Exhibit 1.1
Collegiate Funding Services, Inc.
9,375,000 Shares of Common Stock
Underwriting Agreement
July ____, 2004
X.X. Xxxxxx Securities Inc.
Xxxxxxx Xxxxx & Co.
As Representatives of the
several Underwriters listed
in Schedule 1 hereto
c/o X.X. Xxxxxx Securities Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
- and -
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
4 World Financial Center
Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Collegiate Funding Services, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to the several Underwriters listed in Schedule 1
hereto (the "Underwriters"), for whom you are acting as representatives (the
"Representatives"), an aggregate of 9,375,000 shares and, at the option of the
Underwriters, up to an additional 1,406,250 shares, of common stock, par value
$0.001 per share (the "Stock"), of the Company. The 9,375,000 shares to be sold
by the Company are herein called the "Underwritten Shares" and the 1,406,250
additional shares to be sold by the Company are herein called the "Option
Shares". The Underwritten Shares and the Option Shares are herein referred to as
the "Shares".
The Company hereby confirms its engagement of Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated, and Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated hereby confirms its agreement with the Company to render services
as a "qualified independent underwriter" within the meaning of Rule 2720 of the
Conduct Rules of the NASD with respect to the Offering. Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated, solely in its capacity as qualified independent
underwriter and not otherwise, is referred to herein as the "QIU."
The Company hereby confirms its agreement with the several Underwriters
concerning the purchase and sale of the Shares, as follows:
1. Registration Statement. The Company has prepared and filed with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Securities Act"), a registration statement (File No.
333-114466) including a prospectus, relating to the Shares. Such registration
statement, as amended at the time it becomes effective, including the
information, if any, deemed pursuant to Rule 430A under the Securities Act to be
part of the registration statement at the time of its effectiveness ("Rule 430
Information"), is referred to herein as the "Registration Statement"; and as
used herein, the term "Preliminary Prospectus" means each prospectus included in
such registration statement (and any amendments thereto) before it becomes
effective, any prospectus filed with the Commission pursuant to Rule 424(a)
under the Securities Act and the prospectus included in the Registration
Statement at the time of its effectiveness that omits Rule 430A Information, and
the term "Prospectus" means the prospectus in the form first used to confirm
sales of the Shares. If the Company has filed an abbreviated registration
statement pursuant to Rule 462(b) under the Securities Act (the "Rule 462
Registration Statement"), then any reference herein to the term "Registration
Statement" shall be deemed to include such Rule 462 Registration Statement.
2. Purchase of the Shares by the Underwriters. (a) The Company agrees to
issue and sell the Shares to the several Underwriters as provided in this
Agreement, and each Underwriter, on the basis of the representations, warranties
and agreements set forth herein and subject to the conditions set forth herein,
agrees, severally and not jointly, to purchase from the Company the respective
number of Underwritten Shares set forth opposite such Underwriter's name in
Schedule 1 hereto at a price per share (the "Purchase Price") of $ . The public
offering price of the Shares is not in excess of the price recommended by the
QIU.
In addition, the Company agrees to issue and sell the Option Shares to the
several Underwriters as provided in this Agreement, and the Underwriters, on the
basis of the representations, warranties and agreements set forth herein and
subject to the conditions set forth herein, shall have the option to purchase,
severally and not jointly, from the Company the Option Shares at the Purchase
Price.
If any Option Shares are to be purchased, the number of Option Shares to
be purchased by each Underwriter shall be the number of Option Shares which
bears the same ratio to the aggregate number of Option Shares being purchased as
the number of Underwritten Shares set forth opposite the name of such
Underwriter in Schedule 1 hereto (or such number increased as set forth in
Section 9 hereof) bears to the aggregate number of Underwritten Shares being
purchased from the Company by the several Underwriters, subject, however, to
such adjustments to eliminate any fractional Shares as the Representatives in
their sole discretion shall make.
The Underwriters may exercise the option to purchase the Option Shares at
any time (but not more than once) on or before the thirtieth day following the
date of this Agreement, by written notice from the Representatives to the
Company. Such notice shall set forth the aggregate number of Option Shares as to
which the option is being exercised and the date and time when the Option Shares
are to be delivered and paid for which may be the same date and
2
time as the Closing Date (as hereinafter defined) but shall not be earlier than
the Closing Date nor later than the tenth full business day (as hereinafter
defined) after the date of such notice (unless such time and date are postponed
in accordance with the provisions of Section 9 hereof). Any such notice shall be
given at least two Business Days prior to the date and time of delivery
specified therein.
(b) The Company understands that the Underwriters intend to make a public
offering of the Shares as soon after the effectiveness of this Agreement as in
the judgment of the Representatives is advisable, and initially to offer the
Shares on the terms set forth in the Prospectus. The Company acknowledges and
agrees that the Underwriters may offer and sell Shares to or through any
affiliate of an Underwriter and that any such affiliate may offer and sell
Shares purchased by it to or through any Underwriter.
(c) Payment for the Shares shall be made by wire transfer in immediately
available funds to the accounts specified by the Company to the Representatives
in the case of the Underwritten Shares, at the offices of Xxxxx Xxxx & Xxxxxxxx
at 10:00 A.M. New York City time on July__, 2004, or at such other time or place
on the same or such other date, not later than the fifth business day
thereafter, as the Representatives and the Company may agree upon in writing or,
in the case of the Option Shares, on the date and at the time and place
specified by the Representatives in the written notice of the Underwriters'
election to purchase such Option Shares. The time and date of such payment for
the Underwritten Shares are referred to herein as the "Closing Date" and the
time and date for such payment for the Option Shares, if other than the Closing
Date, are herein referred to as the "Additional Closing Date".
Payment for the Shares to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery to
the Representatives for the respective accounts of the several Underwriters of
the Shares to be purchased on such date in definitive form registered in such
names and in such denominations as the Representatives shall request in writing
not later than two full business days prior to the Closing Date or the
Additional Closing Date, as the case may be, with any transfer taxes payable in
connection with the sale of the Shares duly paid by the Company. The
certificates for the Shares will be made available for inspection and packaging
by the Representatives at the office of X.X. Xxxxxx Securities Inc. set forth
above not later than 1:00 P.M., New York City time, on the business day prior to
the Closing Date or the Additional Closing Date, as the case may be.
3. Representations and Warranties of the Company. The Company represents
and warrants to each Underwriter that:
(a) Preliminary Prospectus. No order preventing or suspending the use of
any Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, complied in all material
respects with the Securities Act and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that the
Company makes no representation and warranty with respect to any statements or
omissions made in reliance
3
upon and in conformity with information relating to any Underwriter furnished to
the Company in writing by such Underwriter through the Representatives expressly
for use in any Preliminary Prospectus.
(b) Registration Statement and Prospectus. No order suspending the
effectiveness of the Registration Statement has been issued by the Commission
and no proceeding for that purpose has been initiated or, to the knowledge of
the Company, threatened by the Commission; as of the applicable effective date
of the Registration Statement and any amendment thereto, the Registration
Statement 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 in
order to make the statements therein not misleading; and as of the applicable
filing date of the Prospectus and any amendment or supplement thereto and as of
the Closing Date and as of the Additional Closing Date, as the case may be, the
Prospectus will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that the Company makes no representation and
warranty with respect to any statements or omissions made in reliance upon and
in conformity with information relating to any Underwriter furnished to the
Company in writing by such Underwriter through the Representatives expressly for
use in the Registration Statement and the Prospectus and any amendment or
supplement thereto.
(c) Financial Statements. The financial statements and the related notes
thereto included in the Registration Statement and the Prospectus comply in all
material respects with the applicable requirements of the Securities Act and the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Commission thereunder (collectively, the "Exchange Act"), as applicable, and
present fairly the financial position of the Company and its subsidiaries as of
the dates indicated and the results of their operations and the changes in their
cash flows for the periods specified; such financial statements have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis throughout the periods covered thereby except to the extent
specified therein, and the supporting schedules included in the Registration
Statement present fairly the information required to be stated therein; and the
other historical financial information included in the Registration Statement
and the Prospectus has been derived from the accounting records of the Company
and its subsidiaries and presents fairly the information shown thereby.
(d) No Material Adverse Change. Since the date of the most recent
financial statements of the Company included in the Registration Statement and
the Prospectus, (i) there has not been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries, or any dividend or
distribution of any kind declared, set aside for payment, paid or made by the
Company on any class of capital stock, or any material adverse change, or any
development involving a prospective material adverse change, in the business,
properties, financial condition, stockholders' equity or results of operations
of the Company and its subsidiaries taken as a whole; (ii) neither the Company
nor any of its subsidiaries has entered into any transaction or agreement that
is material to the Company
4
and its subsidiaries taken as a whole or incurred any liability or obligation,
direct or contingent, that is material to the Company and its subsidiaries taken
as a whole, except as disclosed in the Prospectus and the Registration Statement
or in the ordinary course of business; and (iii) neither the Company nor any of
its subsidiaries has sustained any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor disturbance or dispute or any action, order or
decree of any court or arbitrator or governmental or regulatory authority,
except in each case as otherwise disclosed in the Registration Statement and the
Prospectus.
(e) Organization and Good Standing. The Company and each of its
subsidiaries have been duly organized and are validly existing and in good
standing under the laws of their respective jurisdictions of organization, are
duly qualified to do business and are in good standing in each jurisdiction in
which their respective ownership or lease of property or the conduct of their
respective businesses requires such qualification, and have all power and
authority necessary to own or hold their respective properties and to conduct
the businesses in which they are engaged, except where the failure to be so
qualified or have such power or authority would not, individually or in the
aggregate, have a material adverse effect on the business, properties, financial
condition, stockholders' equity, results of operations or prospects of the
Company and its subsidiaries taken as a whole (a "Material Adverse Effect"). The
Company does not own or control, directly or indirectly, any corporation,
association or other entity other than the subsidiaries listed in Exhibit 21 to
the Registration Statement.
(f) Capitalization. The Company has an authorized capitalization as set
forth in the Prospectus under the heading "Capitalization"; all the outstanding
shares of capital stock of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable and are not subject to any
pre-emptive or similar rights; except as described in or expressly contemplated
by the Prospectus, there are no outstanding rights (including, without
limitation, pre-emptive rights), warrants or options to acquire, or instruments
convertible into or exchangeable for, any shares of capital stock or other
equity interest in the Company or any of its subsidiaries, or any contract,
commitment, agreement, understanding or arrangement of any kind relating to the
issuance of any capital stock of the Company or any such subsidiary, any such
convertible or exchangeable securities or any such rights, warrants or options;
the capital stock of the Company conforms in all material respects to the
description thereof contained in the Registration Statement and the Prospectus;
and all the outstanding shares of capital stock or other equity interests of
each subsidiary of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable (to the extent such principle is applicable)
and are owned directly or indirectly by the Company, free and clear of any lien,
charge, encumbrance, security interest, restriction on voting or transfer or any
other claim of any third party, except for such liens as are in effect under the
Credit Agreement dated as of October 30, 2003 between the Company, Collegiate
Funding Services, L.L.C., CFSL Acquisition Corp., and the Lenders named therein,
as amended, or as disclosed in the Prospectus.
(g) Due Authorization. The Company has full right, power and authority to
execute and deliver this Agreement and to perform its obligations hereunder; and
all action required to be taken for the due and proper authorization, execution
and delivery by it of this Agreement and the consummation by it of the
transactions contemplated hereby has been duly and validly taken.
5
(h) Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by the Company.
(i) The Shares. The Shares to be issued and sold by the Company hereunder
have been duly authorized by the Company and, when issued and delivered and paid
for as provided herein, will be duly and validly issued and will be fully paid
and nonassessable and will conform in all material respects to the descriptions
thereof in the Prospectus; and the issuance of the Shares is not subject to any
preemptive or similar rights.
(j) No Violation or Default. Neither the Company nor any of its
subsidiaries is (i) in violation of its charter or by-laws or similar
organizational documents; (ii) in default, and no event has occurred that, with
notice or lapse of time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is subject; or
(iii) in violation of any law or statute or any judgment, order, rule or
regulation of any court or arbitrator or governmental or regulatory authority,
except, in the case of clauses (i) (other than with respect to the Company and
Collegiate Funding Services, LLC), (ii) and (iii) above, for any such default or
violation that would not, individually or in the aggregate, have a Material
Adverse Effect.
(k) No Conflicts. The execution, delivery and performance by the Company
of this Agreement, the issuance and sale of the Shares to be sold by the Company
hereunder and the consummation by the Company of the transactions contemplated
hereby will not (i) conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a 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, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, (ii) result in any violation
of the provisions of the charter or by-laws or similar organizational documents
of the Company or any of its subsidiaries or (iii) result in the violation of
any law or statute or any judgment, order, rule or regulation of any court or
arbitrator or governmental or regulatory authority, except (in the case of
clauses (i) and (iii) above) as could not reasonably be expected to have a
Material Adverse Effect.
(l) No Consents Required. No consent, approval, authorization, order,
registration or qualification of or with any court or arbitrator or governmental
or regulatory authority is required for the execution, delivery and performance
by the Company of this Agreement, the issuance and sale of the Shares to be sold
by the Company hereunder and the consummation by the Company of the transactions
contemplated hereby, except for the registration of the Shares under the
Securities Act and such consents, approvals, authorizations, orders and
registrations or qualifications as may be required under applicable state
securities laws in connection with the purchase and distribution of the Shares
by the Underwriters.
6
(m) Legal Proceedings. Except as described in the Prospectus, there are no
legal, governmental or regulatory investigations, actions, suits or proceedings
pending to which the Company or any of its subsidiaries is a party or to which
any property of the Company or any of its subsidiaries is subject that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect or materially and adversely affect the ability of the
Company to perform its obligations under this Agreement; to the best knowledge
of the Company, no such investigations, actions, suits or proceedings are
threatened or contemplated by any governmental or regulatory authority or
threatened by others; and (i) there are no current or pending legal,
governmental or regulatory actions, suits or proceedings that are required under
the Securities Act to be described in the Prospectus that are not so described
and (ii) there are no statutes, regulations or contracts or other documents that
are required under the Securities Act to be filed as exhibits to the
Registration Statement or described in the Registration Statement or the
Prospectus that are not so filed or described.
(n) Independent Accountants. Ernst & Young LLP and PBGH, LLP (formerly
Xxxxxx Xxxxxxxxxx Xxxxxxx and Xxxxxxx), who have certified certain financial
statements of the Company and its subsidiaries included in the Registration
Statement each are independent public accountants with respect to the Company
and its subsidiaries as required by the Securities Act.
(o) Title to Real and Personal Property. Except as disclosed in the
Prospectus, the Company and its subsidiaries have good and marketable title in
fee simple to, or have valid rights to lease or otherwise use, all items of real
and personal property that are material to the respective businesses of the
Company and its subsidiaries, in each case free and clear of all liens,
encumbrances, claims and defects and imperfections of title except those that
(i) do not materially interfere with the use made and proposed to be made of
such property by the Company and its subsidiaries or (ii) could not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect.
(p) Title to Intellectual Property. Except as disclosed in the Prospectus,
the Company and its subsidiaries own or possess adequate rights to use all
material trademarks, service marks, trade names, trademark registrations,
service xxxx registrations, copyrights, licenses and know-how necessary for the
conduct of their respective businesses; and except as disclosed in the
Prospectus, to the best knowledge of the Company, the conduct of their
respective businesses will not conflict in any material respect with any such
rights of others, and the Company and its subsidiaries have not received any
notice of any claim of infringement or conflict with any such rights of others.
(q) No Undisclosed Relationships. No relationship, direct or indirect,
exists between or among the Company or any of its subsidiaries, on the one hand,
and the directors, officers, stockholders or customers of the Company or any of
its subsidiaries, on the other, that is required by the Securities Act to be
described in the Registration Statement and the Prospectus and that is not so
described.
(r) Investment Company Act. The Company is not, and after giving effect to
the offering and sale of the Shares and the application of the proceeds thereof
as described in the
7
Prospectus will not be, required to register as an "investment company" as such
term is defined in the Investment Company Act of 1940, as amended.
(s) Taxes. The Company and its subsidiaries have paid (or established
adequate reserves for) all material federal, state, local and foreign taxes and
filed all tax returns required to be paid or filed through the date hereof; and
except as otherwise disclosed in the Prospectus, there is no material tax
deficiency that has been, or could reasonably be expected to be, asserted
against the Company or any of its subsidiaries or any of their respective
properties or assets.
(t) Licenses and Permits. The Company and its subsidiaries possess all
licenses, certificates, permits and other authorizations issued by, and have
made all declarations and filings with, the appropriate federal, state, local or
foreign governmental or regulatory authorities that are necessary for the
ownership or lease of their respective properties or the conduct of their
respective businesses as described in the Registration Statement and the
Prospectus, except where the failure to possess or make the same would not,
individually or in the aggregate, have a Material Adverse Effect; and except as
described in the Prospectus, neither the Company nor any of its subsidiaries has
received notice of any revocation or modification of any such license,
certificate, permit or authorization or has any reason to believe that any such
license, certificate, permit or authorization will not be renewed in the
ordinary course.
(u) No Labor Disputes. No labor disturbance by or dispute with employees
of the Company or any of its subsidiaries exists or, to the best knowledge of
the Company, is contemplated or threatened, except for any disturbance or
dispute which could not reasonably be expected to result in a Material Adverse
Effect.
(v) Compliance With Environmental Laws. The Company and its subsidiaries
(i) are in compliance with any and all applicable federal, state, local and
foreign laws, rules, regulations, decisions and orders relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (collectively, "Environmental
Laws"); (ii) have received and are in compliance with all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses; and (iii) have not received notice of any actual or
potential liability for the investigation or remediation of any disposal or
release of hazardous or toxic substances or wastes, pollutants or contaminants,
except in any such case for any such failure to comply, or failure to receive
required permits, licenses or approvals, or liability as would not, individually
or in the aggregate, have a Material Adverse Effect.
(w) Compliance With ERISA. Except as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect: (i) each
employee benefit plan, within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), that is
maintained, administered or contributed to by the Company or any of its
affiliates for employees or former employees of the Company and its affiliates
has been maintained in compliance with its terms and the requirements of any
applicable statutes, orders, rules and regulations, including but not limited to
ERISA and the Internal Revenue Code of 1986, as amended (the "Code"); (ii) no
prohibited transaction, within the meaning of Section
8
406 of ERISA or Section 4975 of the Code, has occurred with respect to any such
plan excluding transactions effected pursuant to a statutory or administrative
exemption; and (iii) for each such plan that is subject to the funding rules of
Section 412 of the Code or Section 302 of ERISA, no "accumulated funding
deficiency" as defined in Section 412 of the Code has been incurred, whether or
not waived, and no such plan has terminated under Title IV of ERISA resulting in
any liability with respect to such termination that remains unsatisfied.
(x) Accounting Controls. The Company and its subsidiaries maintain systems
of internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(y) Insurance. The Company and its subsidiaries have insurance covering
their respective properties, operations, personnel and businesses, including
business interruption insurance, which insurance is in amounts and insures
against such losses and risks as the Company reasonably believes are adequate to
protect the Company and its subsidiaries and their respective businesses and is
in amounts as are customary in the Company's industry; and neither the Company
nor any of its subsidiaries has (i) received notice from any insurer or agent of
such insurer that material capital improvements or other expenditures are
required or necessary to be made in order to continue such insurance or (ii) any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage at
market rates from similar insurers as may be necessary to continue its business.
(z) No Unlawful Payments. Neither the Company nor any of its subsidiaries
nor, to the best knowledge of the Company, any director, officer, agent,
employee or other person associated with or acting on behalf of the Company or
any of its subsidiaries has (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977; or (iv) made any bribe, influence payment, kickback or other
unlawful payment.
(aa) No Broker's Fees. Neither the Company nor any of its
subsidiaries is a party to any contract, agreement or understanding with any
person (other than this Agreement) that would give rise to a valid claim against
the Company or any of its subsidiaries or any Underwriter for a brokerage
commission, finder's fee or like payment in connection with the offering and
sale of the Shares.
(bb) No Registration Rights. Except as disclosed in the Registration
Statement, no person has the right to require the Company or any of its
subsidiaries to register any securities for
9
sale under the Securities Act by reason of the filing of the Registration
Statement with the Commission or the issuance and sale of the Shares to be sold
by the Company hereunder.
(cc) Statistical and Market Data. Nothing has come to the attention of the
Company that has caused the Company to believe that the statistical and
market-related data included in the Registration Statement and the Prospectus is
not based on or derived from sources that are reliable and accurate in all
material respects.
4. Further Agreements of the Company. The Company covenants and agrees
with each Underwriter that:
(a) Effectiveness of the Registration Statement. If the Registration
Statement is not effective upon execution of this Agreement, the Company will
use its reasonable best efforts to cause the Registration Statement to become
effective at the earliest possible time and, if required, will file the final
Prospectus with the Commission within the time periods specified by Rule 424(b)
and Rule 430A under the Securities Act.
(b) Delivery of Copies. The Company will deliver, without charge, (i) to
each of the Representatives, one signed copy of the Registration Statement as
originally filed and each amendment thereto, in each case including all exhibits
and consents filed therewith; and (ii) to each Underwriter (A) a conformed copy
of the Registration Statement as originally filed and each amendment thereto
(without exhibits) and (B) during the Prospectus Delivery Period, as many copies
of the Prospectus (including all amendments and supplements thereto) as the
Representatives may reasonably request. As used herein, the term "Prospectus
Delivery Period" means such period of time after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters a
prospectus relating to the Shares is required by law to be delivered in
connection with sales of the Shares by any Underwriter or dealer.
(c) Amendments or Supplements. Before filing any amendment or supplement
to the Registration Statement or the Prospectus, the Company will furnish to the
Representatives and counsel for the Representatives a copy of the proposed
amendment or supplement for review and will not file any such proposed amendment
or supplement to which the Representatives reasonably objects based on the
advice of counsel.
(d) Notice to the Representatives. The Company will advise the
Representatives promptly, and confirm such advice in writing, during the
Prospectus Delivery Period (i) if the Registration Statement is not effective
upon execution of this Agreement, when the Registration Statement has become
effective; (ii) when any amendment to the Registration Statement has been filed
or becomes effective; (iii) when any supplement to the Prospectus or any
amendment to the Prospectus has been filed; (iv) of any request by the
Commission for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or the receipt of any comments from the Commission
relating to the Registration Statement or any other request by the Commission
for any additional information; (v) of the issuance by the Commission of any
order suspending the effectiveness of the Registration Statement or preventing
or suspending the use of any Preliminary Prospectus or the Prospectus or the
initiation or threatening of any
10
proceeding for that purpose; (vi) of the occurrence of any event within the
Prospectus Delivery Period as a result of which the Prospectus as then amended
or supplemented would include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances existing when the Prospectus is delivered to a
purchaser, not misleading; and (vii) of the receipt by the Company of any notice
with respect to any suspension of the qualification of the Shares for offer and
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose; and the Company will use its reasonable best efforts to prevent
the issuance of any such order suspending the effectiveness of the Registration
Statement, preventing or suspending the use of any Preliminary Prospectus or the
Prospectus or suspending any such qualification of the Shares and, if any such
order is issued, will obtain as soon as possible the withdrawal thereof.
(e) Ongoing Compliance of the Prospectus. If during the Prospectus
Delivery Period (i) any event shall occur or condition shall exist as a result
of which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances existing when the Prospectus is delivered to a
purchaser, not misleading or (ii) it is necessary to amend or supplement the
Prospectus to comply with law, the Company will immediately notify the
Underwriters thereof and forthwith prepare and, subject to paragraph (c) above,
file with the Commission and furnish to the Underwriters and to such dealers as
the Representatives may designate, such amendments or supplements to the
Prospectus as may be necessary so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the circumstances existing
when the Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus will comply with law.
(f) Blue Sky Compliance. The Company will qualify the Shares for offer and
sale under the securities or Blue Sky laws of such jurisdictions as the
Representatives shall reasonably request and will continue such qualifications
in effect so long as required for distribution of the Shares, provided that in
connection therewith, the Company shall not be required to qualify as a foreign
corporation or as a dealer in securities or to file a general consent to service
of process in any jurisdiction in which it is not otherwise so subject.
(g) Earning Statement. The Company will make generally available to its
security holders and the Representatives as soon as practicable an earning
statement that satisfies the provisions of Section 11(a) of the Securities Act
and Rule 158 of the Commission promulgated thereunder covering a period of at
least twelve months beginning with the first fiscal quarter of the Company
occurring after the "effective date" (as defined in Rule 158) of the
Registration Statement.
(h) Clear Market. For a period of 180 days after the date of the initial
public offering of the Shares, the Company will not (i) offer, pledge, announce
the intention to sell, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase or otherwise transfer or dispose of, directly or indirectly,
any shares of Stock or any securities convertible into or exercisable or
exchangeable for Stock or (ii) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic
11
consequences of ownership of the Stock, whether any such transaction described
in clause (i) or (ii) above is to be settled by delivery of Stock or such other
securities, in cash or otherwise, without the prior written consent of the
Representatives, other than: (A) the Shares to be sold hereunder; (B) any shares
of Stock of the Company issued pursuant to employee benefit plans, stock option
plans, or other employee compensation plans or employment agreements existing on
the effective date of the Registration Statement; (C) any shares of Stock of the
Company issued pursuant to the exercise of options, warrants or rights
outstanding on the effective date of the Registration Statement; (D) grants of
options pursuant to employee benefit plans, stock option plans or other employee
compensation plans or employment agreements existing on the effective date of
the Registration Statement; and (E) any shares of Stock of the Company issued in
connection with a bona fide business acquisition made by the Company which
involves a third party that is not an affiliate of the Company, provided that
the recipient of the shares of Stock agrees to be bound by the terms of the
lock-up letter agreement attached as Annex A to this Agreement.
(i) Use of Proceeds. The Company will apply the net proceeds from the sale
of the Shares as described in the Prospectus under the heading "Use of
Proceeds".
(j) No Stabilization. The Company will not take, directly or indirectly,
any action designed to or that could reasonably be expected to cause or result
in any stabilization or manipulation of the price of the Shares in violation of
applicable law.
(k) NASDAQ. The Company will use its best efforts to have the Shares
approved for trading on the Nasdaq National Market, subject only to official
notice of issuance.
(l) Reports. So long as the Shares are outstanding, the Company will
furnish to the Representatives, as soon as they are available, copies of all
reports or other communications (financial or other) furnished to holders of the
Shares, and copies of any reports and financial statements furnished to or filed
with the Commission or any national securities exchange or automatic quotation
system (it being understood that filing on XXXXX shall be deemed to constitute
delivery hereunder).
(m) Filings. The Company will file with the Commission such reports as may
be required by Rule 463 under the Securities Act.
5. Conditions of Underwriters' Obligations. The obligation of each
Underwriter to purchase the Underwritten Shares on the Closing Date or the
Option Shares on the Additional Closing Date, as the case may be, as provided
herein is subject to the performance by the Company covenants and other
obligations hereunder and to the following additional conditions:
(a) Registration Compliance; No Stop Order. The Registration Statement (or
if a post-effective amendment thereto is required to be filed under the
Securities Act, such post-effective amendment) shall have become effective, and
the Representatives shall have received notice thereof, not later than 5:00
P.M., New York City time, on the date hereof; no order suspending the
effectiveness of the Registration Statement shall be in effect, and no
proceeding
12
for such purpose shall be pending before or threatened by the Commission; the
Prospectus shall have been timely filed with the Commission under the Securities
Act and in accordance with Section 5(a) hereof; and all requests by the
Commission for additional information shall have been complied with to the
reasonable satisfaction of the Representatives.
(b) Representations and Warranties. The representations and warranties of
the Company contained herein shall be true and correct on the date hereof and on
and as of the Closing Date or the Additional Closing Date, as the case may be;
and the statements of the Company and its officers made in any certificates
delivered pursuant to this Agreement shall be true and correct on and as of the
Closing Date or the Additional Closing Date, as the case may be.
(c) No Downgrade. Subsequent to the execution and delivery of this
Agreement, (i) no downgrading shall have occurred in the rating accorded any
securities or preferred stock of or guaranteed by the Company or any of its
subsidiaries by any "nationally recognized statistical rating organization", as
such term is defined by the Commission for purposes of Rule 436(g)(2) under the
Securities Act and (ii) no such organization shall have publicly announced that
it has under surveillance or review, or has changed its outlook with respect to,
its rating of any securities or preferred stock of or guaranteed by the Company
or any of its subsidiaries (other than an announcement with positive
implications of a possible upgrading).
(d) No Material Adverse Change. Subsequent to the execution and delivery
of this Agreement, no event or condition of a type described in Section 3(d)(i)
or (iii) hereof shall have occurred or shall exist, which event or condition is
not described in the Prospectus (excluding any amendment or supplement thereto)
and the effect of which in the judgment of the Representatives is so material
and adverse as to make it impracticable or inadvisable to proceed with the
offering, sale or delivery of the Shares on the Closing Date or the Additional
Closing Date, as the case may be, on the terms and in the manner contemplated by
this Agreement and the Prospectus.
(e) Officer's Certificate. The Representatives shall have received on and
as of the Closing Date or the Additional Closing Date, as the case may be, a
certificate of the chief financial officer of the Company and one additional
senior executive officer of the Company who is satisfactory to the
Representatives (A) confirming that such officers have carefully reviewed the
Registration Statement and the Prospectus and, to the best knowledge of such
officers, the representation of the Company set forth in Section 3(b) hereof is
true and correct, (B) confirming that the other representations and warranties
of the Company in this Agreement are true and correct and that the Company has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to such Closing Date and (C) to the
effect set forth in paragraphs (a) and (d) above.
(f) Comfort Letters. On the date of this Agreement and on the Closing Date
or the Additional Closing Date, as the case may be, Ernst & Young LLP and Xxxxx
X. Xxxxxxxxxx, Executive Vice President and Chief Financial Officer of the
Company, shall each have furnished to the Representatives, in each case at the
request of the Company, letters, dated the respective
13
dates of delivery thereof and addressed to the Underwriters, in form and
substance reasonably satisfactory to the Representatives, containing statements
and information of the type customarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and certain
financial information contained in the Registration Statement and the
Prospectus; provided, that the letters delivered on the Closing Date or the
Additional Closing Date, as the case may be, shall use a "cut-off" date no more
than three business days prior to such Closing Date or such Additional Closing
Date, as the case may be.
(g) Opinions of Counsel for the Company. Xxxxxxx Xxxxxxx & Xxxxxxxx LLP,
counsel for the Company, shall have furnished to the Representatives, at the
request of the Company, their written opinion and letter, and Xxxxxxx X.
Xxxxxxxxx, Esq., General Counsel to the Company, shall have furnished to the
Representatives, at the request of the Company, his written opinion, each dated
the Closing Date or the Additional Closing Date, as the case may be, and
addressed to the Underwriters, in form and substance reasonably satisfactory to
the Representatives, to the effect set forth in Exhibits X-0, X-0 and A-3,
respectively, hereto.
(h) Opinion of Counsel for the Underwriters. The Representatives shall
have received on and as of the Closing Date or the Additional Closing Date, as
the case may be, an opinion of Xxxxx Xxxx & Xxxxxxxx, counsel for the
Underwriters, with respect to such matters as the Representatives may reasonably
request, and such counsel shall have received such documents and information as
they may reasonably request to enable them to pass upon such matters.
(i) No Legal Impediment to Issuance. No action shall have been taken and
no statute, rule, regulation or order shall have been enacted, adopted or issued
by any federal, state or foreign governmental or regulatory authority that
would, as of the Closing Date or the Additional Closing Date, as the case may
be, prevent the issuance or sale of the Shares; and no injunction or order of
any federal, state or foreign court shall have been issued that would, as of the
Closing Date or the Additional Closing Date, as the case may be, prevent the
issuance or sale of the Shares.
(j) Good Standing. The Representatives shall have received on and as of
the Closing Date or the Additional Closing Date, as the case may be,
satisfactory evidence of the good standing of the Company and the subsidiaries
listed in Exhibit B hereto (the "Subsidiaries") in their respective
jurisdictions of organization and their good standing as foreign entities in
such other jurisdictions as the Representatives may reasonably request, in each
case in writing or any standard form of telecommunication from the appropriate
Governmental Authorities of such jurisdictions.
(k) NASDAQ. The Shares to be delivered on the Closing Date or Additional
Closing Date, as the case may be, shall have been approved for trading on the
Nasdaq National Market, subject to official notice of issuance.
(l) Lock-up Agreements. The "lock-up" agreements, each substantially in
the form of Exhibit A hereto, between you and the shareholders, officers and
directors of the Company relating to sales and certain other dispositions of
shares of Stock or certain other securities,
14
delivered to you on or before the date hereof, shall be full force and effect on
the Closing Date or the Additional Closing Date, as the case may be.
(m) Additional Documents. On or prior to the Closing Date or the
Additional Closing Date, as the case may be, the Company shall have furnished to
the Representatives such further certificates and documents as the
Representatives may reasonably request.
All opinions, letters, certificates and evidence mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
6. Indemnification and Contribution.
(a) Indemnification of the Underwriters by the Company. The Company agrees
to indemnify and hold harmless each Underwriter, its affiliates, directors and
officers and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages and liabilities (including,
without limitation, legal fees and other expenses incurred in connection with
any suit, action or proceeding or any claim asserted, as such fees and expenses
are reasonably incurred), joint or several, that arise out of, or are based
upon, any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus (or any amendment or
supplement thereto) or any Preliminary Prospectus, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except insofar as such
losses, claims, damages or liabilities arise out of, or are based upon, any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with any information relating to any Underwriter
furnished to the Company in writing by such Underwriter through the
Representatives expressly for use therein, it being understood and agreed that
the only such information furnished by any Underwriter consists of the
information described as such in subsection (c) below; ; provided, that the
foregoing indemnity with respect to any Preliminary Prospectus shall not inure
to the benefit of any Underwriter from whom the persons asserting any such
losses, claims, damages or liabilities purchased Stock if, to the extent
required by applicable law, a copy of the Prospectus (as then amended or
supplemented) was not sent or given by or on behalf of such Underwriter to such
person at or prior to the written confirmation of the sale of the Stock to such
person and if the Prospectus (as so amended or supplemented) would have cured
the defect giving rise to such loss, claim, damage or liability, unless such
failure to send or give a copy of the Prospectus is the result of noncompliance
by the Company with Section 4 hereof.
The Company also agrees to indemnify and hold harmless Xxxxxxx Lynch,
Pierce, Xxxxxx & Xxxxx Incorporated, its affiliates, directors and officers and
each person, if any, who controls Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, from and against any and all losses, claims, damages and
liabilities incurred as a result of Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated's participation as a "qualified independent underwriter" within the
meaning of the
15
Rules of Conduct of the National Association of Securities Dealers, Inc. in
connection with the offering of the Shares.
(b) Indemnification of the Company. Each Underwriter agrees, severally and
not jointly, to indemnify and hold harmless the Company, its directors, its
officers who signed the Registration Statement and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the indemnity set forth in
paragraph (a) above, but only with respect to any losses, claims, damages or
liabilities that arise out of, or are based upon, any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with any information relating to such Underwriter furnished to the
Company in writing by such Underwriter through the Representatives expressly for
use in the Registration Statement and the Prospectus (or any amendment or
supplement thereto) or any Preliminary Prospectus, it being understood and
agreed upon that the only such information furnished by any Underwriter consists
of the following information in the Prospectus furnished on behalf of each
Underwriter: the statements with respect to the public offering of the Shares on
the cover page of the Prospectus, the names and corresponding Share amounts set
forth in the table of Underwriters under the caption "Underwriting", the
concession and reallowance figures appearing in the fourth paragraph under the
caption "Underwriting", the information regarding electronic distribution of the
Prospectus in the eighth paragraph, and the information contained in the
eleventh through and including the sixteenth paragraphs and the twenty-first
paragraph under the caption "Underwriting".
(c) Notice and Procedures. If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be brought or
asserted against any person in respect of which indemnification may be sought
pursuant to the preceding paragraphs of this Section 6, such person (the
"Indemnified Person") shall promptly notify the person against whom such
indemnification may be sought (the "Indemnifying Person") in writing; provided
that the failure to notify the Indemnifying Person shall not relieve the
Indemnifying Person from any liability that it may have under this Section 6
except to the extent that it has been materially prejudiced by such failure; and
provided, further, that the failure to notify the Indemnifying Person shall not
relieve it from any liability that it may have to an Indemnified Person
otherwise than under this Section 6. If any such proceeding shall be brought or
asserted against an Indemnified Person and it shall have notified the
Indemnifying Person thereof, the Indemnifying Person shall retain counsel
reasonably satisfactory to the Indemnified Person to represent the Indemnified
Person and any others entitled to indemnification pursuant to this Section 6
that the Indemnifying Person may designate in such proceeding and shall pay the
fees and expenses of such counsel related to such proceeding, as incurred. In
any such proceeding, any Indemnified Person shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Person unless (i) the Indemnifying Person and the
Indemnified Person shall have mutually agreed to the contrary; (ii) the
Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person; (iii) the Indemnified Person
shall have reasonably concluded that there may be legal defenses available to it
that are different from or in addition to those available to the Indemnifying
Person; or (iv) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and
16
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them. It is understood and
agreed that the Indemnifying Person shall not, in connection with any proceeding
or related proceeding in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all Indemnified Persons, and that all such fees and expenses shall be paid or
reimbursed as they are incurred; provided, however that if indemnity may be
sought pursuant to the second paragraph of 6(a) above in respect of such
proceeding, then in addition to such separate firm of the Underwriters, their
affiliates and such control persons of the Underwriters the indemnifying party
shall be liable for the fees and expenses of not more than one separate firm (in
addition to any local counsel) for Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated in its capacity as a "qualified independent underwriter", its
affiliates and all persons, if any, who control Xxxxxxx Lynch, Pierce, Xxxxxx &
Xxxxx Incorporated within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act. Any such separate firm for any Underwriter,
its affiliates, directors and officers and any control persons of such
Underwriter shall be designated in writing by X.X. Xxxxxx Securities Inc., any
such separate firm for the Company, its directors, its officers who signed the
Registration Statement and any control persons of the Company shall be
designated in writing by the Company. The Indemnifying Person 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 Person agrees to indemnify each Indemnified
Person from and against any loss or liability by reason of such settlement or
judgment. No Indemnifying Person shall, without the written consent of the
Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnification could have been sought hereunder by such Indemnified
Person, unless such settlement (x) includes an unconditional release of such
Indemnified Person, in form and substance reasonably satisfactory to such
Indemnified Person, from all liability on claims that are the subject matter of
such proceeding and (y) does not include any statement as to or any admission of
fault, culpability or a failure to act by or on behalf of any Indemnified
Person.
(e) Contribution. If the indemnification provided for in paragraphs (a)
and (b) above is unavailable to an Indemnified Person or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters or the QIU
, as the case may be, on the other from the offering of the Shares or (ii) if
the allocation provided by clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) but also the relative fault of the Company on the one
hand and the Underwriters or the QIU, as the case may be, on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters or the QIU, as the case may be, on the other shall be
deemed to be in the same respective proportions as the net proceeds (before
deducting expenses) received by the Company from the sale of the Shares and the
total underwriting discounts and commissions received by the Underwriters in
connection
17
therewith, in each case as set forth in the table on the cover of the
Prospectus, bear to the aggregate offering price of the Shares. The relative
fault of the Company on the one hand and the Underwriters or the QIU, as the
case may be, on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters or the QIU, as the case may be,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(f) Limitation on Liability. The Company and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 6
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in paragraph (e) above.
The amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in paragraph (e) above shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses incurred by such Indemnified Person in connection with any such
action or claim. Notwithstanding the provisions of this Section 6, in no event
shall an Underwriter be required to contribute any amount in excess of the
amount by which the total underwriting discounts and commissions received by
such Underwriter with respect to the offering of the Shares exceeds the amount
of any damages that such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 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 6 are several
in proportion to their respective purchase obligations hereunder and not joint.
(g) Non-Exclusive Remedies. The remedies provided for in this Section 6
are not exclusive and shall not limit any rights or remedies which may otherwise
be available to any Indemnified Person at law or in equity.
7. Effectiveness of Agreement. This Agreement shall become effective upon
the execution and delivery hereof by the parties hereto.
8. Termination. This Agreement may be terminated in the absolute
discretion of the Representatives, by notice to the Company, if after the
execution and delivery of this Agreement and prior to the Closing Date or, in
the case of the Option Shares, prior to the Additional Closing Date (i) trading
generally shall have been suspended or materially limited on or by any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc.; (ii) trading of any securities issued or guaranteed
by the Company shall have been suspended on any exchange or in any
over-the-counter market; (iii) a general moratorium on commercial banking
activities shall have been declared by federal or New York State authorities; or
(iv) there shall have occurred any outbreak or escalation of hostilities or any
change in financial markets or any calamity or crisis, either within or outside
the United States, that, in the judgment of the Representatives, is material and
adverse and makes it impracticable
18
or inadvisable to proceed with the offering, sale or delivery of the Shares on
the Closing Date or the Additional Closing Date, as the case may be on the terms
and in the manner contemplated by this Agreement and the Prospectus.
9. Defaulting Underwriter. (a) If, on the Closing Date or the Additional
Closing Date, as the case may be, any Underwriter defaults on its obligation to
purchase the Shares that it has agreed to purchase hereunder on such date, the
non-defaulting Underwriters may in their discretion arrange for the purchase of
such Shares by other persons satisfactory to the Company on the terms contained
in this Agreement. If, within 36 hours after any such default by any
Underwriter, the non-defaulting Underwriters do not arrange for the purchase of
such Shares, then the Company shall be entitled to a further period of 36 hours
within which to procure other persons satisfactory to the non-defaulting
Underwriters to purchase such Shares on such terms. If other persons become
obligated or agree to purchase the Shares of a defaulting Underwriter, either
the non-defaulting Underwriters or the Company may postpone the Closing Date or
the Additional Closing Date, as the case may be, for up to five full business
days in order to effect any changes that in the opinion of counsel for the
Company or counsel for the Underwriters may be necessary in the Registration
Statement and the Prospectus or in any other document or arrangement, and the
Company agrees to promptly prepare any amendment or supplement to the
Registration Statement and the Prospectus that effects any such changes. As used
in this Agreement, the term "Underwriter" includes, for all purposes of this
Agreement unless the context otherwise requires, any person not listed in
Schedule I hereto that, pursuant to this Section 9, purchases Shares that a
defaulting Underwriter agreed but failed to purchase.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by the non-defaulting
Underwriters and the Company as provided in paragraph (a) above, the aggregate
number of Shares that remain unpurchased on the Closing Date or the Additional
Closing Date, as the case may be, does not exceed one-eleventh of the aggregate
number of Shares to be purchased on such date, then the Company shall have the
right to require each non-defaulting Underwriter to purchase the number of
Shares that such Underwriter agreed to purchase hereunder on such date plus such
Underwriter's pro rata share (based on the number of Shares that such
Underwriter agreed to purchase on such date) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by the non-defaulting
Underwriters and the Company as provided in paragraph (a) above, the aggregate
number of Shares that remain unpurchased on the Closing Date or the Additional
Closing Date, as the case may be, exceeds one-eleventh of the aggregate amount
of Shares to be purchased on such date, or if the Company shall not exercise the
right described in paragraph (b) above, then this Agreement or, with respect to
any Additional Closing Date, the obligation of the Underwriters to purchase
Shares on the Additional Closing Date, as the case may be shall terminate
without liability on the part of the non-defaulting Underwriters. Any
termination of this Agreement pursuant to this Section 9 shall be without
liability on the part of the Company, except that the provisions of Section 6
hereof shall not terminate and shall remain in effect.
19
(d) Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company or any non-defaulting Underwriter for
damages caused by its default.
10. Payment of Expenses. (a) Whether or not the transactions contemplated
by this Agreement are consummated or this Agreement is terminated, the Company
will pay or cause to be paid all costs and expenses incident to the performance
of its obligations hereunder, including without limitation, (i) the costs
incident to the authorization, issuance, sale, preparation and delivery of the
Shares and any taxes payable in that connection; (ii) the costs incident to the
preparation, printing and filing under the Securities Act of the Registration
Statement, the Preliminary Prospectus and the Prospectus (including all
exhibits, amendments and supplements thereto) and the distribution thereof;
(iii) the costs of reproducing and distributing this Agreement; (iv) the fees
and expenses of the Company's counsel and independent accountants; (v) the fees
and expenses (not in excess of $5,000) incurred in connection with the
registration or qualification and determination of eligibility for investment of
the Shares under the laws of such jurisdictions as the Representatives may
designate and the preparation, printing and distribution of a Blue Sky
Memorandum (including the related fees and expenses of counsel for the
Underwriters); (vi) the cost of preparing stock certificates; (vii) the costs
and charges of any transfer agent and any registrar; (viii) all expenses and
application fees incurred in connection with any filing with, and clearance of
the offering by, the National Association of Securities Dealers, Inc.; (ix) all
expenses incurred by the Company in connection with any "road show" presentation
to potential investors; (x) the expenses of the QIU incurred in carrying out its
duties in such capacity; and (xi) all expenses and application fees related to
the listing of the Shares on the Nasdaq National Market.
(b) If (i) this Agreement is terminated pursuant to Section 8(ii), (ii)
the Company for any reason fails to tender the Shares for delivery to the
Underwriters or (iii) the Underwriters decline to purchase the Shares for any
reason permitted under this Agreement (in the case of clause (ii) or (iii) by
reason of any failure on the part of the Company to perform any obligation to be
performed hereunder or because any other condition to be fulfilled by the
Company is not fulfilled), the Company agrees to reimburse the Underwriters for
all out-of-pocket costs and expenses (including the reasonable fees and expenses
of their counsel) reasonably incurred by the Underwriters in connection with
this Agreement and the offering contemplated hereby.
11. Persons Entitled to Benefit of Agreement. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and the officers and directors and any controlling persons referred
to in Section 6 hereof. Nothing in this Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein. No
purchaser of Shares from any Underwriter shall be deemed to be a successor
merely by reason of such purchase.
12. Survival. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Company and the Underwriters
contained in this Agreement or made by or on behalf of the Company or the
Underwriters pursuant to this Agreement or any certificate delivered pursuant
hereto shall survive the delivery of and payment for the Shares and
20
shall remain in full force and effect, regardless of any termination of this
Agreement or any investigation made by or on behalf of the Company or the
Underwriters.
13. Certain Defined Terms. For purposes of this Agreement, (a) except
where otherwise expressly provided, the term "affiliate" has the meaning set
forth in Rule 405 under the Securities Act; (b) the term "business day" means
any day other than a day on which banks are permitted or required to be closed
in New York City; and (c) the term "subsidiary" has the meaning set forth in
Rule 405 under the Securities Act.
14. Miscellaneous. (a) Authority of the Representatives. Any action by the
Underwriters hereunder may be taken by X.X. Xxxxxx Securities Inc. and Xxxxxxx
Xxxxx & Co. on behalf of the Underwriters, and any such action taken by X.X.
Xxxxxx Securities Inc. and Xxxxxxx Xxxxx & Co, shall be binding upon the
Underwriters.
(b) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted and
confirmed by any standard form of telecommunication. Notices to the Underwriters
shall be given to the Representatives c/o X.X. Xxxxxx Securities Inc., 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (fax: (000) 000-0000); Attention: Syndicate
Desk and Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, 4 World Financial
Center, Xxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (fax: 000-000-0000); Attention
Global Origination Counsel. Notices to the Company shall be given to it at 000
Xxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxxxxxxx, Xxxxxxxx, 00000 (Fax: (540)
000-0000); Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
(c) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(d) Counterparts. This Agreement may be signed in counterparts (which may
include counterparts delivered by any standard form of telecommunication), each
of which shall be an original and all of which together shall constitute one and
the same instrument.
(e) Amendments or Waivers. No amendment or waiver of any provision of this
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
(f) Headings. The headings herein are included for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
If the foregoing is in accordance with your understanding, please indicate
your acceptance of this Agreement by signing in the space provided below.
Very truly yours,
COLLEGIATE FUNDING SERVICES, INC.
21
By: _______________________
Name:
Title:
Accepted: July__, 2004
X.X. XXXXXX SECURITIES INC.
XXXXXXX XXXXX & CO.
For themselves and on behalf of the
several Underwriters listed
in Schedule 1 hereto.
BY: X.X. XXXXXX SECURITIES INC.
By: ______________________
Name:
Title:
By: XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx &
Xxxxx Incorporated
By: ______________________
Name:
Title:
22
Schedule I
Underwriter Number of Shares
X.X. Xxxxxx Securities Inc...............................
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated.......................................
Citigroup Global Markets Inc.............................
Credit Suisse First Boston LLC...........................
Banc of America Securities LLC...........................
Xxxxx, Xxxxxxxx & Xxxxx, Inc.............................
-----------
Total 9,375,000
23
Exhibit A-1
[Form of Opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx LLP]
1. The Company has full corporate power and authority to conduct its business
as described in the Registration Statement and Prospectus.
2. The Shares have been duly authorized and, upon payment and delivery in
accordance with the Underwriting Agreement, the Shares will be, validly issued,
fully paid and nonassessable.
3. The statements made in the Prospectus under the caption "Description of
Capital Stock", insofar as they purport to constitute summaries of the terms of
the capital stock (including the Shares), or the Delaware General Corporation
Law or rules and regulations thereunder, constitute accurate summaries of the
terms of such capital stock and of such statute and the rules and regulations
thereunder in all material respects.
4. The statements made in the Prospectus under the caption "Certain United
States Tax Consequences to Non-U.S. Holders," insofar as they purport to
constitute summaries of matters of United States federal tax law and regulations
or legal conclusions with respect thereto, constitute accurate summaries of the
matters described therein in all material respects.
5. The statements made in the Registration Statement in Item 14 insofar as
they purport to constitute summaries of the terms of the Delaware General
Corporation Law and other documents, constitute accurate summaries of the terms
of such statutes and documents in all material respects.
6. The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
7. Assuming the application of the proceeds from the sale of Shares as
described in the Prospectus, the issue and sale of the Shares by the Company and
the execution, delivery and performance by the Company of the Underwriting
Agreement will not breach or result in a 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, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument filed
as an exhibit to the Registration Statement, nor will such action violate the
Amended and Restated Certificate of Incorporation or By-laws of the Company or
any federal or New York statute or the Delaware General Corporation Law or any
rule or regulation that has been issued pursuant to any federal or New York
statute or the Delaware General Corporation Law or any order known to us issued
pursuant to any federal or New York statute or the Delaware General Corporation
Law by any court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties, except for any
such breach or default or violation of any
24
rule, regulation or order that would not, individually or in the aggregate, have
a Material Adverse Effect (as defined in the Underwriting Agreement).
6. No consent, approval, authorization, order, registration or qualification
of or with any federal or New York governmental agency or body or any Delaware
governmental agency or body acting pursuant to the Delaware General Corporation
Law or, to our knowledge, any federal or New York court or any Delaware court
acting pursuant to the Delaware General Corporation Law is required for the
execution and delivery by the Company of the Underwriting Agreement, the issue
and sale of the Shares by the Company and the compliance by the Company with all
of the provisions of the Underwriting Agreement, except for the registration
under the Securities Act and the Exchange Act of the Shares, and such consents,
approvals, authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters.
7. The Registration Statement has become effective under the Securities Act
and the Prospectus was filed on July __, 2004 pursuant to Rule 424(b) of the
rules and regulations of the Commission under the Securities Act and, to our
knowledge, no stop order suspending the effectiveness of the Registration
Statement has been issued or proceeding for that purpose has been instituted or
threatened by the Commission.
8. The Company is not, and after giving effect to the offering and sale of
the Shares and the application of the proceeds thereof as described in the
Prospectus will not be, an "investment company" within the meaning of and
subject to regulation under the Investment Company Act of 1940, as amended.
25
Exhibit A-2
[Form of letter of Xxxxxxx Xxxxxxx & Xxxxxxxx LLP]
(i) we advise you that each of the Registration Statement, as of its effective
date, and the Prospectus, as of its date, was, on its face, appropriately
responsive, in all material respects, to the requirements of the Securities Act
and the applicable rules and regulations of the Commission thereunder, except
that in each case we express no view with respect to the financial statements or
other financial or statistical data contained in or omitted from the
Registration Statement or the Prospectus; and
(ii) nothing has come to our attention that causes us to believe that the
Registration Statement, as of its effective date, contained any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading or
that the Prospectus, as of its date or as of the date hereof, contained or
contains any untrue statement of a material fact or omitted or omits to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, except
that in each case we express no belief with respect to the financial statements
or other financial data or statistical data derived from the financial
statements or financial books and records (including, without limitation, data
relating to the Company's loan originations and portfolios) contained in or
omitted from the Registration Statement or the Prospectus.
26
Exhibit A-3
[Form of opinion of Xxxxxxx X. Xxxxxxxxx, Esq.]
1. The Company has been duly incorporated and is validly existing and in good
standing as a corporation under the law of the State of Delaware and has full
corporate power and authority to conduct its business as described in the
Registration Statement and Prospectus.
2. Each of the subsidiaries listed on Schedule 1 (the "Specified
Subsidiaries"), has been duly organized and is validly existing in good standing
under the law of its respective jurisdiction of incorporation, and each such
Subsidiary has full corporate power and authority to conduct its business as
described in the Registration Statements and Prospectus. Each of the
Subsidiaries is duly qualified to do business and is in good standing in each
jurisdiction in which its respective ownership or lease of property or the
conduct of its respective businesses requires such qualification, and has all
power and authority necessary to own or hold its respective properties and to
conduct the businesses in which it is engaged, except where the failure to be so
qualified or have such power or authority would not, individually or in the
aggregate, have a Material Adverse Effect.
3. All outstanding shares of the Company's Common Stock and all outstanding
shares of capital stock or other equity interests of each of the Specified
Subsidiaries have been duly authorized and are validly issued, fully paid and
nonassessable, to the extent such principle is applicable.
4. There are no preemptive rights under federal or New York law or under the
Delaware General Corporation Law to subscribe for or purchase shares of the
Common Stock in connection with the issuance and sale of the Shares by the
Company. There are no preemptive or other rights to subscribe for or purchase,
nor any restriction upon the voting or transfer of, any shares of the Common
Stock pursuant to the Company's Amended and Restated Certificate of
Incorporation or By-laws or any agreement or other instrument to which the
Company is a party or by which the Company is bound, other than restrictions
that terminate upon the consummation of the sale of the Shares.
5. The issue and sale of the Shares by the Company and the execution,
delivery and performance by the Company of the Underwriting Agreement will not
breach or result in a default under any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the Subsidiaries is
bound or to which any of the property or assets of the Company or any of the
Subsidiaries is subject, nor will such action violate the provisions of the
charter or bylaws or similar organizational documents of the Company or of the
Subsidiaries or any federal or state statute or any rule or regulation that has
been issued pursuant to any federal or state statute or any order known to me
issued pursuant to any federal or state statute or by any court or governmental
agency or body having jurisdiction over the Company or any of its subsidiaries
or any of their properties, except for any breach or default or violation of any
statute, rule or regulation or order that would not, individually or in the
aggregate, have a Material Adverse Effect.
27
6. No consent, approval, authorization, order, registration or qualification
of or with any governmental agency or body or, to my knowledge, any court is
required for the issue and sale of the Shares by the Company and the compliance
by the Company with all of the provisions of the Underwriting Agreement, except
for the registration under the Securities Act and the Exchange Act of the
Shares, and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the Underwriters.
7. To my knowledge, except as described in the Prospectus, there are no legal,
governmental or regulatory investigations, actions, suits or proceedings pending
to which the Company or its Subsidiaries is a party or to which any property of
the Company or the Subsidiaries is the subject which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect; and
to my knowledge, no such investigations, actions or proceedings are threatened
or contemplated by any governmental or regulatory authority or threatened by
others.
8. To my knowledge, there are no contracts or agreements between the Company
and any person granting such person the right (other than rights which have been
waived or satisfied) to require the Company to include any securities of the
Company owned or to be owned by such person in the securities registered
pursuant to the Registration Statement.
28
Exhibit B
SUBSIDIARIES OF
COLLEGIATE FUNDING SERVICES, INC.
CFSL Acquisition Corp
Collegiate Funding Services, LLC
Collegiate Funding Portfolio Administration, L.L.C.
Collegiate Funding Master Servicing, L.L.C.
Collegiate Funding of Delaware, L.L.C.
Collegiate Funding Special Purpose Corporation
Collegiate Funding Services Education Loan Trust 1
Collegiate Funding Services Education Loan Trust 2003-A
CFS Servicing, L.L.C.
CFS-SunTech Servicing LLC
Collegiate Funding Originations, LLC
Collegiate Funding Services Resources I, LLC
Collegiate Funding Services Education Loan Trust 2003-B
Collegiate Funding
Services Education Loan Trust 2004-A
Members Connect Inc.
College Publisher, Inc.
eGrad Inc.
29
Annex A
FORM OF LOCK-UP AGREEMENT
, 2004
X.X. XXXXXX SECURITIES INC.
XXXXXXX XXXXX & CO.
AS REPRESENTATIVES OF
THE SEVERAL UNDERWRITERS LISTED IN
SCHEDULE I TO THE UNDERWRITING
AGREEMENT REFERRED TO BELOW
c/o X.X. Xxxxxx Securities Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
- and -
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
4 World Financial Center
Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Collegiate Funding Services, Inc. --- Initial Public Offering
Ladies and Gentlemen:
The undersigned understands that you, as Representatives of the several
Underwriters, propose to enter into an Underwriting Agreement (the "Underwriting
Agreement") with Collegiate Funding Services, Inc., a Delaware corporation (the
"Company"), providing for the public offering (the "Public Offering") by the
several Underwriters named in Schedule I to the Underwriting Agreement (the
"Underwriters"), of common stock of the Company (the "Securities"). Capitalized
terms used herein and not otherwise defined shall have the meanings set forth in
the Underwriting Agreement.
In consideration of the Underwriters' agreement to purchase and make the
Public Offering of the Securities, and for other good and valuable consideration
receipt of which is
30
hereby acknowledged, the undersigned hereby agrees that, without the prior
written consent of X.X. Xxxxxx Securities Inc. and Xxxxxxx Xxxxx & Co. on behalf
of the Underwriters, the undersigned will not, during the period ending 180 days
after the date of the prospectus relating to the Public Offering (the
"Prospectus"), (1) offer, pledge, announce the intention to sell, sell, contract
to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock,
$0.001 per share par value, of the Company (the "Common Stock") or any
securities convertible into or exercisable or exchangeable for Common Stock
(including without limitation, Common Stock which may be deemed to be
beneficially owned by the undersigned in accordance with the rules and
regulations of the Securities and Exchange Commission and securities which may
be issued upon exercise of a stock option or warrant) or (2) enter into any swap
or other agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise. In addition, the
undersigned agrees that, without the prior written consent of X.X. Xxxxxx
Securities Inc. and Xxxxxxx Xxxxx & Co. on behalf of the Underwriters, it will
not, during the period ending 180 days after the date of the Prospectus, make
any demand for or exercise any right with respect to, the registration of any
shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock.
The foregoing paragraph shall not apply to bona fide gifts or other
dispositions of shares of any class of the Company's capital stock that do not
involve a disposition for value, in each case that are made exclusively between
and among the undersigned or members of the undersigned's family, or affiliates
of the undersigned, including its partners (if a partnership), members (if a
limited liability company), any of its wholly-owned subsidiaries (if a
corporation) or any trust for the direct or indirect benefit of the undersigned
or members of the undersigned's family; provided that it shall be a condition to
any such transfer that (i) the transferee agrees to be bound by the terms of
this lock-up letter agreement to the same extent as if the transferee were a
party hereto, and (ii) no filing by any party (donor, donee, transferor or
transferee) under the Securities Exchange Act of 1934, as amended, shall be
required or shall be voluntarily made in connection with such transfer or
distribution (other than an annual filing on a Form 5 made during, or after the
expiration of, the 180-day period referred to above).
In furtherance of the foregoing, the Company, and any duly appointed
transfer agent for the registration or transfer of the securities described
herein, are hereby authorized to decline to make any transfer of securities if
such transfer would constitute a violation or breach of this Letter Agreement.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Letter Agreement. All authority
herein conferred or agreed to be conferred and any obligations of the
undersigned shall be binding upon the successors, assigns, heirs or personal
representatives of the undersigned.
The undersigned understands that, if the Company notifies you that it does
not intend to proceed with the Public Offering, if the Underwriting Agreement
does not become effective prior
31
to August 16, 2004, or if the Underwriting Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Common Stock to be sold thereunder, the
undersigned shall be released form all obligations under this Letter Agreement.
The undersigned understands that the Underwriters are entering into the
Underwriting Agreement and proceeding with the Public Offering in reliance upon
this Letter Agreement.
32
This lock-up agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the conflict of laws
principles thereof.
Very truly yours,
[NAME OF STOCKHOLDER]
By: _______________________
Name:
Title:
Accepted as of the date first set forth above:
X.X. XXXXXX SECURITIES INC.
XXXXXXX XXXXX & CO.
ACTING SEVERALLY ON BEHALF OF THEMSELVES
AND THE SEVERAL UNDERWRITERS NAMED IN
SCHEDULE I TO THE UNDERWRITING AGREEMENT
BY: X.X. XXXXXX SECURITIES INC.
BY: ______________________________
Name:
Title:
By: XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx &
Xxxxx Incorporated
By: ______________________
Name:
Title:
33
