of the Selling Shareholders......................................................18
Agreement Not to Offer or Sell Additional Securities.......................................18
Delivery of Forms W-8 and W-9..............................................................18
Section 4. Payment of Expenses............................................................................18
Section 5. Conditions of the Obligations of the Underwriters..............................................19
Accountants' Comfort Letter................................................................20
Compliance with Registration Requirements; No Stop Order;
No Objection from NASD..................................................................20
No Material Adverse Change ................................................................21
Opinion of Counsel for the Company.........................................................21
Opinion of Counsel for the Underwriters....................................................21
Officers' Certificate......................................................................21
Bring-down Comfort Letter..................................................................22
Opinion of Counsel for the Selling Shareholders............................................22
Selling Shareholders' Certificate..........................................................22
Selling Shareholders' Documents............................................................22
Lock-Up Agreement from Certain Shareholders
of the Company Other Than Selling Shareholders..........................................23
Additional Documents.......................................................................23
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Section 6. Reimbursement of Underwriters' Expenses....................................................23
Section 7. Effectiveness of this Agreement............................................................23
Section 8. Indemnification............................................................................24
Indemnification of the Underwriters........................................................24
Indemnification of the Company, its Directors and Officers.................................26
Notifications and Other Indemnification Procedures.........................................26
Settlements................................................................................27
Section 9. Contribution...............................................................................28
Section 10. Default of One or More of the Several Underwriter..........................................29
Section 11. Termination of this Agreement..............................................................30
Section 12. Representations and Indemnities to Survive Delivery........................................30
Section 13 Notices....................................................................................31
Section 14. Successors.................................................................................32
Section 15. Partial Unenforceability...................................................................32
Section 16. Governing Law Provisions...................................................................32
Section 17. Failure of One or More of the Selling Shareholders to Sell and
Deliver Common Shares......................................................................32
Section 18. General Provisions.........................................................................33
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Underwriting Agreement
May [___], 1998
NATIONSBANC XXXXXXXXXX SECURITIES LLC
BT ALEX. XXXXX INCORPORATED
XXXXXX XXXXXXXXXX XXXXX INC.
THE XXXXXXXX-XXXXXXXX COMPANY, LLC
c/o NATIONSBANC XXXXXXXXXX SECURITIES LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Introductory. NCO Group, Inc., a Pennsylvania corporation (the
"Company), proposes to issue and sell to the several underwriters named in
Schedule A (the "Underwriters") an aggregate of 5,800,000 shares of its Common
Stock, no par value (the "Common Stock"); and the shareholders of the Company
named in Schedule B (collectively, the "Selling Shareholders") severally propose
to sell to the Underwriters an aggregate of 765,000 shares of Common Stock. The
5,800,000 shares of Common Stock to be sold by the Company and the 765,000
shares of Common Stock to be sold by the Selling Shareholders are collectively
called the "Firm Common Shares". In addition, the Company has granted to the
Underwriters an option to purchase up to an additional 887,233 shares of Common
Stock and certain of the Selling Shareholders have severally granted to the
Underwriters an option to purchase up to an additional 97,517 shares of Common
Stock, each such Selling Shareholder selling up to the amount set forth opposite
such Selling Shareholder's name in Schedule B, all as provided in Section 2. The
additional 887,233 shares to be sold by the Company and the additional 97,517
shares to be sold by certain of the Selling Shareholders pursuant to such option
are collectively called the "Optional Common Shares". The Firm Common Shares
and, if and to the extent such option is exercised, the Optional Common Shares
are collectively called the "Common Shares".
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No.
333-[___]), which contains a form of prospectus to be used in connection with
the public offering and sale of the Common Shares. Such registration statement,
as amended, including the financial statements, exhibits and schedules thereto,
in the form in which it was declared effective by the Commission under the
Securities Act of 1933 and the rules and regulations promulgated thereunder
(collectively, the "Securities Act"), including all documents incorporated or
deemed to be incorporated by reference therein and any information deemed to be
a part thereof at the time of effectiveness pursuant to Rule 430A or Rule 434
under the Securities Act or the Securities Exchange Act of 1934 and the rules
and regulations promulgated thereunder (collectively, the "Exchange Act"), is
called the "Registration Statement". Any registration statement filed by the
Company pursuant to Rule 462(b) under the Securities Act is called the "Rule
462(b) Registration Statement", and from and after the date and time of filing
of the Rule 462(b) Registration Statement the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. Such prospectus, in the
form first used by the Underwriters to confirm sales of the Common Shares, is
called the "Prospectus"; provided, however, if the Company has, with the consent
of NationsBanc Xxxxxxxxxx Securities LLC, elected to rely upon Rule 434 under
the Securities Act, the term "Prospectus" shall mean the Company's prospectus
subject to completion (each, a "preliminary prospectus") dated May ___, 1998
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(such preliminary prospectus is called the "Rule 434 preliminary prospectus"),
together with the applicable term sheet (the "Term Sheet") prepared and filed by
the Company with the Commission under Rules 434 and 424(b) under the Securities
Act and all references in this Agreement to the date of the Prospectus shall
mean the date of the Term Sheet. All references in this Agreement to the
Registration Statement, the Rule 462(b) Registration Statement, a preliminary
prospectus, the Prospectus or the Term Sheet, or any amendments or supplements
to any of the foregoing, shall include any copy thereof filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
System ("XXXXX"). All references in this Agreement to financial statements and
schedules and other information which is "contained," "included" or "stated" in
the Registration Statement or the Prospectus (and all other references of like
import) shall be deemed to mean and include all such financial statements and
schedules and other information which is or is deemed to be incorporated by
reference in the Registration Statement or the Prospectus, as the case may be;
and all references in this Agreement to amendments or supplements to the
Registration Statement or the Prospectus shall be deemed to mean and include the
filing of any document under the Exchange Act which is or is deemed to be
incorporated by reference in the Registration Statement or the Prospectus, as
the case may be.
The Company and each of the Selling Shareholders hereby confirm their
respective agreements with the Underwriters as follows:
Section 1. Representations and Warranties of the Company and the
Selling Shareholders.
A. Representations and Warranties of the Company and the Selling
Shareholders. Each of the Company and, to the best of their knowledge, each of
the Significant Selling Shareholders (as defined in Schedule B hereto) hereby
represents, warrants and covenants to each Underwriter as follows:
(a) Compliance with Registration Requirements. The Registration
Statement and any Rule 462(b) Registration Statement have been declared
effective by the Commission under the Securities Act. The Company has
complied to the Commission's satisfaction with all requests of the
Commission for additional or supplemental information. No stop order
suspending the effectiveness of the Registration Statement or any Rule
462(b) Registration Statement is in effect and no proceedings for such
2
purpose have been instituted or are pending or, to the best knowledge
of the Company or any of the Significant Selling Shareholders, are
contemplated or threatened by the Commission.
Each preliminary prospectus and the Prospectus when filed
complied in all material respects with the Securities Act and, if filed
by electronic transmission pursuant to XXXXX (except as may be
permitted by Regulation S-T under the Securities Act), was identical to
the copy thereof delivered to the Underwriters for use in connection
with the offer and sale of the Common Shares. Each of the Registration
Statement, any Rule 462(b) Registration Statement and any
post-effective amendment thereto, at the time it became effective and
at all subsequent times, complied and will comply in all material
respects with the Securities Act and did not and 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, in light of the circumstances under which they were made,
not misleading. The Prospectus, as amended or supplemented, as of its
date and at all subsequent times, 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. The
representations and warranties set forth in the two immediately
preceding sentences do not apply to statements in or omissions from the
Registration Statement, any Rule 462(b) Registration Statement, or any
post-effective amendment thereto, or the Prospectus, or any amendments
or supplements thereto, made in reliance upon and in conformity with
information furnished to the Company in writing by the Underwriters
expressly for use therein. There are no contracts or other documents
required to be described in the Prospectus or to be filed as exhibits
to the Registration Statement which have not been described or filed as
required.
(b) Offering Materials Furnished to Underwriters. Company has
delivered to the Underwriters four complete manually signed copies of
the Registration Statement and of each consent and certificate of
experts filed as a part thereof, and conformed copies of the
Registration Statement (without exhibits) and preliminary prospectuses
and the Prospectus, as amended or supplemented, in such quantities and
at such places as the Underwriters have reasonably requested.
(c) Distribution of Offering Material By the Company. The
Company has not distributed and will not distribute, prior to the later
of the Second Closing Date (as defined below) and the completion of the
Underwriters' distribution of the Common Shares, any offering material
in connection with the offering and sale of the Common Shares other
than a preliminary prospectus, the Prospectus or the Registration
Statement.
(d) The Underwriting Agreement. This Agreement has been duly
authorized, executed and delivered by, and is a valid and binding
agreement of, the Company, enforceable in accordance with its terms,
except as rights to indemnification hereunder may be limited by
applicable law and public policy and except as the enforcement hereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the rights and remedies of
creditors or by general equitable principles.
3
(e) Authorization of the Common Shares. The Common Shares to be
purchased by the Underwriters from the Company have been duly
authorized for issuance and sale pursuant to this Agreement and, when
issued and delivered by the Company pursuant to this Agreement and paid
for in the manner set forth in this Agreement, will be validly issued,
fully paid and nonassessable.
(f) No Applicable Registration or Other Similar Rights. There
are no persons with registration or other similar rights to have any
equity or debt securities registered for sale under the Registration
Statement or included in the offering contemplated by this Agreement,
other than the Selling Shareholders with respect to the Common Shares
included in the Registration Statement, except for such rights as have
been duly waived.
(g) No Material Adverse Change. Except as otherwise disclosed or
incorporated by reference in the Prospectus, subsequent to the
respective dates as of which information is given in the Prospectus:
(i) there has been no material adverse change, or any development that
could reasonably be expected to result in a material adverse change, in
the condition, financial or otherwise, or in the earnings, business,
operations or prospects, whether or not arising from transactions in
the ordinary course of business, of the Company and its subsidiaries,
considered as one entity (any such change is called a "Material Adverse
Change"); (ii) the Company and its subsidiaries, considered as one
entity, have not incurred any material liability or obligation,
indirect, direct or contingent, not in the ordinary course of business
nor entered into any material transaction or agreement not in the
ordinary course of business; and (iii) there has been no dividend or
distribution of any kind declared, paid or made by the Company or,
except for dividends paid to the Company or other subsidiaries, any of
its subsidiaries on any class of capital stock or repurchase or
redemption by the Company or any of its subsidiaries of any class of
capital stock.
(h) Independent Accountants. Coopers & Xxxxxxx L.L.P., who have
expressed their opinion with respect to the financial statements of the
Company (which term as used in this Agreement includes the related
notes thereto) included or incorporated by reference in the
Registration Statement and the Prospectus, are independent public or
certified public accountants as required by the Securities Act and the
Exchange Act. Xxxxxx Xxxxxxxx LLP, who have expressed their opinion
with respect to the financial statements of FCA International Ltd.
("FCA") and MedSource, Inc. ("MedSource") (which term as used in this
Agreement includes the related notes thereto) included or incorporated
by reference in the Registration Statement and the Prospectus, are
independent public or certified public accountants as required by the
Securities Act and the Exchange Act.
(i) Preparation of the Financial Statements. The financial
statements included or incorporated by reference in the Registration
Statement and the Prospectus present fairly in all material respects
the
4
consolidated financial position of the Company and its subsidiaries as
of and at the dates indicated and the results of their operations and
cash flows for the periods specified. The financial statements included
or incorporated by reference in the Registration Statement and the
Prospectus present fairly in all material respects the consolidated
financial positions of FCA and MedSource as of and at the dates
indicated and the results of their respective operations and cash flows
for the periods specified. Such financial statements have been prepared
in conformity with generally accepted accounting principles as applied
in the United States applied on a consistent basis throughout the
periods involved, except as may be expressly stated in the related
notes thereto. No other financial statements are required to be
included or incorporated by reference in the Registration Statement.
The financial data set forth in the Prospectus under the captions
"Prospectus Summary--Summary Financial Data", "Selected Financial Data"
and "Capitalization" fairly present the information set forth therein
on the basis stated in the Registration Statement, except as it relates
to pro forma and as adjusted information. The pro forma consolidated
financial statements of the Company and its subsidiaries and the
related notes thereto included under the caption "Prospectus
Summary--Summary Financial Data", "Selected Financial Data",
"Capitalization" and elsewhere in the Prospectus and in the
Registration Statement have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements and have been properly presented on the bases described
therein, and in the opinion of the Company, the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances
referred to therein.
(j) Incorporation and Good Standing of the Company and its
Subsidiaries. Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation and has
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus and, in the
case of the Company, to enter into and perform its obligations under
this Agreement. Each of the Company and each subsidiary is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except for such jurisdictions where the failure to
so qualify or to be in good standing would not result in a Material
Adverse Change. All of the issued and outstanding capital stock of each
subsidiary has been duly authorized and validly issued, is fully paid
and nonassessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance or claim, except that the stock of its
subsidiaries is pledged to Mellon Bank Corporation to secure the
Company's obligations under the Revolving Credit Agreement (the "Credit
Agreement") with Mellon Bank Corporation, as lender, dated March 23,
1998. The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than (i) the
subsidiaries listed in Exhibit 21.1 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997 and (ii) FCA
Acquisition Corporation and its subsidiaries, including FCA.
5
(k) Capitalization and Other Capital Stock Matters. The
authorized, issued and outstanding capital stock of the Company is as
set forth in the Prospectus under the caption "Capitalization" (other
than for subsequent issuances, if any, pursuant to employee benefit
plans described in the Prospectus or upon exercise of outstanding
options or warrants or conversion of convertible notes described in the
Prospectus). The Common Stock (including the Common Shares) conforms in
all material respects to the description thereof contained in the
Prospectus. All of the issued and outstanding shares of Common Stock
(including the shares of Common Stock owned by Selling Shareholders)
have been duly authorized and validly issued, are fully paid and
nonassessable and have been issued in compliance in all material
respects with federal and state securities laws. None of the
outstanding shares of Common Stock were issued in violation of any
preemptive rights, rights of first refusal or other similar rights to
subscribe for or purchase securities of the Company. There are no
authorized or outstanding options, warrants, preemptive rights, rights
of first refusal or other rights to purchase, or equity or debt
securities convertible into or exchangeable or exercisable for, any
capital stock of the Company or any of its subsidiaries other than
those described in the Prospectus. The description of the Company's
stock option, stock bonus and other stock plans or arrangements, and
the options or other rights granted thereunder, set forth in the
Prospectus accurately and fairly presents the information required to
be shown with respect to such plans, arrangements, options and rights.
(l) Stock Exchange Listing. The Common Stock (including the
Common Shares) is registered pursuant to Section 12(g) of the Exchange
Act and is listed on the Nasdaq National Market, and the Company has
taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act
or delisting the Common Stock from the Nasdaq National Market, nor has
the Company received any notification that the Commission or the
National Association of Securities Dealers, Inc. (the "NASD") is
contemplating terminating such registration or listing.
(m) Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required. Neither the Company nor any of
its subsidiaries is in violation of its articles of s Required
incorporation or by-laws or is in default (or, with the giving of
notice or lapse of time, would be in default) ("Default") under any
indenture, mortgage, loan or credit agreement, note, contract,
franchise, lease or other instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them may be bound
(including, without limitation, the Credit Agreement), or to which any
of the property or assets of the Company or any of its subsidiaries is
subject (each, an "Existing Instrument"), except for such Defaults as
would not, individually or in the aggregate, result in a Material
Adverse Change. The Company's execution, delivery and performance of
this Agreement and consummation of the transactions contemplated hereby
and by the Prospectus (i) have been duly authorized by all necessary
corporate action and will not result in any violation of the provisions
of the articles of incorporation or by-laws of the Company or any
subsidiary, (ii) will not conflict with or constitute a breach of, or
Default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
6
of its subsidiaries pursuant to, or require the consent of any other
part to, any Existing Instrument, except for such conflicts, breaches,
Defaults, liens, charges or encumbrances as would not result in a
Material Adverse Change and (iii) will not result in any violation of
any law, administrative regulation or administrative or court decree
applicable to the Company or any subsidiary. No consent, approval,
authorization or other order of, or registration or filing with, any
court or other governmental or regulatory authority or agency, is
required for the Company's execution, delivery and performance of this
Agreement and consummation of the transactions contemplated hereby and
by the Prospectus, except such as have been obtained or made by the
Company and are in full force and effect under the Securities Act,
applicable state securities or blue sky laws and from the NASD.
(n) No Materials Actions or Proceedings. There are no legal or
governmental actions, suits or proceedings pending or, to the best of
the Company's knowledge, threatened (i) against or affecting the
Company or any of its subsidiaries, (ii) which has as the subject
thereof any officer or director of, or property owned or leased by, the
Company or any of its subsidiaries or (iii) relating to environmental
or discrimination matters, where in any such case (A) there is a
reasonable possibility that such action, suit or proceeding might be
determined adversely to the Company or such subsidiary and (B) any such
action, suit or proceeding, if so determined adversely, would
reasonably be expected to result in a Material Adverse Change or
adversely affect the consummation of the transactions contemplated by
this Agreement. No material labor dispute with the employees of the
Company or any of its subsidiaries exists or, to the best of the
Company's knowledge, is threatened or imminent.
(o) Intellectual Property Rights. The Company and its
subsidiaries own or possess sufficient trademarks, trade names, patent
rights, copyrights, licenses, approvals, trade secrets and other
similar rights (collectively, "Intellectual Property Rights")
reasonably necessary to conduct their businesses as now conducted; and
the expected expiration of any of such Intellectual Property Rights
would not result in a Material Adverse Change. Neither the Company nor
any of its subsidiaries has received any notice of infringement or
conflict with asserted Intellectual Property Rights of others, which
infringement or conflict, if the subject of an unfavorable decision,
would result in a Material Adverse Change.
(p) All Necessary Permits, etc. The Company and each subsidiary
possess such valid and current certificates, authorizations or permits
issued by the appropriate state, federal or foreign regulatory agencies
or bodies necessary to conduct their respective businesses except where
the failure to obtain or maintain any such certificate, authorization
or permit would not, individually or in the aggregate, result in a
Material Adverse Change, and neither the Company nor any subsidiary has
received any notice of proceedings relating to the revocation or
modification of, or non-compliance with, any such certificate,
authorization or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in
a Material Adverse Change.
7
(q) Title to Properties. The Company and each of its
subsidiaries have good and marketable title to all the properties and
assets reflected as owned in the financial statements referred to in
Section 1(A) (i) above (or elsewhere in the Prospectus), in each case
free and clear of any security interests, mortgages, liens,
encumbrances, equities, claims and other defects, except such as (i)
are reflected in the financial statements or elsewhere in the
Prospectus or (ii) do not materially and adversely affect the value of
such property and do not materially interfere with the use made or
proposed to be made of such property by the Company or such
subsidiary. The real property, improvements, equipment and personal
property held under lease by the Company or any subsidiary are held
under valid and enforceable leases, with such exceptions as are not
material and do not materially interfere with the use made or proposed
to be made of such real property, improvements, equipment or personal
property by the Company or such subsidiary.
(r) Tax law Compliance. The Company and its subsidiaries have
filed all necessary federal, state and foreign income and franchise tax
returns (or have properly requested extensions thereof) and have paid
all taxes required to be paid by any of them and, if due and payable,
any related or similar assessment, fine or penalty levied against any
of them (except as may be being contested in good faith and by
appropriate proceedings and adequately reserved for in the financial
statements of the Company). The Company has made adequate charges,
accruals and reserves in the applicable financial statements referred
to in Section 1(A) (i) above in respect of all federal, state and
foreign income and franchise taxes for all periods as to which the tax
liability of the Company or any of its subsidiaries has not been
finally determined.
(s) Company Not an "Investment Company". The Company has been
advised of the rules and requirements under the Investment Company Act
of 1940, as amended (the "Investment Company Act"). The Company is not,
and after receipt of payment for the Common Shares will not be, an
"investment company" within the meaning of Investment Company Act and
will conduct its business in a manner so that it will not become
subject to the Investment Company Act.
(t) Insurance. Each of the Company and its subsidiaries are
insured by recognized, financially sound and reputable institutions
with policies in such amounts and with such deductibles and covering
such risks as are generally deemed adequate and customary for their
businesses including, but not limited to, policies covering real and
personal property owned or leased by the Company and its subsidiaries
against theft, damage, destruction, acts of vandalism and earthquakes.
The Company has no reason to believe that it or any subsidiary will not
be able (i) to renew its existing insurance coverage as and when such
policies expire or (ii) to obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its business
as now conducted and at a cost that would not result in a Material
Adverse Change. Neither of the Company nor any subsidiary has been
denied any insurance coverage which it has sought or for which it has
applied.
(u) No Price Stabilization or Manipulation. The Company has not
taken and will not take, directly or indirectly, prior to the later of
(i) the Second Closing Date and (ii) the Underwriters' distribution of
the Common Shares any action designed to or that might be reasonably
expected to cause or result in
8
stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Common Shares.
(v) Related Party Transactions. There are no related-party
transactions involving the Company or any subsidiary on the one hand,
and any other person required to be described in the Prospectus which
have not been described or incorporated by reference as required.
(w) Exchange Act Compliance. The documents incorporated or
deemed to be incorporated by reference in the Prospectus, at the time
they were or hereafter are filed with the Commission, complied and will
comply in all material respects with the requirements of the Exchange
Act, and, when read together with the other information in the
Prospectus, at the time the Registration Statement and any amendments
thereto become effective and at the First Closing Date and the Second
Closing Date, as the case may be, will not contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(x) No Unlawful Contributions or Other Payments. To the
Company's knowledge, neither the Company nor any of its subsidiaries
has made any contribution or other payment to any official of, or
candidate for, any federal, state or foreign office in violation of any
law or of the character required to be disclosed in the Prospectus.
(y) Regulatory Compliance. The Company has not been advised, and
has no reason to believe, that either it or any of its subsidiaries is
not conducting business in compliance with all applicable laws, rules
and regulations of the jurisdictions in which it is conducting
business, including, without limitation, the federal Fair Debt
Collection Practices Act, the federal Fair Credit Reporting Act, the
federal Telemarketing and Consumer Fraud and Abuse Prevention Act of
1994, the federal Telephone Consumer Protection Act of 1991, related
state and local statutes and regulations, all applicable international
laws, rules and regulations and all applicable local, state and federal
environmental laws and regulations, except where failure to be so in
compliance would not result in a Material Adverse Change.
(z) Recent Acquisitions. The FCA Tender Offer (as such term is
defined in the Prospectus) has been consummated, and, as a result, the
Company, directly or indirectly, owns or controls at least two-thirds
of the issued and outstanding capital stock of FCA free and clear of
any security interest, mortgage, pledge, lien, encumbrance or to the
best of the Company's or any of the Significant Selling Shareholder's
knowledge, any pending or threatened claim. The agreements necessary
to effect the acquisitions of FCA, MedSource, and each other company
included in the Company's pro forma balance sheet included in the
Prospectus and Registration Statement have been duly authorized,
executed and
9
delivered by each of the parties thereto and constitute the valid,
legal and binding agreements of each such party.
Any certificate signed by an officer of the Company and delivered to
the Underwriters or to counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the matters
set forth therein.
B. Representations and Warranties of the Selling Shareholders. Each
Selling Shareholder, severally and not jointly, represents, warrants
and covenants to each Underwriter as follows:
(a) The Underwriting Agreement. This Agreement has been duly
authorized, executed and delivered by or on behalf of such Selling
Shareholder and is a valid and binding agreement of such Selling
Shareholder, enforceable in accordance with its terms, except as rights
to indemnification hereunder may be limited by applicable law and
public policy and except as the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the rights and remedies of creditors or
by general equitable principles.
(b) The Custody Agreement and Power of Attorney. Each of the (i)
Custody Agreement signed by such Selling Shareholder and Xxxxxxx X.
Xxxxxxx, as custodian (the "Custodian"), relating to the deposit of the
Common Shares to be sold by such Selling Shareholder (the "Custody
Agreement") and (ii) Power of Attorney appointing certain individuals
named therein as such Selling Shareholder's attorneys-in-fact (each, an
"Attorney-in-Fact") to the extent set forth therein relating to the
transactions contemplated hereby and by the Prospectus (the "Power of
Attorney"), of such Selling Shareholder has been duly authorized,
executed and delivered by such Selling Shareholder and is a valid and
binding agreement of such Selling Shareholder, enforceable in
accordance with its terms, except as rights to indemnification
thereunder may be limited by applicable law and except as the
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles.
(c) Title to Common Shares to be Sold; All Authorizations
Obtained. Such Selling Shareholder has, or has the right to acquire,
and on the First Closing Date and the Second Closing Date (as defined
below) will have, good and valid title to all of the Common Shares
which may be sold by such Selling Shareholder pursuant to this
Agreement on such date and the legal right and power, and all
authorizations and approvals required by law and under its charter or
by-laws, partnership agreement, trust agreement or other organizational
documents, as applicable, to enter into this Agreement and its Custody
Agreement and Power of Attorney, to sell, transfer and deliver all of
the Common Shares which may be sold
10
by such Selling Shareholder pursuant to this Agreement and to comply
with its other obligations hereunder and thereunder.
(d) Delivery of the Common Shares to be Sold. Delivery of the
Common Shares which are sold by such Selling Shareholder pursuant to
this Agreement will pass good and valid title to such Common Shares,
free and clear of any security interest, mortgage, pledge, lien,
encumbrance or other claim.
(e) Non-Contravention; No Further Authorizations or Approvals
Required. 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 and the Power of Attorney
will not contravene or conflict with, result in a breach of, or
constitute a Default under, or require the consent of any other party
to, the charter or by-laws, partnership agreement, trust agreement or
other organizational documents, as applicable, of such Selling
Shareholder or any other material agreement or instrument to which such
Selling Shareholder is a party or by which it is bound or under which
it is entitled to any right or benefit, any provision of applicable law
or any judgment, order, decree or regulation applicable to such Selling
Shareholder of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over such Selling
Shareholder. No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental authority
or agency, is required for the consummation by such Selling Shareholder
of the transactions contemplated in this Agreement, except such as have
been obtained or made and are in full force and effect under the
Securities Act, applicable state securities or blue sky laws and from
the NASD.
(f) No Registration or Other Similar Rights. Such Selling
Shareholder does not have any registration or other similar rights to
have any equity or debt securities registered for sale by the Company
under the Registration Statement or included in the offering
contemplated by this Agreement, except for such rights as are described
or incorporated by reference in the Prospectus.
(g) No Further Consents, etc. Except for the (i) exercise by
such Selling Shareholder of certain registration rights pursuant to the
Registration Rights Agreement dated as of [___] (which registration
rights have been duly exercised pursuant thereto), (ii) consent of such
Selling Shareholder to the respective number of Common Shares to be
sold by all of the Selling Shareholders pursuant to this Agreement and
(iii) waiver by certain other holders of Common Stock of certain
registration rights pursuant to such Registration Rights Agreement, no
consent, approval or waiver is required under any instrument or
agreement to which such Selling Shareholder is a party or by which it
is bound or under which it is entitled to any right or benefit, in
connection with the offering, sale or purchase by the Underwriters of
any of the Common Shares which may be sold by such Selling Shareholder
under this Agreement or the consummation by such Selling Shareholder of
any of the other transactions contemplated hereby.
11
(h) Disclosure Made by Such Selling Shareholder in the
Prospectus. All information furnished by or on behalf of such Selling
Shareholder in writing expressly for use in the Registration Statement
and Prospectus is, and on the First Closing Date and the Second Closing
Date will be, true, correct, and complete in all material respects, and
does not, and on the First Closing Date and the Second Closing Date
will not, contain any untrue statement of a material fact or omit to
state any material fact necessary to make such statements, in light of
the circumstances under which they were made, not misleading. Such
Selling Shareholder confirms as accurate the number of shares of Common
Stock set forth opposite such Selling Shareholder's name in the
Prospectus under the caption "Principal and Selling Shareholders" (both
prior to and after giving effect to the sale of the Common Shares).
(i) No Price Stabilization or Manipulation. Such Selling
Shareholder has not taken and will not take, directly or indirectly,
prior to the later of (i) the Second Closing Date and (ii) the
Underwriters' distribution of the Common Shares any action designed to
or that might be reasonably expected to cause or result in
stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Common Shares.
(j) Confirmation of Company Representations and Warranties. Such
Selling Shareholder is not aware that any of the representations and
warranties of the Company contained in Section 1(A) hereof is untrue or
inaccurate in any material respect.
Any certificate signed by or on behalf of any Selling Shareholder and
delivered to the Underwriters or to counsel for the Underwriters shall be deemed
to be a representation and warranty by such Selling Shareholder to each
Underwriter as to the matters covered thereby.
Section 2. Purchase, Sale and Delivery of the Common Shares.
The Firm Common Shares. Upon the terms herein set forth, (i) the
Company agrees to issue and sell to the several Underwriters an aggregate of
5,800,000 Firm Common Shares and (ii) the Selling Shareholders agree to sell to
the several Underwriters an aggregate of 765,000 Firm Common Shares, each
Selling Shareholder selling the number of Firm Common Shares set forth opposite
such Selling Shareholder's name on Schedule B. On the basis of the
representations, warranties and agreements herein contained, and upon the terms
but subject to the conditions herein set forth, the Underwriters agree,
severally and not jointly, to purchase from the Company and the Selling
Shareholders the respective number of Firm Common Shares set forth opposite
their names on Schedule A. The purchase price per Firm Common Share to be paid
by the several Underwriters to the Company and the Selling Shareholders shall be
$[___] per share.
The First Closing Date. Delivery of certificates for the Firm Common
Shares to be purchased by the Underwriters and payment therefor shall be made at
the offices of NationsBanc Xxxxxxxxxx Securities LLC, 000 Xxxxxxxxxx Xxxxxx, Xxx
00
Xxxxxxxxx, Xxxxxxxxxx (or such other place as may be agreed to by the Company
and NationsBanc Xxxxxxxxxx Securities LLC, as Representative of the
Underwriters) at 6:00 a.m. San Francisco time, on [___], or such other time and
date not later than 10:30 a.m. San Francisco time , on [___] as the Underwriters
shall designate by notice to the Company (the time and date of such closing are
called the "First Closing Date"). The Company and the Selling Shareholders
hereby acknowledge that circumstances under which the Underwriters may provide
notice to postpone the First Closing Date as originally scheduled include, but
are in no way limited to, any determination by the Company, the Selling
Shareholders or the Underwriters to recirculate to the public copies of an
amended or supplemented Prospectus or a delay as contemplated by the provisions
of Section 10.
The Optional Common Shares; the Second Closing Date. In addition, on
the basis of the representations, warranties and agreements herein contained,
and upon the terms but subject to the conditions herein set forth, the Company
and the Selling Shareholders severally and not jointly hereby grant an option to
the Underwriters to purchase, severally and not jointly, up to an aggregate of
887,233 Optional Common Shares from the Company and 97,517 Optional Common
Shares from the Selling Shareholders as set forth in Schedule B at the purchase
price per share to be paid by the Underwriters for the Firm Common Shares. The
option granted hereunder is for use by the Underwriters solely in covering any
over-allotments in connection with the sale and distribution of the Firm Common
Shares. The option granted hereunder may be exercised at any time (but not more
than once) upon notice by the Underwriters to the Company and the Selling
Shareholders, which notice may be given at any time within 30 days from the date
of this Agreement. Such notice shall set forth (i) the aggregate number of
Optional Common Shares as to which the Underwriters are exercising the option,
(ii) the names and denominations in which the certificates for the Optional
Common Shares are to be registered and (iii) the time, date and place at which
such certificates will be delivered (which time and date may be simultaneous
with, but not earlier than, the First Closing Date; and in such case the term
"First Closing Date" shall refer to the time and date of delivery of
certificates for the Firm Common Shares and the Optional Common Shares). Such
time and date of delivery, if subsequent to the First Closing Date, is called
the "Second Closing Date" and shall be determined by the Underwriters and shall
not be earlier than three nor later than five full business days after delivery
of such notice of exercise. If any Optional Common Shares are to be purchased,
(a) each Underwriter agrees, severally and not jointly, to purchase the number
of Optional Common Shares (subject to such adjustments to eliminate fractional
shares as the Underwriters may determine) that bears the same proportion to the
total number of Optional Common Shares to be purchased as the number of Firm
Common Shares set forth on Schedule A opposite the name of such Underwriter
bears to the total number of Firm Common Shares and (b) the Company and each
Selling Shareholder agree, severally and not jointly, to sell the number of
Optional Common Shares (subject to such adjustments to eliminate fractional
shares as the Underwriters may determine) that bears the same proportion to the
total number of Optional Common Shares to be sold as the number of Optional
Common Shares set forth in Schedule B opposite the name of such Selling
Shareholder (or, in the case of the Company, as the number of Optional Common
Shares to be sold by the Company as set forth in the paragraph "Introductory" of
this Agreement) bears to the total number of Optional Common Shares. The
13
Underwriters may cancel the option at any time prior to its expiration by giving
written notice of such cancellation to the Company and the Selling Shareholders.
Public Offering of the Common Shares. The Underwriters hereby advise
the Company and the Selling Shareholders that the Underwriters intend to offer
for sale to the public, as described in the Prospectus, their respective
portions of the Common Shares as soon after this Agreement has been executed and
the Registration Statement has been declared effective as the Underwriters, in
their sole judgment, have determined is advisable and practicable.
Payment for the Common Shares. Payment for the Common Shares to be sold
by the Company shall be made at the First Closing Date (and, if applicable, at
the Second Closing Date) by wire transfer of immediately available funds to the
order of the Company. Payment for the Common Shares to be sold by the Selling
Shareholders shall be made at the First Closing Date (and, if applicable, at the
Second Closing Date) by wire transfer of immediately available funds to the
order of the Custodian.
It is understood that NationsBanc Xxxxxxxxxx Securities LLC has been
authorized, for its own account and the accounts of the several Underwriters, to
accept delivery of and receipt for, and make payment of the purchase price for,
the Firm Common Shares and any Optional Common Shares the Underwriters have
agreed to purchase. NationsBanc Xxxxxxxxxx Securities LLC, individually and not
as the Representative of the Underwriters, may (but shall not be obligated to)
make payment for any Common Shares to be purchased by any Underwriter whose
funds shall not have been received by the Representative by the First Closing
Date or the Second Closing Date, as the case may be, for the account of such
Underwriter, but any such payment shall not relieve such Underwriter from any of
its obligations under this Agreement.
Each Selling Shareholder hereby agrees that (i) it will pay all stock
transfer taxes, stamp duties and other similar taxes, if any, payable upon the
sale or delivery of the Common Shares to be sold by such Selling Shareholder to
the several Underwriters, or otherwise in connection with the performance of
such Selling Shareholder's obligations hereunder and (ii) the Custodian is
authorized to deduct for such payment any such amounts from the proceeds to such
Selling Shareholder hereunder and to hold such amounts for the account of such
Selling Shareholder with the Custodian under the Custody Agreement.
Delivery of the Common Shares. The Company and the Selling Shareholders
shall deliver, or cause to be delivered, to the Representative for the accounts
of the several Underwriters certificates for the Firm Common Shares to be sold
by them at the First Closing Date, against the irrevocable release of a wire
transfer of immediately available funds for the amount of the purchase price
therefor. The Company and the Selling Shareholders shall also deliver, or cause
to be delivered, to the Representative for the accounts of the several
Underwriters, certificates for the Optional Common Shares the Underwriters have
agreed to purchase from them at the First Closing Date or the Second Closing
Date, as the case may be, against the irrevocable release of a wire transfer of
immediately available funds for the amount of the purchase price therefor. The
certificates for the Common Shares shall be in definitive form and registered in
14
such names and denominations as the Underwriters shall have requested at least
two full business days prior to the First Closing Date (or the Second Closing
Date, as the case may be) and shall be made available for inspection on the
business day preceding the First Closing Date (or the Second Closing Date, as
the case may be) at a location in New York City as the Underwriters may
designate. Time shall be of the essence, and delivery at the time and place
specified in this Agreement is a further condition to the obligations of the
Underwriters.
Delivery of Prospectus to the Underwriters. Not later than 12:00 p.m.
on the second business day following the date the Common Shares are released by
the Underwriters for sale to the public, the Company shall deliver or cause to
be delivered copies of the Prospectus in such quantities and at such places as
the Underwriters shall request.
Section 3. Additional Covenants.
A. Covenants of the Company. Covenants of the Company. The
Company further covenants and agrees with each Underwriter as follows:
(a) Underwriters' Review of Proposed Amendments and Supplements.
During such period beginning on the date hereof and ending on the later
of the First Closing Date or such date, as in the opinion of counsel
for the Underwriters, the Prospectus is no longer required by law to be
delivered in connection with sales by an Underwriter or dealer (the
"Prospectus Delivery Period"), prior to amending or supplementing the
Registration Statement (including any registration statement filed
under Rule 462(b) under the Securities Act) or the Prospectus
(including any amendment or supplement through incorporation by
reference of any report filed under the Exchange Act), the Company
shall furnish to the Underwriters for review a copy of each such
proposed amendment or supplement, and the Company shall not file any
such proposed amendment or supplement to which the Underwriters
reasonably object.
(b) Securities Act Compliance. After the date of this Agreement,
the Company shall promptly advise the Underwriters in writing (i) of
the receipt of any comments of, or requests for additional or
supplemental information from, the Commission, (ii) of the time and
date of any filing of any post-effective amendment to the Registration
Statement or any amendment or supplement to any preliminary prospectus
or the Prospectus, (iii) of the time and date that any post-effective
amendment to the Registration Statement becomes effective and (iv) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective
amendment thereto or of any order preventing or suspending the use of
any preliminary prospectus or the Prospectus, or of any proceedings to
remove, suspend or terminate from listing or quotation the Common Stock
from any securities exchange upon which it is listed for trading or
included or designated for quotation, or of the threatening or
initiation of any proceedings for any of such purposes. If the
Commission shall enter any such stop order at any time, the Company
will use its best efforts to obtain the lifting of such order at the
earliest possible moment. Additionally, the Company agrees that it
15
shall comply with the provisions of Rules 424(b), 430A and 434, as
applicable, under the Securities Act and will use its reasonable
efforts to confirm that any filings made by the Company under such Rule
424(b) were received in a timely manner by the Commission.
(c) Amendments and Supplements to the Prospectus and Other
Securities Act Matters. If, during the Prospectus Delivery Period, 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 under which they
were made, not misleading, or if in the reasonable opinion of the
Underwriters or counsel for the Underwriters it is otherwise necessary
to amend or supplement the Prospectus to comply with law, the Company
agrees to promptly prepare (subject to Section 3(A)(a) hereof), file
with the Commission and furnish at its own expense to the Underwriters
and to dealers, 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 under which they were made, be
misleading or so that the Prospectus, as amended or supplemented, will
comply with law.
(d) Copies of any Amendments and Supplements to the Prospectus.
The Company agrees to furnish the Underwriters, without charge, during
the Prospectus Delivery Period, as many copies of the Prospectus and
any amendments and supplements thereto (including any documents
incorporated or deemed incorporated by reference therein) as the
Underwriters may request.
(e) Blue Sky Compliance. The Company shall cooperate with the
Underwriters and counsel for the Underwriters to qualify or register
the Common Shares for sale under (or obtain exemptions from the
application of) the Blue Sky or state securities laws of those
jurisdictions designated by the Underwriters, shall comply with such
laws and shall continue such qualifications, registrations and
exemptions in effect so long as required for the distribution of the
Common Shares. The Company shall not be required to qualify as a
foreign corporation or to take any action that would subject it to
general service of process in any such jurisdiction where it is not
presently qualified or where it would be subject to taxation as a
foreign corporation. The Company will advise the Underwriters promptly
of the suspension of the qualification or registration of (or any such
exemption relating to) the Common Shares for offering, sale or trading
in any jurisdiction or any initiation or threat of any proceeding for
any such purpose, and in the event of the issuance of any order
suspending such qualification, registration or exemption, the Company
shall use its best efforts to obtain the withdrawal thereof at the
earliest possible moment.
(f) Use of Proceeds. The Company shall apply the net proceeds
from the sale of the Common Shares sold by it in accordance with the
manner described under the caption "Use of Proceeds" in the Prospectus.
16
(g) Transfer Agent. The Company shall engage and maintain, at
its expense, a registrar and transfer agent for the Common Stock.
(h) Earnings Statement. As soon as practicable, the Company will
make generally available to its security holders and to the
Underwriters an earnings statement (which need not be audited) covering
the twelve-month period ending [___], 1999 that satisfies the
provisions of the last paragraph of Section 11(a) of the Securities
Act.
(i) Periodic Reporting Obligations. During the Prospectus
Delivery Period the Company shall file, on a timely basis, with the
Commission and The Nasdaq Stock Market all reports and documents
required to be filed under the Exchange Act.
(j) Agreement Not to Offer or Sell Additional Securities. During
the period of 90 days following the date of the Prospectus, the Company
will not, without the prior written consent of NationsBanc Xxxxxxxxxx
Securities LLC (which consent may be withheld at the sole discretion of
NationsBanc Xxxxxxxxxx Securities LLC), directly or indirectly, sell,
offer, contract or grant any option to sell, pledge, transfer or
establish an open "put equivalent position" within the meaning of Rule
16a-1(h) under the Exchange Act, or otherwise dispose of or transfer,
or announce the offering of, or file any registration statement under
the Securities Act in respect of, any shares of Common Stock, options
or warrants to acquire shares of the Common Stock or securities
exchangeable or exercisable for or convertible into shares of Common
Stock (other than as contemplated by this Agreement with respect to the
Common Shares) except for (a) issuances of Common Stock pursuant to
this Agreement, (b) grants of options to the Company's employees,
directors and consultants under the Company's stock option plans as
disclosed or incorporated by reference in the Prospectus, (c) issuances
of Common Stock upon the exercise or conversion of reserved, authorized
or outstanding stock options, warrants or convertible notes disclosed
or incorporated by reference in the Prospectus, (d) issuances of the
Company's Common Stock or other equity securities or any other
securities convertible into or exchangeable for its Common Stock or
other equity securities as full or partial consideration for any bona
fide loan to the Company or for any bona fide merger or acquisition
transaction or (e) registration statements on Forms S-4 or S-8, or
their successor forms, or pursuant to the issuance of securities
pursuant to clause (b) or (d) above.
(k) Future Reports to the Underwriters. During the period of
five years hereafter the Company will furnish to the NationsBanc
Xxxxxxxxxx Securities LLC at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, XX
00000 Attention: Xxxxx X. Xxxxxx (i) as soon as practicable after the
end of each fiscal year, copies of the Annual Report of the Company
containing the balance sheet of the Company as of the close of such
fiscal year and statements of income, shareholders' equity and cash
flows for the year then ended and the opinion thereon of the Company's
independent public or certified public accountants; (ii) as soon as
practicable after the filing thereof, copies of each proxy statement,
Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current
Report on Form 8-K or other report filed by the Company with the
Commission, the NASD or any securities exchange; and (iii) as soon as
available, copies of any report or communication of the Company mailed
generally to holders of its capital stock.
17
(l) Exchange Act Compliance. During the Prospectus Delivery
Period, the Company will file all documents required to be filed with
the Commission pursuant to Section 13, 14 or 15 of the Exchange Act in
the manner and within the time periods required by the Exchange Act.
B. Covenants of the Selling Shareholders Each Selling Shareholder
further covenants and agrees with each Underwriter:
(a) Agreement Not to Offer or Sell Additional Securities. Such
Selling Shareholder will not, without the prior written consent of
NationsBanc Xxxxxxxxxx Securities LLC (which consent may be withheld in
its sole discretion), directly or indirectly, sell, offer, contract or
grant any option to sell (including without limitation any short sale),
pledge, transfer, establish an open "put equivalent position" within
the meaning of Rule 16a-1(h) under the Exchange Act, or otherwise
dispose of any shares of Common Stock, options or warrants to acquire
shares of Common Stock, or securities exchangeable or exercisable for
or convertible into shares of Common Stock currently or hereafter owned
either of record or beneficially (as defined in Rule 13d-3 under
Securities Exchange Act of 1934, as amended) by the undersigned, or
publicly announce the undersigned's intention to do any of the
foregoing, for a period commencing on the date hereof and continuing
through the close of trading on the date 90 days after the date of the
Prospectus; provided, however, that the provisions of this paragraph
shall not preclude the Selling Shareholders from: (a) exercising any
warrant or stock option provided, that they are prohibited from
selling, offering to sell or otherwise disposing of the securities upon
exercise thereof except as provided in this paragraph, (b) transferring
shares of Common Stock, warrants, options or other securities of the
Company by gift, by will or laws of descent and distribution to any
person or entity provided such person or entity agrees in writing to be
bound by the provisions of this paragraph or (c) pledging shares of
Common Stock to secure bona fide loans provided that the pledgee agrees
in writing to be bound by the provisions of this paragraph.
(b) Delivery of Forms W-8 and W-9. To deliver to the
Underwriters prior to the First Closing Date a properly completed and
executed United States Treasury Department Form W-8 (if the Selling
Shareholder is a non-United States person) or Form W-9 (if the Selling
Shareholder is a United States Person).
NationsBanc Xxxxxxxxxx Securities LLC, on behalf of the several
Underwriters, may, in its sole discretion, waive in writing the performance by
the Company or any Selling Shareholder of any one or more of the foregoing
covenants or extend the time for their performance.
Section 4. Payment of Expenses. The Company agrees to pay all costs,
fees and expenses incurred in connection with the performance of the obligations
of the Company and the Selling Shareholders hereunder and in connection with the
transactions contemplated hereby, including without limitation (i) all expenses
incident to the issuance and delivery of the Common Shares (including
18
all printing and engraving costs), (ii) all fees and expenses of the registrar
and transfer agent of the Common Stock, (iii) all necessary issue, transfer and
other stamp taxes in connection with the issuance and sale of the Common Shares
to the Underwriters, (iv) all fees and expenses of the Company's counsel,
independent public or certified pubic accountants and other advisors, (v) all
costs and expenses incurred in connection with the preparation, printing,
filing, shipping and distribution of the Registration Statement (including
financial statements, exhibits, schedules, consents and certificates of
experts), each preliminary prospectus and the Prospectus, and all amendments and
supplements thereto, and this Agreement, (vi) all filing fees, attorneys' fees
and expenses incurred by the Company or the Underwriters in connection with
qualifying or registering (or obtaining exemptions from the qualification or
registration of) all or any part of the Common Shares for offer and sale under
the Blue Sky laws, and, if requested by the Underwriters, preparing and printing
a "Blue Sky Survey" or memorandum, and any supplements thereto, advising the
Underwriters of such qualifications, registrations and exemptions, (vii) the
filing fees incident to, and the reasonable fees and expenses of counsel for the
Underwriters in connection with (which fees and expenses of counsel shall not
exceed $10,000), the NASD's review and approval of the Underwriters'
participation in the offering and distribution of the Common Shares, (viii) the
fees and expenses associated with including the Common Shares on the Nasdaq
National Market, and (ix) all other fees, costs and expenses referred to in Item
14 of Part II of the Registration Statement. Except as provided in this Section
4, Section 6, Section 8 and Section 9 hereof, the Underwriters shall pay their
own expenses, including the fees and disbursements of their counsel. The Company
and the Selling Shareholders shall not in any event be liable to any of the
Underwriters for the loss of anticipated profit from the transactions covered by
this Agreement.
The Selling Shareholders further agree with each Underwriter to pay
(directly or by reimbursement) all fees and expenses incident to the performance
of their obligations under this Agreement which are not otherwise specifically
provided for herein, including but not limited to (i) fees and expenses of
counsel and other advisors for such Selling Shareholders, (ii) fees and expenses
of the Custodian and (iii) expenses and taxes incident to the sale and delivery
of the Common Shares to be sold by such Selling Shareholders to the Underwriters
hereunder (which taxes, if any, may be deducted by the Custodian under the
provisions of Section 2 of this Agreement).
This Section 4 shall not affect or modify any separate, valid agreement
relating to the allocation of payment of expenses between the Company, on the
one hand, and the Selling Shareholders, on the other hand.
Section 5. Conditions of the Obligation of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Common
Shares as provided herein on the First Closing Date and, with respect to the
Optional Common Shares, the Second Closing Date, shall be subject to the
accuracy of the representations and warranties on the part of the Company and
the Selling Shareholders set forth in Sections 1(A) and 1(B) hereof as of the
date hereof and as of the First Closing Date as though then made and, with
respect to the Optional Common Shares, as of the Second Closing Date as though
then made, to the timely performance by the Company and the Selling Shareholders
of their respective covenants and other obligations hereunder, and to each of
the following additional conditions:
19
(a) Accountants' Comfort Letter. On the date hereof, the
Underwriters shall have received from Coopers & Xxxxxxx L.L.P.,
independent public or certified public accountants for the Company, a
letter dated the date hereof addressed to the Underwriters, in form and
substance satisfactory to the Underwriters, containing statements and
information of the type ordinarily included in accountant's "comfort
letters" to underwriters, delivered according to Statement of Auditing
Standards No. 72 (or any successor bulletin), with respect to the
audited and unaudited financial statements and certain financial
information contained in the Registration Statement and the Prospectus
or incorporated by reference therein (and the Underwriters shall have
received an additional four conformed copies of such accountants'
letter for each of the several Underwriters). On the date hereof, the
Underwriters shall have received from Xxxxxx Xxxxxxxx LLP, independent
public or certified public accountants for FCA and MedSource, letters
dated the date hereof addressed to the Underwriters, in form and
substance satisfactory to the Underwriters, containing statements and
information of the type ordinarily included in accountant's "comfort
letters" to underwriters, delivered according to Statement of Auditing
Standards No. 72 (or any successor bulletin), with respect to the
audited and unaudited financial statements and certain financial
information of FCA and MedSource contained in the Registration
Statement and the Prospectus (and the Underwriters shall have received
an additional four conformed copies of such accountants' letters for
each of the several Underwriters).
(b) Compliance with Registration Requirements; No Stop Order; No
Objection from NASD. For the period from and after effectiveness of
this Agreement and prior to the First Closing Date and, with respect to
the Optional Common Shares, the Second Closing Date:
(i) the Company shall have filed the Prospectus with the
Commission (including the information required by Rule 430A
under the Securities Act) in the manner and within the time
period required by Rule 424(b) under the Securities Act; or the
Company shall have filed a post-effective amendment to the
Registration Statement containing the information required by
such Rule 430A, and such post-effective amendment shall have
become effective; or, if the Company elected to rely upon Rule
434 under the Securities Act and obtained the Underwriters'
consent thereto, the Company shall have filed a Term Sheet with
the Commission in the manner and within the time period required
by such Rule 424(b);
(ii) no stop order suspending the effectiveness of the
Registration Statement, any Rule 462(b) Registration Statement,
or any post-effective amendment to the Registration Statement,
shall be in effect and no proceedings for such purpose shall
have been instituted or threatened by the Commission; and
(iii) the NASD shall have raised no objection to the
fairness and reasonableness of the underwriting terms and
arrangements.
20
(c) No Material Adverse Change. For the period from and after
the date of this Agreement and prior to the First Closing Date and,
with respect to the Optional Common Shares, the Second Closing Date
there shall not have occurred any Material Adverse Change.
(d) Opinion of Counsel for the Company. On each of the First
Closing Date and the Second Closing Date the Underwriters shall have
received the favorable opinion of Blank Rome Xxxxxxx & XxXxxxxx LLP,
counsel for the Company, dated as of such Closing Date, the form of
which is attached as Exhibit A (and the Underwriters shall have
received an additional four conformed copies of such counsel's legal
opinion for each of the several Underwriters).
(e) Opinion of Counsel for the Underwriters. On each of the
First Closing Date and the Second Closing Date the Underwriters shall
have received the favorable opinion of Piper & Marbury L.L.P., counsel
for the Underwriters, dated as of such Closing Date, with respect to
the matters set forth in paragraphs (i), (vi), (viii), (ix), (x), (xi),
(xii), and the next-to-last paragraph of Exhibit A (and the
Underwriters shall have received an additional four conformed copies of
such counsel's legal opinion for each of the several Underwriters).
(f) Officers' Certificate. On each of the First Closing Date and
the Second Closing Date the Underwriters shall have received a written
certificate executed by the Chairman of the Board, Chief Executive
Officer and President of the Company and the Chief Financial Officer of
the Company, dated as of such Closing Date, to the effect set forth in
subsections (b)(ii) of this Section 5, and further to the effect that:
(i) for the period from and after the date of this
Agreement and prior to such Closing Date, there has not occurred
any Material Adverse Change;
(ii) the representations, warranties and covenants of the
Company set forth in Section 1(A) of this Agreement are true and
correct with the same force and effect as though expressly made
on and as of such Closing Date; and
(iii) the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied at or prior to such Closing Date.
21
(g) Bring-down Comfort Letter. On each of the First Closing Date
and the Second Closing Date the Underwriters shall have received from
Coopers & Xxxxxxx L.L.P., independent public or certified public
accountants for the Company, a letter dated such date, in form and
substance satisfactory to the Underwriters, to the effect that they
reaffirm the statements made in the letter furnished by them pursuant
to subsection (a) of this Section 5, except that the specified date
referred to therein for the carrying out of procedures shall be no more
than three business days prior to the First Closing Date or Second
Closing Date, as the case may be (and the Underwriters shall have
received an additional four conformed copies of such accountants'
letter for each of the several Underwriters). On each of the First
Closing Date and the Second Closing Date the Underwriters shall have
received from Xxxxxx Xxxxxxxx LLP, independent public or certified
public accountants for FCA and MedSource, letters dated such date, in
form and substance satisfactory to the Underwriters, to the effect that
they reaffirm the statements made in the letters furnished by them
pursuant to subsection (a) of this Section 5, except that the specified
date referred to therein for the carrying out of procedures shall be no
more than three business days prior to the First Closing Date or Second
Closing Date, as the case may be (and the Underwriters shall have
received an additional four conformed copies of such accountants'
letter for each of the several Underwriters).
(h) Opinion of Counsel for the Selling Shareholders. On each of
the First Closing Date and the Second Closing Date the Underwriters
shall have received the favorable opinion of Blank Rome Xxxxxxx &
XxXxxxxx LLP, counsel for the Selling Shareholders who are directors,
officers or employees of the Company and any family member or related
trust of such directors, officers, or employees, and an opinion from
counsel to the other Selling Shareholders, each dated as of such
Closing Date, the form of which is attached as Exhibit B (and the
Underwriters shall have received an additional four conformed copies
of such counsels' legal opinion for each of the several Underwriters).
(i) Selling Shareholders' Certificate. On each of the First
Closing Date and the Second Closing Date the Underwriters shall
received a written certificate executed by the Attorney-in-Fact of each
Selling Shareholder, dated as of such Closing Date, to the effect that:
(ii) the representations, warranties and covenants of such
Selling Shareholder set forth in Section 1(B) of this Agreement
are true and correct with the same force and effect as though
expressly made by such Selling Shareholder on and as of such
Closing Date; and
(ii) such Selling Shareholder has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to such Closing Date.
(j) Selling Shareholders' Documents. On the date hereof, the
Company and the Selling Shareholders shall have furnished for review by
the Underwriters copies of the Powers of Attorney and Custody
Agreements executed by each of the Selling Shareholders and such
22
further information, certificates and documents as the Underwriters may
reasonably request.
(k) Lock-Up Agreement for Certain Shareholders of the Company
Other than Selling Shareholders. On the date hereof, the Company shall
have furnished to the Underwriters an agreement in the form of Exhibit
C hereto from the directors and executive officers of the Company, and
such agreement shall be in full force and effect on each of the First
Closing Date and the Second Closing Date.
(l) Additional Documents. On or before each of the First Closing
Date and the Second Closing Date, the Underwriters and counsel for the
Underwriters shall have received such information, documents and
opinions as they may reasonably require for the purposes of enabling
them to pass upon the issuance and sale of the Common Shares as
contemplated herein, or in order to evidence the accuracy of any of the
representations and warranties, or the satisfaction of any of the
conditions or agreements, herein contained.
If any condition specified in this Section 5 is not satisfied when and
as required to be satisfied, this Agreement may be terminated by the
Underwriters by notice to the Company and the Selling Shareholders at any time
on or prior to the First Closing Date and, with respect to the Optional Common
Shares, at any time prior to the Second Closing Date, which termination shall be
without liability on the part of any party to any other party, except that
Section 4, Section 6, Section 8 and Section 9 shall at all times be effective
and shall survive such termination.
Section 6. Reimbursement of Underwriters' Expenses. If this Agreement
is terminated by the Underwriters pursuant to Section 5 or by the Company
pursuant to Section 7, [Section 11] or Section 17, or if the sale to the
Underwriters of the Common Shares on the First Closing Date is not consummated
because of any refusal, inability or failure on the part of the Company or the
Selling Shareholders to perform any agreement herein or to comply with any
provision hereof, unless such refusal, inability or failure is due to the breach
of any material term or condition of this Agreement by the Underwriters, the
Company agrees to reimburse the Underwriters (or such Underwriters as have
terminated this Agreement with respect to themselves), upon demand for all
out-of-pocket expenses that shall have been reasonably incurred by the
Underwriters in connection with the proposed purchase and the offering and sale
of the Common Shares, including but not limited to fees and disbursements of
counsel, printing expenses, travel expenses, postage, facsimile and telephone
charges.
Section 7. Effectiveness of this Agreement
This Agreement shall not become effective until the later of (i) the
execution of this Agreement by the parties hereto and (ii) notification by the
Commission to the Company and the Underwriters of the effectiveness of the
Registration Statement under the Securities Act.
Prior to such effectiveness, this Agreement may be terminated by the
Company by notice to the Underwriters and the Selling Shareholders or by the
Underwriters by notice to the Company and Selling Shareholders, and any such
termination shall be without liability on the part of (a) the Company or the
Selling Shareholders to any Underwriter, except that, in the event of
termination by the Company, the Company
23
shall be obligated to reimburse the expenses of the Underwriters pursuant to
Sections 4 and 6 hereof, (b) of any Underwriter to the Company or the Selling
Shareholders, or (c) of any party hereto to any other party except that the
provisions of Section 8 and Section 9 shall at all times be effective and shall
survive such termination.
Section 8. Indemnification
(a) Indemnification of the Underwriters. The Company and each of
the Selling Shareholders, severally and not jointly, agree to indemnify
and hold harmless each Underwriter, its officers and employees, and
each person, if any, who controls any Underwriter within the meaning of
the Securities Act and the Exchange Act against any loss, claim,
damage, liability or expense, as incurred, to which such Underwriter or
such controlling person may become subject, under the Securities Act,
the Exchange Act or other federal or state statutory law or regulation,
or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of
the Company), insofar as such loss, claim, damage, liability or expense
(or actions in respect thereof as contemplated below) arises out of or
is based (i) upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, or any amendment
thereto, including any information deemed to be a part thereof pursuant
to Rule 430A or Rule 434 under the Securities Act, or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that
in the case of any Selling Shareholder other than a Significant Selling
Shareholder the indemnification provided hereunder shall only apply to
any omission or alleged omission of a material fact that relates to
such Selling Shareholder; or (ii) upon any untrue statement or alleged
untrue statement of a material fact contained in any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto),
or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that
in the case of any Selling Shareholder other than a Significant Selling
Shareholder the indemnification provided hereunder shall only apply to
any omission or alleged omission of a material fact that relates to
such Selling Shareholder; or (iii) in whole or in part upon any
inaccuracy in the representations and warranties of the Company or the
Selling Shareholders contained herein; or (iv) in whole or in part upon
any failure of the Company or the Selling Shareholders to perform their
respective obligations hereunder or under law; or (v) any act or
failure to act or any alleged act or failure to act by any Underwriter
in connection with, or relating in any manner to, the Common Stock or
the offering contemplated hereby, and which is included as part of or
referred to in any loss, claim, damage, liability or action arising out
of or based upon any matter covered by clause (i) or (ii) above,
provided that the Company shall not be liable under this clause (v) to
the extent that a court of competent jurisdiction shall have determined
by a final judgment that such loss, claim, damage, liability or action
resulted directly from any such acts or failures to act undertaken or
omitted to be taken by such Underwriter through its gross negligence or
willful misconduct; and to reimburse each Underwriter and each such
controlling person for any and all expenses (including the fees and
disbursements of counsel chosen by NationsBanc Xxxxxxxxxx Securities
LLC) as such expenses are reasonably incurred by such Underwriter or
such controlling person in connection with investigating, defending,
settling, compromising or paying (if such settlement, compromise or
payment is effected with the written consent of the Company) any such
loss, claim, damage, liability, expense or action; provided, however,
that the foregoing
24
indemnity agreement shall not apply to any loss, claim, damage,
liability or expense to the extent, but only to the extent, arising out
of or based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in conformity
with written information furnished to the Company and the Selling
Shareholders by the Underwriters expressly for use in the Registration
Statement, any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto); provided, further, that with respect
to any preliminary prospectus, the foregoing indemnity agreement shall
not inure to the benefit of any Underwriter from whom the person
asserting any loss, claim, damage, liability or expense purchased
Common Shares, or any person controlling such Underwriter, if copies of
the Prospectus were timely delivered to the Underwriter pursuant to
Section 2 and 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 Common Shares to such
person, and if the Prospectus (as so amended or supplemented) would
have cured the defect giving rise to such loss, claim, damage,
liability or expense; and provided, further, that with respect to
clause (iii) and clause (iv) above, a Selling Shareholder (other than
a Significant Selling Shareholder) shall not be liable for a breach of
a representation, warranty or covenant of the Company or another
Selling Shareholder. The indemnity agreement set forth in this Section
8(a) shall be in addition to any liabilities that the Company and the
Selling Shareholders may otherwise have.
The Company and the Selling Shareholders may agree, as among
themselves and without limiting the rights of the Underwriters under
this Agreement, as to the respective amounts of such liability for
which they each shall be responsible. In no event, however, shall the
liability of any Selling Shareholder for indemnification or
contribution under this Section 8 or Section 9, respectively, or
otherwise at law or in equity (other than claims based in whole or in
part on fraud) exceed the proceeds received by such Selling Shareholder
from the Underwriters in the offering. Notwithstanding anything to the
contrary in this Section 8, each Underwriter and each person who
controls such Underwriter agrees not to assert its rights to indemnity
under this Section 8(a) against the Selling Shareholders unless and
until (i) such Underwriter or controlling person has requested
indemnification and reimbursement from the Company for such losses,
claims, damages or liabilities (including any legal or other expenses
reasonably incurred) and (ii) the Company does not within thirty (30)
days of such request (A) agree to so indemnify such Underwriter or
controlling person and (B) reimburse in full such Underwriter or
controlling person for any such losses, damages or liabilities
(including legal or other expenses) incurred. In the event that
litigation between the parties with respect to the Section 8 results in
a joint or several judgment against the Company and the Selling
Shareholders, each Underwriter and each person who controls such
Underwriter, agrees that it will not attempt to enforce such judgment
against the Selling Shareholders unless and until any part of such
judgment shall remain unsatisfied by the Company for more than thirty
(30) days.
25
(b) Indemnification of the Company, its Directors and Officers.
Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, each of its directors, each of its officers
who signed the Registration Statement, the Selling Shareholders and
each person, if any, who controls the Company or any Selling
Shareholder within the meaning of the Securities Act or the Exchange
Act, against any loss, claim, damage, liability or expense, as
incurred, to which the Company, or any such director, officer, Selling
Shareholder or controlling person may become subject, under the
Securities Act, the Exchange Act, or other federal or state statutory
law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the
written consent of such Underwriter), insofar as such loss, claim,
damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based: (i) upon any untrue or
alleged untrue statement of a material fact contained in the
Registration Statement, any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto), or arises out of or is based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in the Registration Statement,
any preliminary prospectus, the Prospectus (or any amendment or
supplement thereto), in reliance upon and in conformity with written
information furnished to the Company and the Selling Shareholders by
the Underwriters expressly for use therein or (ii) the failure of any
Underwriter at or prior to the written confirmation of the sale of
shares to send or deliver a copy of an amended Preliminary Prospectus
or the Prospectus (or the Prospectus as amended or supplemented) to the
person asserting any such losses, claims, damages, liabilities or
expenses who purchased the Shares which is the subject thereof and the
untrue statement or omission of a material fact contained in such
Preliminary Prospectus was corrected in the amended Preliminary
Prospectus or Prospectus (or the Prospectus as amended or
supplemented); and to reimburse the Company, or any such director,
officer, Selling Shareholder or controlling person for any legal and
other expense reasonably incurred by the Company, or any such director,
officer, Selling Shareholder or controlling person in connection with
investigating, defending, settling, compromising or paying any such
loss, claim, damage, liability, expense or action. The Company and each
of the Selling Shareholders hereby acknowledge that the only
information that the Underwriters have furnished to the Company and the
Selling Shareholders expressly for use in the Registration Statement,
any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto) are the statements set forth (A) as the two
paragraphs on the inside front cover page of the Prospectus concerning
stabilization and passive market making by the Underwriters and (B) in
the table in the first paragraph and as the second paragraph under the
caption "Underwriting" in the Prospectus; and the Underwriters
represent and warrant that such statements are correct. The indemnity
agreement set forth in this Section 8(b) shall be in addition to any
liabilities that each Underwriter may otherwise have.
(c) Notifications and Other Indemnification Procedures. Promptly
after receipt by an indemnified party under this Section 8 of notice of
the commencement of any action, such indemnified party will, if a claim
in respect thereof is to be made against an indemnifying party under
this Section 8, notify the indemnifying party in writing of the
26
commencement thereof, but the omission so to notify the
indemnifying party will not relieve it from any liability which it may
have to any indemnified party for contribution or otherwise than under
the indemnity agreement contained in this Section 8 or to the extent it
is not prejudiced as a proximate result of such failure. In case any
such action is brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from an
indemnifying party, the indemnifying party will be entitled to
participate in, and, to the extent that it shall elect, jointly with
all other indemnifying parties similarly notified, by written notice
delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both
the indemnified party and the indemnifying party and the representation
of both parties by the same counsel would be inappropriate due to
conflicts of interest between the positions of the indemnifying party
and the indemnified party in conducting the defense of any such action
or that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of such
indemnifying party's election so to assume the defense of such action
and approval by the indemnified party of counsel, the indemnifying
party will not be liable to such indemnified party under this Section 8
for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance
with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the
expenses of more than one separate counsel (together with local counsel
solely as it relates to matters of local law), approved by the
indemnifying party (NationsBanc Xxxxxxxxxx Securities LLC in the case
of Section 8(b) and Section 9), representing the indemnified parties
who are parties to such action) or (ii) the indemnifying party shall
not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice
of commencement of the action, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying party.
(d) Settlements. The indemnifying party under this Section 8
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 against any loss, claim,
damage, liability or expense by reason of such settlement or judgment,
subject to the term and conditions of Section 8. 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 Section 8(c) hereof,
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, compromise or
27
consent to the entry of judgment in any pending or threatened action,
suit or proceeding in respect of which any indemnified party is or
could have been a party and indemnity was or could have been sought
hereunder by such indemnified party, unless such settlement, compromise
or consent includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of such
action, suit or proceeding.
Section 9. Contribution.
If the indemnification provided for in Section 8 is for any reason held
to be unavailable to or otherwise insufficient to hold harmless an indemnified
party in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount paid or payable by such indemnified party, as incurred, as a
result of any losses, claims, damages, liabilities or expenses referred to
therein (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Shareholders, on the one hand,
and the Underwriters, on the other hand, from the offering of the Common Shares
pursuant to this Agreement or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company and the Selling Shareholders, on the one
hand, and the Underwriters, on the other hand, in connection with the statements
or omissions or inaccuracies in the representations and warranties herein which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company and the Selling Shareholders, on the one hand, and the Underwriters,
on the other hand, in connection with the offering of the Common Shares pursuant
to this Agreement shall be deemed to be in the same respective proportions as
the total net proceeds from the offering of the Common Shares pursuant to this
Agreement (before deducting expenses) received by the Company and the Selling
Shareholders, and the total underwriting discount received by the Underwriters,
in each case as set forth on the front cover page of the Prospectus (or, if Rule
434 under the Securities Act is used, the corresponding location on the Term
Sheet) bear to the aggregate initial public offering price of the Common Shares
as set forth on such cover. The relative fault of the Company and the Selling
Shareholders, on the one hand, and the Underwriters, on the other hand, shall be
determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact or any such inaccurate or alleged inaccurate
representation or warranty relates to information supplied by the Company or the
Selling Shareholders, on the one hand, or the Underwriters, on the other hand,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 8(c), any legal or
other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth in
28
Section 8(c) with respect to notice of commencement of any action shall apply if
a claim for contribution is to be made under this Section 9; provided, however,
that no additional notice shall be required with respect to any action for which
notice has been given under Section 8(c) for purposes of indemnification.
The Company, the Selling Shareholders and the Underwriters agree that
it would not be just and 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 which does not
take account of the equitable considerations referred to in this Section 9.
Notwithstanding the provisions of this Section 9, no Underwriter shall
be required to contribute any amount in excess of the underwriting commissions
received by such Underwriter in connection with the Common Shares underwritten
by it and distributed to the public. 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 Underwriters' obligations to contribute
pursuant to this Section 9 are several, and not joint, in proportion to their
respective underwriting commitments as set forth opposite their names in
Schedule A. For purposes of this Section 9, each officer and employee of an
Underwriter and each person, if any, who controls an Underwriter within the
meaning of the Securities Act and the Exchange Act shall have the same rights to
contribution as such Underwriter, and each director of the Company, each officer
of the Company who signed the Registration Statement, and each person, if any,
who controls the Company with the meaning of the Securities Act and the Exchange
Act shall have the same rights to contribution as the Company.
Section 10. Default of One or More of the Several Underwriter. If, on
the First Closing Date or the Second Closing Date, as the case may be, any one
or more of the several Underwriters shall fail or refuse to purchase Common
Shares that it or they have agreed to purchase hereunder on such date, and the
aggregate number of Common Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase does not exceed 10% of the
aggregate number of the Common Shares to be purchased on such date, the other
Underwriters shall be obligated, severally, in the proportions that the number
of Firm Common Shares set forth opposite their respective names on Schedule A
bears to the aggregate number of Firm Common Shares set forth opposite the names
of all such non-defaulting Underwriters, or in such other proportions as may be
specified by the Underwriters with the consent of the non-defaulting
Underwriters, to purchase the Common Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date. If, on the
First Closing Date or the Second Closing Date, as the case may be, any one or
more of the Underwriters shall fail or refuse to purchase Common Shares and the
aggregate number of Common Shares with respect to which such default occurs
exceeds 10% of the aggregate number of Common Shares to be purchased on such
date, and arrangements satisfactory to the Underwriters and the Company for the
purchase of such Common Shares are not made within 48 hours after such default,
this Agreement shall terminate without liability of any party to any other party
except that the provisions of Section 4, Section 6, Section 8 and Section 9
29
shall at all times be effective and shall survive such termination. In any such
case either the Underwriters or the Company shall have the right to postpone the
First Closing Date or the Second Closing Date, as the case may be, but in no
event for longer than seven days in order that the required changes, if any, to
the Registration Statement and the Prospectus or any other documents or
arrangements may be effected.
As used in this Agreement, the term "Underwriter" shall be deemed to
include any person substituted for a defaulting Underwriter under this Section
10. Any action taken under this Section 10 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
Section 11. Termination of this Agreement. Prior to the First Closing
Date this Agreement maybe terminated by the Underwriters by notice given to the
Company and the Selling Shareholders if at any time (i) trading or quotation in
any of the Company's securities shall have been suspended or limited by the
Commission or by The Nasdaq Stock Market, or trading in securities generally on
either The Nasdaq Stock Market or the New York Stock Exchange shall have been
suspended or limited, or minimum or maximum prices shall have been generally
established on any of such stock exchanges by the Commission or the NASD; (ii) a
general banking moratorium shall have been declared by any of federal, New York,
Pennsylvania or California authorities; (iii) there shall have occurred any
outbreak or escalation of national or international hostilities or any crisis or
calamity, or any change in the United States or international financial markets,
or any substantial change or development involving a prospective substantial
change in United States' or international political, financial or economic
conditions, as in the judgment of the Underwriters is material and adverse and
makes it impracticable to market the Common Shares in the manner and on the
terms described in the Prospectus or to enforce contracts for the sale of
securities; (iv) if there shall have occurred any Material Adverse Change; or
(v) the Company shall have sustained a loss by strike, fire, flood, earthquake,
accident or other calamity of such character as in the judgment of the
Underwriters may interfere materially with the conduct of the business and
operations of the Company regardless of whether or not such loss shall have been
insured. Any termination pursuant to this Section 11 shall be without liability
on the part of (a) the Company or the Selling Shareholders to any Underwriter,
except that the Company and the Selling Shareholders shall be obligated to
reimburse the expenses of the Underwriters pursuant to Sections 4 and 6 hereof,
(b) any Underwriter to the Company or the Selling Shareholders, or (c) of any
party hereto to any other party except that the provisions of Section 8 and
Section 9 shall at all times be effective and shall survive such termination.
Section 12. Representation and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of the Selling Shareholders and of
the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or the Company or any of its or their partners,
officers or directors or any controlling person, or the Selling Shareholders, as
30
the case may be, and will survive delivery of and payment for the Common Shares
sold hereunder and any termination of this Agreement.
Section 13. Notices. All communications hereunder shall be in writing
and shall be mailed, hand delivered or telecopied and confirmed to the parties
hereto as follows:
If to the Underwriters:
NationsBanc Xxxxxxxxxx Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxxxx X. Xxxxx
with a copy to:
NationsBanc Xxxxxxxxxx Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
If to the Company:
NCO Group, Inc.
000 Xxxxxxxxxxxx Xxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, Chairman, President
and Chief Executive Officer
with a copy to:
Blank Rome Comisky & XxXxxxxx LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esquire
If to the Selling Shareholders:
NCO Group, Inc.
000 Xxxxxxxxxxxx Xxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, Chairman, President
and Chief Executive Officer
31
with a copy to:
Blank Rome Xxxxxxx & XxXxxxxx LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esquire
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
Section 14. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 10 hereof, and to the benefit of the employees, officers and
directors and controlling persons referred to in Section 8 and Section 9, and in
each case their respective successors, and personal representatives, and no
other person will have any right or obligation hereunder. The term "successors"
shall not include any purchaser of the Common Shares as such from any of the
Underwriters merely by reason of such purchase.
Section 15. Partial Unenforceability. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
Section 16. Governing Law Provisions. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
Section 17. Failure of One or More of the Selling Shareholders to Sell
and Deliver Common SHares. If one or more of the Selling Shareholders shall fail
to sell and deliver to the Underwriters the Common Shares to be sold and
delivered by such Selling Shareholders at the First Closing Date pursuant to
this Agreement, then the Underwriters may at their option, by written notice
from the Underwriters to the Company and the Selling Shareholders, either (i)
terminate this Agreement without any liability on the part of any Underwriter
or, except as provided in Sections 4, 6, 8 and 9 hereof, the Company or the
Selling Shareholders, or (ii) purchase the shares which the Company and other
Selling Shareholders have agreed to sell and deliver in accordance with the
terms hereof. If one or more of the Selling Shareholders shall fail to sell and
deliver to the Underwriters the Common Shares to be sold and delivered by such
Selling Shareholders pursuant to this Agreement at the First Closing Date or the
Second Closing Date, then the Underwriters shall have the right, by written
32
notice from the Underwriters to the Company and the Selling Shareholders, to
postpone the First Closing Date or the Second Closing Date, as the case may be,
but in no event for longer than seven days in order that the required changes,
if any, to the Registration Statement and the Prospectus or any other documents
or arrangements may be effected.
Section 18. General Provisions. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in two
or more counterparts, each one of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement may not be amended or modified unless in writing by all of the
parties hereto, and no condition herein (express or implied) may be waived
unless waived in writing by each party whom the condition is meant to benefit.
The Table of Contents and the Section headings herein are for the convenience of
the parties only and shall not affect the construction or interpretation of this
Agreement.
Each of the parties hereto acknowledges that it is a sophisticated
business person who was adequately represented by counsel during negotiations
regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions. Each of the parties
hereto further acknowledges that the provisions of Sections 8 and 9 hereto
fairly allocate the risks in light of the ability of the parties to investigate
the Company, its affairs and its business in order to assure that adequate
disclosure has been made in the Registration Statement, any preliminary
prospectus and the Prospectus (and any amendments and supplements thereto), as
required by the Securities Act and the Exchange Act.
33
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company and the Custodian the enclosed
copies hereof, whereupon this instrument, along with all counterparts hereof,
shall become a binding agreement in accordance with its terms.
Very truly yours,
NCO GROUP, INC.
By:________________________________________
Xxxxxxx X. Xxxxxxx, Chairman, President
and Chief Executive Officer
SELLING SHAREHOLDERS
By:_______________________________________
Xxxxxxx X. Xxxxxxx
Acting on behalf of the Selling
Shareholders
The foregoing Underwriting Agreement is hereby confirmed and accepted
by the Underwriters in San Francisco, California as of the date first above
written.
NATIONSBANC XXXXXXXXXX SECURITIES LLC
BT ALEX. XXXXX INCORPORATED
XXXXXX XXXXXXXXXX XXXXX INC.
THE XXXXXXXX-XXXXXXXX COMPANY, LLC
By NATIONSBANC XXXXXXXXXX SECURITIES LLC
By:_____________________________
Xxxxxxx X. Xxxxx
34
SCHEDULE A
Number of
Firm Common Shares
to be Purchased
Underwriters
NationsBanc Xxxxxxxxxx Securities LLC ................. [ ]
BT Alex. Xxxxx Incorporated ........................... [ ]
Xxxxxx Xxxxxxxxxx Xxxxx Inc. .......................... [ ]
The Xxxxxxxx-Xxxxxxxx Company, LLC .................... [ ]
Total........................................... 6,565,000
1
SCHEDULE B
Number of Maximum Number of
Selling Shareholder Firm Common Shares Optional Common Shares
to be Sold to be Sold
Selling Shareholder #1*
[address]
Attention: [___] [___] [___]
Selling Shareholder #2
[address]
Attention: [___] [___] [___]
Total: 765,000 97,517
* Significant Selling Shareholder
2
EXHIBIT A
Opinion of counsel for the Company to be delivered pursuant to Section
5(d) of the Underwriting Agreement.
References to the Prospectus in this Exhibit A include any supplements
thereto at the Closing Date.
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
Commonwealth of Pennsylvania.
(ii) The Company has the corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its
obligations under the Underwriting Agreement.
(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except for
such jurisdictions where the failure to so qualify or to be in good
standing would not, individually or in the aggregate, result in a
Material Adverse Change.
(iv) Each significant subsidiary (as defined in Rule 405 under
the Securities Act) has been duly incorporated and 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, lease
and operate its properties and to conduct its business as described in
the Prospectus and, to the best knowledge of such counsel, is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except for such jurisdictions where the failure to
so qualify or to be in good standing would not, individually or in the
aggregate, result in a Material Adverse Change.
(v) All of the issued and outstanding capital stock of each such
significant subsidiary has been duly authorized and validly issued, is
fully paid and non-assessable and is owned by the Company, directly or
through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance or, to the best knowledge of such
counsel, any pending or threatened claim, except for the pledge of such
shares to Mellon Bank Corporation to secure obligations under the
Credit Agreement.
(vi) The authorized, issued and outstanding capital stock of the
Company (including the Common Stock) conform to the descriptions
thereof set forth or incorporated by reference in the Prospectus. All
1
of the outstanding shares of Common Stock (including the shares of
Common Stock owned by the Selling Shareholders) have been duly
authorized and validly issued, are fully paid and nonassessable and, to
the best of such counsel's knowledge, have been issued in compliance
with the registration and qualification requirements of federal and
state securities laws. The form of certificate used to evidence the
Common Stock is in due and proper form and complies with all applicable
requirements of the articles of incorporation and by-laws of the
Company and the Pennsylvania Business Corporation Law. The description
of the Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted and exercised
thereunder, set forth in the Prospectus accurately and fairly presents
the information required to be shown with respect to such plans,
arrangements, options and rights.
(vii) No shareholder of the Company or any other person has any
preemptive right, right of first refusal or other similar right to
subscribe for or purchase securities of the Company arising (i) by
operation of the articles of incorporation or by-laws of the Company or
the Pennsylvania Business Corporation Law or (ii) to the best knowledge
of such counsel, otherwise.
(viii)The Underwriting Agreement has been duly authorized,
executed and delivered by, and is a valid and binding agreement of, the
Company, enforceable in accordance with its terms, except as rights to
indemnification thereunder may be limited by applicable law and except
as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable
principles.
(ix) Each document filed pursuant to the Exchange Act (other
than the financial statements and supporting schedules included
therein, as to which no opinion need be rendered) and incorporated or
deemed to be incorporated by reference in the Prospectus complied when
so filed as to form in all material respects with the Exchange Act; and
such counsel has no reason to believe that any of such documents, when
they were so filed, contained an 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 when such documents were filed, not misleading.
(x) The Common Shares to be purchased by the Underwriters from
the Company have been duly authorized for issuance and sale pursuant to
the Underwriting Agreement and, when issued and delivered by the
Company pursuant to the Underwriting Agreement against payment of the
consideration set forth therein, will be validly issued, fully paid and
nonassessable.
2
(xi) The Registration Statement and the Rule 462(b) Registration
Statement, if any, has been declared effective by the Commission under
the Securities Act. To the best knowledge of such counsel, no stop
order suspending the effectiveness of either of the Registration
Statement or the Rule 462(b) Registration Statement, if any, has been
issued under the Securities Act and no proceedings for such purpose
have been instituted or are pending or are contemplated or threatened
by the Commission. 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).
(xii) The Registration Statement, including any Rule 462(b)
Registration Statement, the Prospectus including any document
incorporated by reference therein, and each amendment or supplement to
the Registration Statement and the Prospectus including any document
incorporated by reference therein, as of their respective effective or
issue dates (other than the financial statements and supporting
schedules included or incorporated by reference therein or in exhibits
to or excluded from the Registration Statement, as to which no opinion
need be rendered) comply as to form in all material respects with the
applicable requirements of the Securities Act and the Exchange Act.
(xiii) The Common Shares have been approved for listing on the
Nasdaq National Market.
(xiv) The statements (i) in the Prospectus under the captions
"Risk Factors--Government Regulation", "Risk Factors--Shares Eligible
for Future Sale", "Risk Factors--Anti-Takeover Provisions",
"Management's Discussion and Analysis and Results of
Operations--Liquidity and Capital Resources", "Business--Regulation",
and "Business--Legal Proceedings" and (ii) Item 15 of the Registration
Statement, insofar as such statements constitute matters of law,
summaries of legal matters, the Company's charter or by-law provisions,
documents or legal proceedings, or legal conclusions, has been reviewed
by such counsel and fairly present and summarize, in all material
respects, the matters referred to therein.
(xv) To the best knowledge of such counsel, there are no legal
or governmental actions, suits or proceedings pending or threatened
which are required to be disclosed in the Registration Statement, other
than those disclosed therein.
(xvi) To the best knowledge of such counsel, there are no
Existing Instruments required to be described or referred to in the
Registration Statement or to be filed as exhibits thereto other than
those described or referred to therein or filed or incorporated by
reference as exhibits thereto; and the descriptions thereof and
references thereto are correct in all material respects.
3
(xvii) No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental authority
or agency, is required for the Company's execution, delivery and
performance of the Underwriting Agreement and consummation of the
transactions contemplated thereby and by the Prospectus, except as
required under the Securities Act, applicable state securities or blue
sky laws and from the NASD.
(xviii) The execution and delivery of the Underwriting Agreement
by the Company and the performance by the Company of its obligations
thereunder (other than performance by the Company of its obligations
under the indemnification section of the Underwriting Agreement, as to
which no opinion need be rendered) (i) have been duly authorized by all
necessary corporate action on the part of the Company; (ii) will not
result in any violation of the provisions of the charter or by-laws of
the Company or any subsidiary; (iii) will not constitute a breach of,
or Default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
of its subsidiaries pursuant to, (A) the Company's Revolving Credit
Agreement, or (B) to the best knowledge of such counsel, any other
material Existing Instrument; or (iv) to the best knowledge of such
counsel, will not result in any violation of any law, administrative
regulation or administrative or court decree applicable to the Company
or any subsidiary.
(xix) The Company is not, and after receipt of payment for the
Common Shares will not be, an "investment company" within the meaning
of Investment Company Act.
(xx) Except as disclosed in the Prospectus, to the best
knowledge of such counsel, there are no persons with registration or
other similar rights to have any equity or debt securities registered
for sale under the Registration Statement or included in the offering
contemplated by the Underwriting Agreement, other than the Selling
Shareholders, except for such rights as have been duly waived.
(xxi) To the best knowledge of such counsel, neither the Company
nor any subsidiary is in violation of its articles of incorporation or
by-laws or any law, administrative regulation or administrative or
court decree applicable to the Company or any subsidiary or is in
Default in the performance or observance of any obligation, agreement,
covenant or condition contained in any material Existing Instrument,
except in each such case for such violations or Defaults as would not,
individually or in the aggregate, result in a Material Adverse Change.
(xxii) The FCA Tender Offer has been consummated, and, as a
result, the Company, directly or indirectly, owns or controls all of
the issued and outstanding capital stock of FCA free and clear of any
security interest, mortgage, pledge, lien, encumbrance or to the best
4
of the Company's or any of the Significant Selling Shareholder's
knowledge, any pending or threatened claim. The agreements necessary to
effect the acquisitions of FCA, MedSource, [CSI] and each other company
included in the Company's pro forma balance sheet included in the
Prospectus and Registration Statement have been duly authorized,
executed and delivered by each of the parties thereto and constitute
the valid, legal and binding agreements of each such party, and the
acquisition of all of the capital stock or assets of the respective
acquired company by the Company and the related transactions
contemplated thereby have been consummated pursuant to the terms
described in the Prospectus.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent public or certified public accountants for
the Company and with representatives of the Underwriters at which the contents
of the Registration Statement and the Prospectus, and any supplements or
amendments thereto, and related matters were discussed and, although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus (other than as specified above), and
any supplements or amendments thereto, on the basis of the foregoing, nothing
has come to their attention which would lead them to believe that either the
Registration Statement or any amendments thereto, at the time the Registration
Statement or such amendments became effective, contained an untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus, as of its date or at the First Closing Date or the Second Closing
Date, as the case may be, contained an 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 (it being understood that such counsel need express no belief as to
the financial statements or schedules or other financial or statistical data
derived therefrom, included or incorporated by reference in the Registration
Statement or the Prospectus or any amendments or supplements thereto).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
Pennsylvania Business Corporation Law or the federal law of the United States,
to the extent they deem proper and specified in such opinion, upon the opinion
(which shall be dated the First Closing Date or the Second Closing Date, as the
case may be, shall be satisfactory in form and substance to the Underwriters,
shall expressly state that the Underwriters may rely on such opinion as if it
were addressed to them and shall be furnished to the Underwriters) of other
counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the Underwriters; provided, however, that such
counsel shall further state that they believe that they and the Underwriters are
justified in relying upon such opinion of other counsel, and (B) as to matters
of fact, to the extent they deem proper, on certificates of responsible officers
of the Company and public officials.
5
EXHIBIT B
The opinion of such counsel pursuant to Section 5(h) shall be rendered
to the Underwriters at the request of the Company and shall so state therein.
References to the Prospectus in this Exhibit B include any supplements thereto
at the Closing Date.
(i) The Underwriting Agreement has been duly authorized,
executed and delivered by or on behalf of, and is a valid and binding
agreement of, the Selling Shareholders, enforceable in accordance with
its terms, except as rights to indemnification thereunder may be
limited by applicable law and except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally or by
general equitable principles.
(ii) The execution and delivery by the Selling Shareholders of,
and the performance by the Selling Shareholders of their obligations
under, the Underwriting Agreement and the Custody Agreements and the
Powers of Attorney will not contravene or conflict with, result in a
breach of, or constitute a default under, the charter or by-laws,
partnership agreement, trust agreement or other organizational
documents, as the case may be, of each Selling Shareholder, or, to the
best of such counsel's knowledge, violate or contravene any provision
of applicable law or regulation, or violate, result in a breach of or
constitute a default under the terms of any other agreement or
instrument to which each Selling Shareholder is a party or by which it
is bound, or any judgment, order or decree applicable to each Selling
Shareholder of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over such Selling
Shareholder.
(iii) Each Selling Shareholder has good and valid title to all
of the Common Shares which may be sold by such Selling Shareholder
under the Underwriting Agreement and has the legal right and power, and
all authorizations and approvals required under its charter and
by-laws, partnership agreement, trust agreement or other organizational
documents, as the case may be, to enter into the Underwriting Agreement
and its Custody Agreement and its Power of Attorney, to sell, transfer
and deliver all of the Common Shares which may sold by such Selling
Shareholder under the Underwriting Agreement and to comply with its
other obligations under the Underwriting Agreement, its Custody
Agreement and its Power of Attorney.
(iv) Each of the Custody Agreement and Power of Attorney of each
Selling Shareholder has been duly authorized, executed and delivered by
such Selling Shareholder and is a valid and binding agreement of such
Selling Shareholder, enforceable in accordance with its terms, except
as rights to indemnification thereunder may be limited by applicable
1
law and except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating
to or affecting creditors' rights generally or by general equitable
principles.
(v) Assuming that the Underwriters purchase the Common Shares
which are sold by each Selling Shareholder pursuant to the Underwriting
Agreement for value, in good faith and without notice of any adverse
claim, the delivery of such Common Shares pursuant to the Underwriting
Agreement will pass good and valid title to such Common Shares, free
and clear of either any security interest, mortgage, pledge, lieu
encumbrance or other claim.
(vi) To the best of such counsel's knowledge, no consent,
approval, authorization or other order of, or registration or filing
with, any court or governmental authority or agency, is required for
the consummation by each Selling Shareholder of the transactions
contemplated in the Underwriting Agreement, except as required under
the Securities Act, applicable state securities or blue sky laws, and
from the NASD.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
Pennsylvania Business Corporation Law or the federal law of the United States,
to the extent they deem proper and specified in such opinion, upon the opinion
(which shall be dated the First Closing Date or the Second Closing Date, as the
case may be, shall be satisfactory in form and substance to the Underwriters,
shall expressly state that the Underwriters may rely on such opinion as if it
were addressed to them and shall be furnished to the Underwriters) of other
counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the Underwriters; provided, however, that such
counsel shall further state that they believe that they and the Underwriters are
justified in relying upon such opinion of other counsel, and (B) as to matters
of fact, to the extent they deem proper, on certificates of the Selling
Shareholders and public officials
2
EXHIBIT C
May ___, 1998
NATIONSBANC XXXXXXXXXX SECURITIES LLC
BT ALEX. XXXXX INCORPORATED
XXXXXX XXXXXXXXXX XXXXX INC.
THE XXXXXXXX-XXXXXXXX COMPANY, LLC
c/o NATIONSBANC XXXXXXXXXX SECURITIES LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
RE: NCO Group, Inc. (the "Company")
---------------
Ladies and Gentlemen:
The undersigned is an owner of record or beneficially of certain shares
of Common Stock of the Company ("Common Stock") or securities convertible into
or exchangeable or exercisable for Common Stock. The Company proposes to carry
out a public offering of Common Stock (the "Offering") for which you will act as
the underwriters. The undersigned recognizes that the Offering will be of
benefit to the undersigned and will benefit the Company by, among other things,
raising additional capital for its operations. The undersigned acknowledges that
you and the other underwriters are relying on the representations and agreements
of the undersigned contained in this letter in carrying out the Offering and in
entering into underwriting arrangements with the Company with respect to the
Offering.
In consideration of the foregoing, the undersigned hereby agrees that
the undersigned will not, without the prior written consent of NationsBanc
Xxxxxxxxxx Securities LLC (which consent may be withheld in its sole
discretion), directly or indirectly, sell, offer, contract or grant any option
to sell (including without limitation any short sale), pledge, transfer,
establish an open "put equivalent position" within the meaning of Rule 16a-1(h)
under the Securities Exchange Act of 1934, or otherwise dispose of any shares of
Common Stock, options or warrants to acquire shares of Common Stock, or
securities exchangeable or exercisable for or convertible into shares of Common
Stock currently or hereafter owned either of record or beneficially (as defined
in Rule 13d-3 under Securities Exchange Act of 1934, as amended) by the
undersigned, or publicly announce the undersigned's intention to do any of the
foregoing, for a period commencing on the date hereof and continuing through the
close of trading on the date 90 days after the date of the Prospectus; provided,
however, that the provisions of this paragraph shall not preclude the
undersigned from: (a) exercising any warrant or stock option provided that it is
prohibited from selling, offering to sell or otherwise disposing of the
1
securities upon exercise thereof except as provided in this paragraph, (b)
transferring shares of Common Stock, warrants, options or other securities of
the Company by gift, by will or laws of descent and distribution to any person
or entity provided such person or entity agrees in writing to be bound by the
provisions of this paragraph or (c) pledging shares of Common Stock to secure
bona fide loans provided that the pledgee agrees in writing to be bound by the
provisions of this paragraph. 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 shares of Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock held by the
undersigned except in compliance with the foregoing restrictions.
With respect to the Offering only, the undersigned waives any
registration rights relating to registration under the Securities Act of any
Common Stock owned either of record or beneficially by the undersigned,
including any rights to receive notice of the Offering.
This agreement is irrevocable and will be binding on the undersigned
and the respective successors, heirs, personal representatives, and assigns of
the undersigned.
________________________________
Printed Name of Holder
By:_____________________________
Signature
________________________________
Printed Name of Person Signing
(and indicate capacity of person signing if
signing as custodian, trustee, or on behalf
of an entity)
2
