Portfolio Recovery Associates, Inc. 1,250,000 Shares of Common Stock1 Underwriting Agreement
Exhibit 1.1
Portfolio Recovery Associates, Inc.
1,250,000 Shares of Common Stock1
1,250,000 Shares of Common Stock1
Underwriting Agreement
February 17, 2010
Xxxxxxx Xxxxx & Company, L.L.C.
As Representative of the Several
Underwriters Named in Schedule A
c/o Xxxxxxx Xxxxx & Company, L.L.C.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
As Representative of the Several
Underwriters Named in Schedule A
c/o Xxxxxxx Xxxxx & Company, L.L.C.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Section 1. Introductory. Portfolio Recovery Associates, Inc. (the “Company”), a
Delaware corporation, has an authorized capital stock consisting of 2,000,000 shares, $0.01 par
value, of Preferred Stock, of which no shares will be outstanding as of the First Closing Date
hereinafter defined, and 30,000,000 shares, $0.01 par value, of Common Stock (“Common Stock”), of
which 15,520,235 shares were outstanding as of the date hereof, and no other shares of Common Stock
will have been issued as of the First Closing Date hereinafter defined, except for shares of Common
Stock issued upon the exercise of stock options outstanding as of the date hereof or shares of
Common Stock issued pursuant to this Agreement. The Company proposes to issue and sell 1,250,000
shares of its authorized but unissued Common Stock (the “Firm Shares”) to the several underwriters
named in Schedule A (“Underwriters”), who are acting severally and not jointly. In addition, the
Company proposes to grant to the Underwriters options to purchase up to an aggregate of 187,500
additional shares of Common Stock (“Option Shares”) as provided in Section 4 hereof. The Firm
Shares and, to the extent such options are exercised, the Option Shares, are hereinafter
collectively referred to as the “Shares.”
You have advised the Company that the Underwriters propose to make a public offering of their
respective portions of the Shares as soon as you deem advisable after the registration statement
hereinafter referred to becomes effective, if it has not yet become effective, and the Pricing
Agreement hereinafter defined has been executed and delivered.
Prior to the purchase and public offering of the Shares by the several Underwriters, the
Company and the Representative, acting on behalf of the several Underwriters, shall enter into an
agreement substantially in the form of Exhibit A hereto (the “Pricing Agreement”). The
Pricing Agreement may take the form of an exchange of any standard form of written
telecommunication between the Company and the Representative and shall specify such applicable
information as is indicated in Exhibit A hereto. The offering of the Shares will be
governed by this Agreement, as supplemented by the Pricing Agreement. From and after the date of
the execution and delivery of the Pricing Agreement, this Agreement shall be deemed to incorporate
the Pricing Agreement.
| 1 | Plus an option to acquire up to 187,500 additional shares to cover overallotments. |
The Company hereby confirms its agreement with the Underwriters as follows:
Section 2. Representations and Warranties of the Company. The Company represents and
warrants to the several Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-162224), a related base
prospectus (the “Base Prospectus”) and a preliminary prospectus supplement to the Base
Prospectus (any such preliminary prospectus supplement, together with the Base Prospectus, a
“preliminary prospectus”) with respect to the Shares have been prepared and filed with the
Securities and Exchange Commission (“Commission”) by the Company in conformity in all
material respects with the requirements of the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder (collectively, the “1933 Act;” unless
otherwise indicated all references herein to specific rules are rules promulgated under the
0000 Xxx); and the Company has so prepared and has filed such amendments thereto, if any,
and such amended preliminary prospectuses as may have been required to the date hereof and
will file such additional amendments thereto and such amended prospectuses as may hereafter
be required. The Company will prepare and file a prospectus pursuant to Rule 424(b) that
discloses the information previously omitted from the preliminary prospectus in reliance
upon Rule 430B. To the extent that the Representative requests, there have been or will
promptly be delivered to you one signed copy of such registration statement and amendments,
one copy of each exhibit filed therewith, and conformed copies of such registration
statement and amendments (but without exhibits) and of the related Base Prospectus and
preliminary prospectus or prospectuses, and final forms of prospectus for each of the
Underwriters.
Such registration statement (as amended, if applicable) at the time it became effective
and the prospectus constituting a part thereof (including, in each case, the information, if
any, deemed to be part thereof pursuant to Rule 430B or the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission thereunder (collectively, the
“Exchange Act”)), as from time to time amended or supplemented, are hereinafter referred to
as the “Registration Statement” and the “Prospectus,” respectively, except that if any
revised prospectus shall be provided to the Underwriters by the Company for use in
connection with the offering of the Shares which differs from the Prospectus on file at the
Commission at the time the Registration Statement became or becomes effective (whether or
not such revised prospectus is required to be filed by the Company pursuant to Rule 424(b)),
the term “Prospectus” shall refer to such revised prospectus from and after the time it was
provided to the Underwriters for such use. Any registration statement (including any
amendment or supplement thereto or information which is deemed part thereof) filed by the
Company under Rule 462(b) (“Rule 462(b) Registration Statement”) shall be deemed to be part
of the “Registration Statement” as defined herein, and any prospectus (including any
amendment or supplement thereto or information which is deemed part thereof) included in
such registration statement shall be deemed to be part of the “Prospectus” as defined
herein, as appropriate. Any reference herein to the Registration Statement, the Base
Prospectus, a preliminary prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, except to the extent any information contained in such filings is deemed
“furnished” in accordance with Commission rules. Any document filed by the Company after
the effective date of the Registration Statement or the date of any prospectus and
incorporated by reference into the Registration Statement shall be deemed to be included in
the Registration Statement or such prospectus as of the date of such filing. Any document
filed by the Company under the Exchange Act prior to the date hereof or during the offering
period, when such document was or is filed with the Commission, conformed or will conform in
all material respects to the requirements of the Exchange Act, and none of such documents
contained or will contain, as of the date such
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document was or is filed with the Commission, any untrue statement of a material fact
or omitted or will omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading.
(b) (i) At the time of filing the Registration Statement, (ii) at the time of the most
recent amendment thereto for the purposes of complying with Section 10(a)(3) of the 1933 Act
(whether such amendment was by post-effective amendment, incorporated report filed pursuant
to Section 13 or 15(d) of the Exchange Act or form of prospectus), (iii) at the time the
Company or any person acting on its behalf (within the meaning, for this clause only, of
Rule 163(c) of the 0000 Xxx) made any offer relating to the Shares in reliance on the
exemption of Rule 163 of the 1933 Act, and (iv) as of the date hereof, the Company was and
is a “well known seasoned issuer” as defined in Rule 405 under the 1933 Act. The
Registration Statement is an “automatic shelf registration statement,” as defined in Rule
405 of the 1933 Act, that automatically became effective not more than three years prior to
the date hereof; the Company has not received from the Commission any notice pursuant to
Rule 401(g)(2) of the 1933 Act objecting to use of the automatic shelf registration
statement form and the Company has not otherwise ceased to be eligible to use the automatic
shelf registration form.
(c) The Commission has not issued any order preventing or suspending the use of any
preliminary prospectus, and each preliminary prospectus has conformed in all material
respects with the requirements of the 1933 Act and, as of its date, has not included any
untrue statement of a material fact or omitted to state a material fact necessary to make
the statements therein, in light of the circumstances in which they were made, not
misleading; and when the Registration Statement became effective, and at all times
subsequent thereto, up to the First Closing Date or the Second Closing Date hereinafter
defined, as the case may be, the Registration Statement, including the information deemed to
be part of the Registration Statement at the time specified in Rule 430B, if applicable, and
the Prospectus and any amendments or supplements thereto, in all material respects conformed
or will in all material respects conform to the requirements of the 1933 Act, and neither
the Registration Statement nor the Prospectus, nor any amendment or supplement thereto,
included or will include any untrue statement of a material fact or omitted or will omit to
state a material fact, in the case of the Registration Statement or any amendment or
supplement thereto, required to be stated therein or necessary to make the statements
therein not misleading and, in the case of the Prospectus, or any amendment or supplement
thereto, necessary to make the statements therein, in light of the circumstances under which
they were made, not misleading.
As of the Applicable Time hereinafter defined, neither (x) the Issuer General Use Free
Writing Prospectus(es) hereinafter defined issued at or prior to the Applicable Time, the
Statutory Prospectus hereinafter defined as of the Applicable Time and the information in
Schedule A to the Pricing Agreement, all being considered together (collectively, the
“Disclosure Package”) nor (y) any individual Issuer Limited Use Free Writing Prospectus
hereinafter defined issued at or prior to the Applicable Time, when considered together with
the Disclosure Package, included any untrue statement of a material fact or omitted to state
a material fact necessary to make the statements therein not misleading.
As used in this Section 2(c) and elsewhere in this Agreement:
“Applicable Time” means 4:00 P.M., Chicago Time, on February 17, 2010 or such other
time as agreed by the Company and the Representative.
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“Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as defined
in Rule 433, relating to the Shares that (i) is required to be filed with the Commission by
the Company, (ii) is a “road show for an offering that is a written communication” within
the meaning of Rule 433(d)(8)(i) or (iii) is exempt from filing pursuant to Rule
433(d)(5)(i) because it contains a description of the Shares or of the offering thereof that
does not reflect the final terms, in each case in the form filed or required to be filed
with the Commission or, if not required to be filed, in the form required to be retained in
the Company’s records pursuant to Rule 433(g).
“Issuer General Use Free Writing Prospectus” means any Issuer Free Writing Prospectus
specified in Schedule B hereto.
“Issuer Limited Use Free Writing Prospectus” means any Issuer Free Writing Prospectus
that is not an Issuer General Use Free Writing Prospectus.
“Statutory Prospectus” as of any time means the Base Prospectus, as supplemented by the
preliminary prospectus supplement, relating to the Shares that are included in the
Registration Statement immediately prior to the Applicable Time.
Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times
through the completion of the public offer and sale of the Shares or until any earlier date
that the Company notified or notifies the Representative as described in Section 5(d), did
not, does not and will not include any information that conflicted, conflicts or will
conflict with the information contained in the Registration Statement or the Prospectus, and
any preliminary or other prospectus deemed to be a part thereof that has not been superseded
or modified.
Notwithstanding the foregoing, the representations and warranties of the Company set
forth in this Section 2(c) shall not apply to information contained in or omitted from any
preliminary prospectus, the Registration Statement, the Prospectus, any Issuer Free Writing
Prospectus or any amendment or supplement thereto in reliance upon and in conformity with
written information furnished to the Company by or on behalf of any Underwriter through the
Representative specifically for use in the preparation thereof.
At the earliest time after the filing of the Registration Statement relating to the
Shares that the Company or another offering participant made a bona fide offer (within the
meaning of Rule 164(h)(2)) of the 1933 Act and at the date of this Agreement, the Company
was not and is not an “ineligible issuer” as defined in Rule 405.
(d) The Company and its subsidiaries have been duly organized or formed and are validly
existing as corporations or limited liability companies in good standing under the laws of
their respective places of incorporation or formation, as the case may be, with the
corporate power and authority or the power and authority as a limited liability company, as
applicable, to own their properties and conduct their business as described in the
Prospectus; the Company and each of its subsidiaries are duly qualified to do business as
foreign corporations or foreign limited liability companies, as applicable, under the
applicable law of, and are in good standing as such in, each jurisdiction in which they own
or lease substantial properties, have an office, or in which substantial business is
conducted and such qualification is required except in any such case where the failure to so
qualify or be in good standing would not have a material adverse effect upon the Company and
its subsidiaries taken as a whole (a “Material Adverse Effect”); and no proceeding of which
the Company has knowledge has been instituted in any such jurisdiction, revoking, limiting
or curtailing, or seeking to revoke, limit or curtail, such power and authority or
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qualification. The States of Kansas, Nevada, Alabama, Tennessee, California, Illinois
and Texas and the Commonwealth of Virginia are the only jurisdictions in which the Company
or any of its subsidiaries maintains an office or leases property.
(e) The Company owns directly or indirectly 100 percent of the issued and outstanding
limited liability company interests of each of its subsidiaries, free and clear of any
claims, liens, encumbrances or security interests and all of such limited liability company
interests have been duly authorized and validly issued and are fully paid.
(f) The issued and outstanding shares of capital stock of the Company as set forth in
the Prospectus have been duly authorized and validly issued, are fully paid and
nonassessable, and conform to the description thereof contained in the Prospectus.
(g) The Shares to be sold by the Company have been duly authorized and when issued,
delivered and paid for pursuant to this Agreement, will be validly issued, fully paid and
nonassessable, and will conform to the description thereof contained in the Prospectus.
(h) The making and performance by the Company of this Agreement and the Pricing
Agreement have been duly authorized by all necessary corporate action and will not (i)
violate any provision of the Company’s charter or bylaws, (ii) result, except as would not
have a Material Adverse Effect, in a breach or violation of any of the terms and provisions
of, or constitute a default or change of control under (A) any agreement, franchise,
license, indenture, mortgage, deed of trust, or other instrument to which the Company or any
subsidiary is a party or by which the Company, any subsidiary or the property of any of them
may be bound or affected, or (B) any statute, rule, regulation or order applicable to the
Company or any of its subsidiaries of any court, regulatory body, administrative agency or
other governmental body having jurisdiction over the Company or any subsidiary or any of
their respective properties, or any order of any court, regulatory body, administrative
agency or other governmental body entered in any proceeding to which the Company or any
subsidiary was or is now a party or by which it is bound. No consent, approval,
authorization or other order of any court, regulatory body, administrative agency or other
governmental body is required for the execution and delivery of this Agreement or the
Pricing Agreement or the consummation of the transactions contemplated herein or therein,
except for compliance with the 1933 Act and blue sky laws applicable to the public offering
of the Shares by the several Underwriters and clearance of such offering with the Financial
Industry Regulatory Authority (“FINRA”). This Agreement has been duly executed and
delivered by the Company.
(i) The accountants who have expressed their opinions with respect to certain of the
consolidated financial statements incorporated by reference in the Registration Statement
are an independent registered public accounting firm as required by the 1933 Act and the
Exchange Act, and such accountants are not in violation of the auditor independence
requirements of the Xxxxxxxx-Xxxxx Act of 2002 (the “Xxxxxxxx-Xxxxx Act”).
(j) The consolidated financial statements of the Company incorporated by reference in
the Registration Statement, the Disclosure Package and the Prospectus present fairly, in all
material respects, the consolidated financial position of the Company as of the respective
dates of such financial statements, and the consolidated results of operations and cash
flows of the Company for the respective periods covered thereby, all in conformity with U.S.
generally accepted accounting principles consistently applied throughout the periods
involved, except as disclosed therein.
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The financial information set forth in the Prospectus under “Summary Consolidated
Financial and Operating Data” presents fairly, in all material respects, on the basis stated
in the Prospectus, the information set forth therein.
All disclosures contained in the Registration Statement, the Disclosure Package and the
Prospectus regarding “non-GAAP financial measures” (as such term is defined by the
Commission’s rules and regulations) comply with Regulation G of the Exchange Act and Item 10
of Regulation S-K under the 1933 Act, to the extent applicable.
(k) Neither the Company nor any subsidiary is in violation of its organizational
documents or in default under any consent decree, or in default with respect to any material
provision of any lease, loan agreement, franchise, license, permit or other contract
obligation to which it is a party; and, to the Company’s knowledge, there does not exist any
state of facts which constitutes an event of default as defined in such documents or which,
with notice or lapse of time or both, would constitute such an event of default, in each
case, except for violations or defaults that neither singly nor in the aggregate would have
a Material Adverse Effect.
(l) There are no material legal or governmental proceedings pending, or to the
Company’s knowledge, threatened to which the Company or any subsidiary is or may be a party
or of which material property owned or leased by the Company or any subsidiary is or may be
the subject, or related to environmental or discrimination matters that are not disclosed in
the Prospectus, or that question the validity of this Agreement or the Pricing Agreement or
any action taken or to be taken pursuant hereto or thereto.
(m) There are no holders of securities of the Company having rights to registration
thereof or preemptive rights to purchase Common Stock.
(n) 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 hereinabove described
(or elsewhere in the Prospectus), subject to no lien, mortgage, pledge, charge or
encumbrance of any kind except those, if any, reflected in such financial statements (or
elsewhere in the Prospectus) or that are not material to the Company and its subsidiaries
taken as a whole. The Company and each of its subsidiaries hold their respective leased
properties that are material to the Company and its subsidiaries taken as a whole under
valid and binding leases.
(o) The Company has not taken and will not take during the offering period (including
any time after the effective date of the Registration Statement during which the
Underwriters are deemed to be making a public offering), directly or indirectly, any action
designed to or which has constituted or which might reasonably be expected to cause or
result, under the Exchange Act or otherwise, in stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the Shares.
(p) Subsequent to the respective dates as of which information is given in the
Registration Statement, the Disclosure Package and the Prospectus, and except as
contemplated by the Prospectus, the Company and its subsidiaries, taken as a whole, have not
incurred any material liabilities or obligations, direct or contingent, or entered into any
material transactions not in the ordinary course of business and there has not been any
material adverse change in their condition (financial or otherwise) or results of operations
nor any material change in their capital stock, short-term debt or long-term debt.
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(q) There is no material document of a character required to be described in the
Registration Statement, the Disclosure Package or the Prospectus or to be filed as an
exhibit to the Registration Statement which is not described or filed as required.
(r) Except as disclosed in the Prospectus, the Company together with its subsidiaries
owns and possesses all right, title and interest in and to, or has duly licensed from third
parties, all patents, patent rights, trade secrets, inventions, know-how, trademarks, trade
names, copyrights, service marks and other proprietary rights (“Trade Rights”) material to
the business of the Company and each of its subsidiaries taken as a whole. Neither the
Company nor any of its subsidiaries has received any notice of infringement,
misappropriation or conflict from any third party as to such material Trade Rights which has
not been resolved or disposed of and neither the Company nor any of its subsidiaries has
infringed, misappropriated or otherwise conflicted with material Trade Rights of any third
parties, which infringement, misappropriation or conflict would have a Material Adverse
Effect.
(s) The conduct of the business of the Company and each of its subsidiaries is in
compliance in all respects with applicable federal, state, local and foreign laws and
regulations, except where the failure to be in compliance would not have a Material Adverse
Effect.
(t) The Company and its subsidiaries possess certificates, authorizations, or permits
issued by appropriate governmental agencies or bodies necessary to conduct the business now
operated by them, and have not received any notice of proceedings relating to the revocation
or modification of any such certificate, authorization or permit that, if determined
adversely to the Company or its subsidiaries, would, individually or in the aggregate, have
a Material Adverse Effect.
(u) All offers and sales of the Company’s capital stock or membership interests of its
subsidiaries prior to the date hereof were either (i) made pursuant to a registration
statement filed by the Company with the Commission under the 1933 Act or (ii) at all
relevant times exempt from the registration requirements of the 1933 Act and, in each case,
all such offers and sales during the twelve months prior to the date hereof were duly
registered with or the subject of an available exemption from the registration requirements
of the applicable state and local securities or blue sky laws.
(v) The Company has filed all necessary federal and state income and franchise tax
returns that were required to be filed prior to the date hereof, after taking into account
all applicable extensions obtained, and has paid all taxes shown as due thereon and there is
no tax deficiency that has been, or to the knowledge of the Company might be, asserted
against the Company or any of its properties or assets, in each case that would have a
Material Adverse Effect.
(w) A registration statement pursuant to Section 12(b) of the Exchange Act to register
the Common Stock thereunder has been declared effective by the Commission pursuant to the
Exchange Act, and the Common Stock is duly registered thereunder. The Shares are listed on
The NASDAQ Global Select Market.
(x) The Company has established and maintains disclosure controls and procedures (as
defined in Rules 13a-15 and 15d-15 under the Exchange Act) and such controls and procedures
are effective in ensuring that material information relating to the Company, including its
subsidiaries, is made known to the principal executive officer and the principal financial
officer. The Company has utilized such controls and procedures (to the extent applicable)
in
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preparing and evaluating the disclosures included in the Registration Statement, the
Disclosure Package and the Prospectus.
(y) The Company and each of its subsidiaries maintain a system 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 accountability for assets; (iii)
access to assets is permitted only in accordance with management’s general or specific
authorization; and (iv) amounts reflected on the Company’s consolidated balance sheet for
assets are compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(z) The Company is not, and does not intend to conduct its business in a manner in
which it would become, an “investment company” as defined in Section 3(a) of the Investment
Company Act of 1940, as amended (“Investment Company Act”).
(aa) No transaction has occurred between or among the Company and any of its officers
or directors, stockholders or any affiliate or affiliates of any such officer or director or
stockholder that is required to be described in and is not described in the Registration
Statement and the Prospectus.
(bb) The Company’s board of directors has validly appointed an audit committee whose
composition satisfies the requirements of Rule 5605(c)(2) of the Rules of The NASDAQ Stock
Market (the “NASDAQ Rules”), and the board of directors or the audit committee has adopted a
charter that satisfies the requirements of Rule 5605(c)(1) of the NASDAQ Rules.
(cc) The Company and its subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are customary in the
businesses in which they are engaged or propose to engage after giving effect to the
transactions described in the Prospectus. To the knowledge of the Company, all policies of
insurance and fidelity or surety bonds insuring the Company, its subsidiaries and their
respective businesses, assets, employees, officers and directors are in full force and
effect; and the Company and its subsidiaries are in compliance with the terms of such
policies and instruments in all material respects.
(dd) The Company is in compliance in all material respects with all applicable
provisions of the Xxxxxxxx-Xxxxx Act and all rules and regulations promulgated thereunder.
(ee) None of the Company and its subsidiaries is involved in any labor dispute nor, to
the knowledge of the Company, is any such dispute threatened. The Company is not aware of
any threatened or pending litigation between the Company and any of its executive officers
and has not received notice from any of its executive officers that such officer does not
intend to remain in the employment of the Company.
Section 3. Representations and Warranties of the Underwriters.
The Representative, on behalf of the several Underwriters, represents and warrants to the
Company that the information set forth (a) on the cover page of the Prospectus with respect to
price, underwriting discount and terms of the offering and (b) in paragraphs 3, 12 and 13 under
“Underwriting” in the Prospectus was furnished to the Company by and on behalf of the Underwriters
for use in
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connection with the preparation of the Registration Statement and is correct and complete in
all material respects.
Section 4. Purchase, Sale and Delivery of Shares. On the basis of the
representations, warranties and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to sell to the Underwriters named in Schedule A
hereto, and the Underwriters agree, severally and not jointly, to purchase from the Company
1,250,000 Firm Shares at the price per share set forth in the Pricing Agreement. The obligation of
each Underwriter to the Company shall be to purchase from the Company that number of Firm Shares
set forth opposite the name of such Underwriter in Schedule A. The public offering price and the
purchase price shall be set forth in the Pricing Agreement.
At 9:00 A.M., Chicago Time, on the fourth business day, if permitted under Rule 15c6-1 under
the Exchange Act, (or the third business day if required under Rule 15c6-1 under the Exchange Act
or unless postponed in accordance with the provisions of Section 12) following the date the
Registration Statement becomes effective (or, if the Company has elected to rely upon Rule 430B,
the fourth business day, if permitted under Rule 15c6-1 under the Exchange Act, (or the third
business day if required under Rule 15c6-1 under the Exchange Act) after execution of the Pricing
Agreement), or such other time not later than ten business days after such date as shall be agreed
upon by the Representative and the Company, the Company will deliver to you at the offices of
counsel for the Underwriters or through the facilities of The Depository Trust Company for the
accounts of the several Underwriters, certificates representing the Firm Shares to be sold by it,
against payment of the purchase price therefor by delivery of federal or other immediately
available funds, by wire transfer or otherwise, to the Company. Such time of delivery and payment
is herein referred to as the “First Closing Date.” The certificates for the Firm Shares to be so
delivered will be in such denominations and registered in such names as you request by notice to
the Company prior to 10:00 A.M., Chicago Time, on the second business day preceding the First
Closing Date, and will be made available at the Company’s expense for checking and packaging by the
Representative at 10:00 A.M., Chicago Time, on the business day preceding the First Closing Date.
Payment for the Firm Shares so to be delivered shall be made at the time and in the manner
described above at the offices of counsel for the Underwriters.
In addition, on the basis of the representations, warranties and agreements herein contained,
but subject to the terms and conditions herein set forth, the Company hereby grants an option to
the several Underwriters to purchase, severally and not jointly, up to an aggregate of 187,500
Option Shares, at the same purchase price per share to be paid for the Firm Shares, for use solely
in covering any overallotments made by the Underwriters in the sale and distribution of the Firm
Shares. The option granted hereunder may be exercised at any time (but not more than once) within
30 days after the date of the Prospectus first filed by the Company pursuant to Rule 424(b) under
the 1933 Act (the “Rule 424 Prospectus”) upon notice by you to the Company setting forth the
aggregate number of Option Shares as to which the Underwriters are exercising the option, the names
and denominations in which the certificates for such shares are to be registered and the time and
place at which such certificates will be delivered. Such time of delivery (which may not be
earlier than the First Closing Date), being herein referred to as the “Second Closing Date,” shall
be determined by you, but if at any time other than the First Closing Date, shall not be earlier
than three nor later than 10 full business days after delivery of such notice of exercise. The
number of Option Shares to be purchased by each Underwriter shall be determined by multiplying the
number of Option Shares to be sold by the Company by a fraction, the numerator of which is the
number of Firm Shares to be purchased by such Underwriter as set forth opposite its name in
Schedule A and the denominator of which is the total number of Firm Shares (subject to such
adjustments to eliminate any fractional share purchases as you in your absolute discretion may
make). Certificates for the Option Shares will be made available at the Company’s expense for
checking and packaging at 10:00 A.M., Chicago Time, on the first full business day preceding the
Second Closing
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Date. The manner of payment for and delivery of the Option Shares shall be the same as for
the Firm Shares as specified in the preceding paragraph.
You have advised the Company that each Underwriter has authorized you to accept delivery of
its Shares, to make payment and to acknowledge receipt therefor. You, individually and not as the
Representative of the Underwriters, may make payment for any Shares to be purchased by any
Underwriter whose funds shall not have been received by you 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 obligation hereunder.
Section 5. Covenants of the Company. The Company covenants and agrees that:
(a) The Company will advise you promptly of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of the institution of
any proceedings for that purpose, or of any notification of the suspension of qualification
of the Shares for sale in any jurisdiction or the initiation or threatening of any
proceedings for that purpose or of any examination pursuant to Section 8(e) of the 1933 Act
concerning the Registration Statement and if the Company becomes the subject of a proceeding
under Section 8A of the 1933 Act in connection with the offering of the Shares, and will
also advise you promptly of any request of the Commission for amendment or supplement of the
Registration Statement, of any preliminary prospectus or of the Prospectus, or for
additional information.
(b) The Company will give you notice of its intention to file or prepare any amendment
to the Registration Statement (including any post-effective amendment) or any Rule 462(b)
Registration Statement or any amendment or supplement to the Prospectus (including any
revised prospectus which the Company proposes for use by the Underwriters in connection with
the offering of the Shares which differs from the prospectus on file at the Commission at
the time the Registration Statement became or becomes effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b)) and will furnish you with copies
of any such amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file any such amendment or supplement or use
any such prospectus to which you or counsel for the Underwriters shall reasonably object.
(c) If at any time when a prospectus relating to the Shares is required to be delivered
under the 1933 Act any event occurs as a result of which the Prospectus, including any
amendments or supplements, would include an untrue statement of a material fact, or omit to
state any material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading, or if it
is necessary at any time to amend the Prospectus, including any amendments or supplements
thereto and including any revised prospectus which the Company proposes for use by the
Underwriters in connection with the offering of the Shares which differs from the prospectus
on file with the Commission at the time of effectiveness of the Registration Statement,
whether or not such revised prospectus is required to be filed pursuant to Rule 424(b) to
comply with the 1933 Act, the Company promptly will advise you thereof and will promptly
prepare and file with the Commission an amendment or supplement which will correct such
statement or omission or an amendment which will effect such compliance; and, in case any
Underwriter is required to deliver a prospectus nine months or more after the effective date
of the Registration Statement, the Company upon request, but at the expense of such
Underwriter, will prepare promptly such prospectus or prospectuses as may be necessary to
permit compliance with the requirements of Section 10(a)(3) of the 1933 Act.
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(d) If at any time following the issuance of an Issuer Free Writing Prospectus there
occurred or occurs an event or development of which the Company is aware and as a result of
which such Issuer Free Writing Prospectus conflicted or would conflict with the information
contained in the Registration Statement or included or would include an untrue statement of
a material fact or omitted or would omit to state a material fact necessary to make the
statements therein, in light of the circumstances prevailing at that subsequent time, not
misleading, the Company will promptly notify the Representative and will promptly amend or
supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate or correct
such conflict, untrue statement or omission.
(e) Neither the Company nor any of its subsidiaries will acquire any capital stock of
the Company prior to the earlier of the Second Closing Date or termination or expiration of
the related option nor will the Company declare or pay any dividend or make any other
distribution upon the Common Stock payable to stockholders of record on a date prior to the
earlier of the Second Closing Date or termination or expiration of the related option,
except in either case as contemplated by the Prospectus.
(f) As soon as practicable, but not later than March 16, 2011, the Company will make
generally available to its security holders an earnings statement (which need not be
audited) covering a period of at least 12 months beginning after the effective date of the
Registration Statement, which will satisfy the provisions of the last paragraph of Section
11(a) of the 1933 Act.
(g) During such period as a prospectus is required by law to be delivered in connection
with offers and sales of the Shares by an Underwriter or dealer, upon your request, the
Company will furnish to you at its expense, subject to the provisions of subsection (c)
hereof, copies of the Registration Statement, the Prospectus, any Permitted Free Writing
Prospectus hereinafter defined, each preliminary prospectus and all amendments and
supplements to any such documents in each case as soon as available and in such quantities
as you may reasonably request, for the purposes contemplated by the 1933 Act.
(h) The Company will cooperate with the Underwriters in qualifying or registering the
Shares for sale under the blue sky laws of such jurisdictions as you designate, and will
continue such qualifications in effect so long as reasonably required for the distribution
of the Shares. The Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any such jurisdiction where it is not
currently qualified or where it would be subject to taxation as a foreign corporation.
(i) Upon the request of the Representative and to the extent not publicly available on
the Commission’s XXXXX database, during the period of five years hereafter, the Company will
furnish you and each of the other Underwriters with a copy (i) as soon as practicable after
the filing thereof, of each report filed by the Company with the Commission, any securities
exchange or FINRA; (ii) as soon as practicable after the release thereof, of each material
press release in respect of the Company that is not disseminated via the Company’s website
or a national news service; and (iii) as soon as available, of each report of the Company
mailed to stockholders.
(j) The Company will use the proceeds received by it from the sale of the Shares being
sold by it in the manner specified in the Prospectus.
(k) If, at the time of effectiveness of the Registration Statement, any information
shall have been omitted therefrom in reliance upon Rule 430B, then promptly following the
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execution of the Pricing Agreement, the Company will prepare, and file or transmit for
filing with the Commission in accordance with such Rule 430B and Rule 424(b), copies of an
amended Prospectus, or, if required by such Rule 430B, a post-effective amendment to the
Registration Statement (including an amended Prospectus), containing all information so
omitted. If required, the Company will prepare and file, or transmit for filing, a Rule
462(b) Registration Statement not later than the date of the execution of the Pricing
Agreement. If a Rule 462(b) Registration Statement is filed, the Company shall make payment
of, or arrange for payment of, the additional registration fee owing to the Commission
required by Rule 111.
(l) For so long as the Company is subject to the Exchange Act, the Company will comply
with all registration, filing and reporting requirements of the Exchange Act and The NASDAQ
Global Select Market and the Company will comply in all material respects with all
applicable provisions of the Xxxxxxxx-Xxxxx Act.
(m) The Company will maintain such controls and other procedures, including without
limitation those required by the Xxxxxxxx-Xxxxx Act and the applicable regulations
thereunder, that are designed to ensure that information required to be disclosed by the
Company in the reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the Commission’s
rules and forms, including without limitation, controls and procedures designed to ensure
that information required to be disclosed by the Company in the reports that it files or
submits under the Exchange Act is accumulated and communicated to the Company’s management,
including its principal executive officer and its principal financial officer, or persons
performing similar functions, as appropriate to allow timely decisions regarding required
disclosure, to ensure that material information relating to the Company, including its
subsidiaries, is made known to them by others within those entities.
(n) For so long as the Company is subject to the Exchange Act, the Company and its
subsidiaries will maintain a system of internal accounting controls designed 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 accountability for assets; (iii) access to assets is permitted
only in accordance with management’s general or specific authorization; and (iv) amounts
reflected on the Company’s consolidated balance sheet for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with respect to any
differences.
(o) The Company agrees not to, directly or indirectly, (i) offer, sell (including
“short” selling), assign, transfer, encumber, pledge, contract to sell, grant an option to
purchase, 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 or securities
convertible or exchangeable into, or exercisable for, Common Stock; or (ii) enter any swap
or other arrangement that transfers all or a portion of the economic consequences associated
with the ownership of any Common Stock (except, in each case, Common Stock sold pursuant to
this Agreement or issued (A) pursuant to the exercise of currently outstanding stock options
or the grant of restricted stock to employees of the Company other than executive officers
in the ordinary course of business consistent with past practice, including in connection
with the hiring of employees, in each case under the Company’s Amended and Restated 2002
Stock Option Plan and 2004 Restricted Stock Plan, or (B) upon conversion of currently
outstanding convertible securities) without the prior written consent of the Representative
for a period of 90 days (the “Lock-Up Period”) after the date of this Agreement; provided,
however, that, for so long as NASD Rule 2711 or any similar
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or successor rule is in effect, if (1) during the last 17 days of the initial Lock-Up
Period, the Company releases earnings results or material news or a material event relating
to the Company occurs or (2) prior to the expiration of the initial Lock-Up Period, the
Company announces that it will release earnings results during the 16-day period beginning
on the last day of the initial Lock-Up Period, then in either case the Lock-Up Period will
be extended until the expiration of the 18-day period beginning on the date of release of
the earnings results or the occurrence of the material news or material event, as
applicable, unless the Representative waives, in writing, such extension.
Section 6. Covenants of the Company and the Underwriters. The Company represents and
agrees that, unless it obtains the prior consent of the Representative, and each Underwriter,
severally and not jointly, represents and agrees that, unless it obtains the prior consent of the
Company and the Representative, it has not made and will not make any offer relating to the Shares
that would constitute an “issuer free writing prospectus,” as defined in Rule 433, or that would
otherwise constitute a “free writing prospectus,” as defined in Rule 405, required to be filed with
the Commission. Any such free writing prospectus consented to by the Representative or by the
Company and the Representative, as the case may be, is hereinafter referred to as a “Permitted Free
Writing Prospectus.” The Company represents that it has treated and agrees that it will treat each
Permitted Free Writing Prospectus as an “issuer free writing prospectus,” as defined in Rule 433,
and has complied and will comply with the requirements of Rule 433 applicable to any Permitted Free
Writing Prospectus, including timely filing with the Commission where required, legending and
record-keeping.
Section 7. Payment of Expenses. Whether or not the transactions contemplated
hereunder are consummated or this Agreement becomes effective as to all of its provisions or is
terminated, the Company agrees to pay (i) all costs, fees and expenses (other than legal fees and
disbursements of counsel for the Underwriters and the expenses incurred by the Underwriters)
incurred in connection with the performance of the obligations of the Company hereunder, including
without limiting the generality of the foregoing, all fees and expenses of legal counsel for the
Company and of the Company’s independent accountants, all costs and expenses incurred in connection
with the preparation, printing, filing and distribution (including electronic delivery) of the
Registration Statement, each preliminary prospectus, any Permitted Free Writing Prospectus and the
Prospectus (including all exhibits and financial statements) and all amendments and supplements
provided for herein, this Agreement, the Pricing Agreement and a blue sky memorandum, (ii) all
reasonable third-party costs, fees and expenses (including reasonable legal fees and disbursements
of outside legal counsel for the Underwriters not to exceed $15,000) incurred by the Underwriters
in connection with qualifying or registering all or any part of the Shares for offer and sale under
blue sky laws, including clearance of such offering with FINRA; (iii) all fees and expenses of the
Company’s transfer agent, printing of the certificates for the Shares and all transfer taxes, if
any, with respect to the sale and delivery of the Shares to the several Underwriters; and (iv) all
reasonable costs, fees and expenses (including without limitation any damages or other amounts
payable in connection with legal or contractual liability) associated with the reforming of any
contracts for sale of the Shares made by the Underwriters caused by a breach of the representation
contained in the second paragraph of Section 2(c); provided, however, that except as provided in
this Section 7 and in Sections 9, 11 and 14 of this Agreement, the Underwriters will pay all of
their own costs and expenses, including fees of their counsel (except as set forth above), stock
transfer taxes on the resale of any Shares by them and any expense relating to the publication of
“tombstone” advertisements.
Section 8. Conditions of the Obligations of the Underwriters. The obligations of the
several Underwriters to purchase and pay for the Firm Shares on the First Closing Date and the
Option Shares on the Second Closing Date shall be subject to the accuracy of the representations
and warranties on the part of the Company herein set forth as of the date hereof and as of the
First Closing Date or the Second Closing Date, as the case may be, to the accuracy of the
statements of officers of the Company
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made pursuant to the provisions hereof, to the performance by the Company of its obligations
hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective either prior to the
execution of this Agreement or not later than 1:00 P.M., Chicago Time, on the first full
business day after the date of this Agreement, or such later time as shall have been
consented to by you but in no event later than 1:00 P.M., Chicago Time, on the third full
business day following the date hereof; and prior to the First Closing Date or the Second
Closing Date, as the case may be, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that purpose shall have
been instituted or shall be pending or, to the knowledge of the Company or you, shall be
contemplated by the Commission. If the Company has elected to rely upon Rule 430B, the
information concerning the public offering price of the Shares and price-related
information, and such other information omitted from the Base Prospectus in reliance on Rule
430B, shall have been transmitted to the Commission for filing pursuant to Rule 424(b) in
the manner and within the prescribed time period (without reliance on Rule 424(b)(8)) and
the Company will provide evidence satisfactory to the Representative of such timely filing
(or a post-effective amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rules 430B and 424(b)). If a Rule 462(b)
Registration Statement is required, such Registration Statement shall have been transmitted
to the Commission for filing and become effective within the prescribed time period and,
prior to the First Closing Date, the Company shall have provided evidence of such filing and
effectiveness in accordance with Rule 462(b).
(b) The Shares shall have been qualified for sale under the blue sky laws of such
states as shall have been specified by the Representative.
(c) The legality and sufficiency of the authorization, issuance and sale or transfer
and sale of the Shares hereunder, the validity and form of the certificates representing the
Shares, the execution and delivery of this Agreement and the Pricing Agreement, and all
corporate proceedings and other legal matters incident thereto, and the form of the
Registration Statement, the Disclosure Package, any Issuer Limited Use Free Writing
Prospectus and the Prospectus (except financial statements) shall have been approved by
counsel for the Underwriters exercising reasonable judgment.
(d) You shall not have advised the Company that the Registration Statement, the
Disclosure Package, any Issuer Limited Use Free Writing Prospectus, when considered together
with the Disclosure Package, or the Prospectus or any amendment or supplement thereto,
contains an untrue statement of fact, which, in the opinion of counsel for the Underwriters,
is material or omits to state a fact which, in the opinion of such counsel, is material and
is required to be stated therein or necessary to make the statements therein not misleading.
(e) Subsequent to the execution and delivery of this Agreement, there shall not have
occurred any material adverse change, or any development involving a prospective material
adverse change, in or affecting particularly the business or properties of the Company or
its subsidiaries, taken as a whole, whether or not arising in the ordinary course of
business, which, in the judgment of the Representative, makes it impractical or inadvisable
to proceed with the public offering or purchase of the Shares as contemplated hereby.
(f) There shall have been furnished to you, as Representative of the Underwriters, on
the First Closing Date or the Second Closing Date, as the case may be, except as otherwise
expressly provided below:
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(i) An opinion of Dechert LLP, counsel for the Company, addressed to the
Underwriters and dated the First Closing Date or the Second Closing Date, as the
case may be, in form and substance reasonably acceptable to the Underwriters.
(ii) An opinion of the Company’s General Counsel addressed to the Underwriters
and dated the First Closing Date or the Second Closing Date, as the case may be, in
form and substance reasonably acceptable to the Underwriters.
(iii) An opinion of Sidley Austin LLP, counsel for the Underwriters, dated the
First Closing Date or the Second Closing Date, as the case may be, with respect to
the existence of the Company, the validity of the Shares, the Registration
Statement, the Disclosure Package and the Prospectus and other related matters as
you may reasonably require, and the Company shall have furnished to such counsel
such documents and shall have exhibited to them such papers and records as they may
reasonably request for the purpose of enabling them to pass upon such matters.
(iv) A certificate of the chief executive officer and the principal financial
officer of the Company, dated the First Closing Date or the Second Closing Date, as
the case may be, to the effect that:
(1) the representations and warranties of the Company set forth in
Section 2 of this Agreement are true and correct as of the date of this
Agreement and as of the First Closing Date or the Second Closing Date, as
the case may be, and 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;
(2) the Commission has not issued an order preventing or suspending the
use of the Prospectus or any preliminary prospectus filed as a part of the
Registration Statement or any amendment thereto; no stop order suspending
the effectiveness of the Registration Statement has been issued; and to the
best knowledge of the respective signers, no proceedings for that purpose
have been instituted or are pending or contemplated under the 1933 Act; and
(3) subsequent to the date of the most recent financial statements
included in the Registration Statement and Prospectuses, and except as set
forth or contemplated in the Prospectuses, (A) none of the Company and its
consolidated subsidiaries has incurred any material liabilities or
obligations, direct or contingent, or entered into any material transactions
not in the ordinary course of business, and (B) there has not been any
change that has had or would reasonably be expected to have a Material
Adverse Effect or any material change in short-term debt or long-term debt
of the Company and its subsidiaries.
The delivery of the certificate provided for in this subparagraph shall be and
constitute a representation and warranty of the Company as to the facts required in
the immediately foregoing clauses (1), (2) and (3) to be set forth in said
certificate.
(v) At the time the Pricing Agreement is executed and also on the First Closing
Date or the Second Closing Date, as the case may be, there shall be delivered to you
a letter addressed to you, as Representative of the Underwriters, from KPMG LLP, an
independent registered public accountant firm, the first one to be dated the date of
the
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Pricing Agreement, the second one to be dated the First Closing Date and the
third one (in the event of a second closing) to be dated the Second Closing Date, in
form and substance reasonably satisfactory to the Underwriters. There shall not
have been any change or decrease specified in the letters referred to in this
subparagraph which makes it impractical or inadvisable in the judgment of the
Representative to proceed with the public offering or purchase of the Shares as
contemplated hereby.
(vi) A certificate of the chief executive officer and the principal financial
officer of the Company, dated the First Closing Date or the Second Closing Date, as
the case may be, verifying the truth and accuracy of such statistical or financial
figures regarding the Company included in the Prospectus which you may reasonably
request and which have not been otherwise verified by the letters referred to in
clause (iv) above, such verification to include the provision of documentary
evidence supporting any such statistical or financial figure.
(vii) Such further certificates and documents as you may reasonably request.
All such opinions, certificates, letters and documents shall be in compliance with the
provisions hereof only if they are satisfactory to you and to Sidley Austin LLP, counsel for the
Underwriters, which approval shall not be unreasonably withheld. The Company shall furnish you
with such manually signed or conformed copies of such opinions, certificates, letters and documents
as you request.
If any condition to the Underwriters’ obligations hereunder to be satisfied prior to or at the
First Closing Date is not so satisfied, this Agreement at your election will terminate upon
notification to the Company without liability on the part of any Underwriter or the Company, except
for the expenses to be paid or reimbursed by the Company pursuant to Sections 7 and 9 hereof and
except to the extent provided in Section 11 hereof.
Section 9. Reimbursement of Underwriters’ Expenses. If the sale to the Underwriters
of the Firm Shares on the First Closing Date is not consummated because any condition of the
Underwriters’ obligations hereunder is not satisfied or because of any refusal, inability or
failure on the part of the Company to perform any agreement herein or to comply with any provision
hereof, unless such failure to satisfy such condition or to comply with any provision hereof is due
to the default or omission of any Underwriter, the Company agrees to reimburse you and the other
Underwriters upon demand for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been reasonably incurred by you and them in connection
with the proposed purchase and the sale of the Shares. Any such termination shall be without
liability of any party to any other party except that the provisions of Section 7, Section 9 and
Section 11 shall at all times be effective and shall apply.
Section 10. Effectiveness of Registration Statement. You and the Company will use
your and its best efforts to cause the Registration Statement to become effective, if it has not
yet become effective, and to prevent the issuance of any stop order suspending the effectiveness of
the Registration Statement and, if such stop order be issued, to obtain as soon as possible the
lifting thereof.
Section 11. Indemnification. (a) The Company agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter within the meaning of the
1933 Act or the Exchange Act against any losses, claims, damages or liabilities, joint or several,
to which such Underwriter or such controlling person may become subject under the 1933 Act, the
Exchange Act or other federal or state statutory law or regulation, at common law or otherwise
(including in settlement of any litigation if such settlement is effected with the written consent
of the Company),
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insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, including the information deemed to be part of the
Registration Statement at the time specified in Rule 430B, any preliminary prospectus, any Issuer
Free Writing Prospectus, the Prospectus, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact, in the case of
the Registration Statement or any amendment or supplement thereto, required to be stated therein or
necessary to make the statements therein not misleading and, in the case of any preliminary
prospectus, any Issuer Free Writing Prospectus, the Prospectus, or any amendment or supplement
thereto, necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading; and will reimburse each Underwriter and each such controlling person for
any legal or other expenses reasonably incurred by such Underwriter or such controlling person in
connection with investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in the Registration Statement, any
preliminary prospectus, any Issuer Free Writing Prospectus, the Prospectus or any amendment or
supplement thereto in reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Underwriter through the Representative, specifically for use
therein. In addition to its other obligations under this Section 11(a), the Company agrees that,
as an interim measure during the pendency of any claim, action, investigation, inquiry or other
proceeding arising out of or based upon any statement or omission, or any alleged statement or
omission, described in this Section 11(a), it will reimburse the Underwriters on a monthly basis
for all reasonable legal and other expenses incurred in connection with investigating or defending
any such claim, action, investigation, inquiry or other proceeding, notwithstanding the absence of
a judicial determination as to the propriety and enforceability of the Company’s obligation to
reimburse the Underwriters for such expenses and the possibility that such payments might later be
held to have been improper by a court of competent jurisdiction. This indemnity agreement will be
in addition to any liability which the Company may otherwise have.
(b) Each Underwriter will severally indemnify and hold harmless the Company, each of its
directors, each of its officers who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of the 1933 Act or the Exchange Act, against any losses,
claims, damages or liabilities to which the Company, or any such director, officer, or controlling
person may become subject under the 1933 Act, the Exchange Act or other federal or state statutory
law or regulation, 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 losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any
untrue or alleged untrue statement of any material fact contained in the Registration Statement,
any preliminary prospectus, any Issuer Free Writing Prospectus, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged omission to state
therein a material fact, in the case of the Registration Statement or any amendment or supplement
thereto, required to be stated therein or necessary to make the statements therein not misleading
and, in the case of any preliminary prospectus, any Issuer Free Writing Prospectus, the Prospectus,
or any amendment or supplement thereto, necessary to make the statements therein, in light of the
circumstances under which they were made, 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, any Issuer Free Writing
Prospectus, the Prospectus, or any amendment or supplement thereto in reliance upon and in
conformity with Section 3 of this Agreement or any other written information furnished to the
Company by such Underwriter through the Representative specifically for use in the preparation
thereof; and will reimburse any legal or other expenses reasonably incurred by the Company, or any
such director, officer, or controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action. In addition to their other obligations under this
Section 11(b), the Underwriters agree
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that, as an interim measure during the pendency of any claim, action, investigation, inquiry
or other proceeding arising out of or based upon any statement or omission, or any alleged
statement or omission, described in this Section 11(b), they will reimburse the Company on a
monthly basis for all reasonable legal and other expenses incurred in connection with investigating
or defending any such claim, action, investigation, inquiry or other proceeding, notwithstanding
the absence of a judicial determination as to the propriety and enforceability of the Underwriters’
obligation to reimburse the Company for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction. This indemnity agreement
will be in addition to any liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 11 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 11, notify the indemnifying party of the
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 except to the extent that the indemnifying
party was prejudiced by such failure to notify. In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly
with all other indemnifying parties similarly notified, 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 indemnified party
shall have reasonably concluded, based on the advice of outside counsel, 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, or the indemnified and indemnifying parties may have
conflicting interests which would make it inappropriate for the same counsel to represent both of
them, the indemnified party or parties shall have the right to select separate counsel to assume
such legal defense and otherwise to 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 its 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 11 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
such counsel in connection with the assumption of legal defense 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, approved by the Representative in the
case of paragraph (a) representing all indemnified parties not having different or additional
defenses or potential conflicting interest among themselves who are parties to such action), (ii)
the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time after notice of commencement of
the action or (iii) the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability arising out of such
proceeding.
(d) If the indemnification provided for in this Section 11 is unavailable to an indemnified
party under paragraphs (a) or (b) hereof in respect of any losses, claims, damages or liabilities
referred to therein, then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Underwriters from the offering of the
Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is
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appropriate to reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company and the Underwriters in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The respective relative benefits received by the Company and
the Underwriters shall be deemed to be in the same proportion, in the case of the Company, as the
total price paid to the Company for the Shares by the Underwriters (net of underwriting discount
but before deducting expenses) bears to, and in the case of the Underwriters, as the underwriting
discount received by them bears to, the total of such amounts paid to the Company and received by
the Underwriters as underwriting discount, in each case as contemplated by the Prospectus. The
relative fault of the Company and the Underwriters shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the omission to state
a material fact relates to information supplied by the Company or the Underwriters and the parties’
relative intent, knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the losses, claims,
damages and liabilities referred to above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or defending any action
or claim.
The Company and the Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 11(d) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this Section 11(d), no
Underwriter shall be required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which 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 0000 Xxx) 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 11(d) are
several in proportion to their respective underwriting commitments and not joint.
(e) The provisions of this Section 11 shall survive any termination of this Agreement.
Section 12. Default of Underwriters. It shall be a condition to the agreement and obligation
of the Company to sell and deliver the Shares hereunder, and of each Underwriter to purchase the
Shares hereunder, that, except as hereinafter in this paragraph provided, each of the Underwriters
shall purchase and pay for all Shares agreed to be purchased by such Underwriter hereunder upon
tender to the Representative of all such Shares in accordance with the terms hereof. If any
Underwriter or Underwriters default in their obligations to purchase Shares hereunder on the First
Closing Date and the aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed 10 percent of the total number of Shares which the
Underwriters are obligated to purchase on the First Closing Date, the Representative (or, if the
Representative is in default, the non-defaulting Underwriters) may make arrangements satisfactory
to the Company for the purchase of such Shares by other persons, including any of the Underwriters,
but if no such arrangements are made by such date the nondefaulting Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase the Shares which
such defaulting Underwriters agreed but failed to purchase on such date. If any Underwriter or
Underwriters so default and the aggregate number of Shares with respect to which such default or
defaults occur is more than the above percentage and arrangements satisfactory to the
Representative (or, if the Representative is in default, the non-defaulting Underwriters) and the
Company for the purchase of such Shares by other persons are not made within 36 hours after such
default, this Agreement will terminate without liability on the part of any nondefaulting
Underwriter
-19-
or the Company, except for the expenses to be paid by the Company pursuant to Sections 7 and 9
hereof and except to the extent provided in Section 11 hereof.
In the event that Shares to which a default relates are to be purchased by the nondefaulting
Underwriters or by another party or parties, the Representative (or, if the Representative is in
default, the non-defaulting Underwriters) or the Company shall have the right to postpone the First
Closing Date for not more than seven business days in order that the necessary changes in the
Registration Statement, Prospectus and any other documents, as well as any other arrangements, may
be effected. As used in this Agreement, the term “Underwriter” includes any person substituted for
an Underwriter under this Section 12. Nothing herein will relieve a defaulting Underwriter from
liability for its default.
Section 13. Effective Date. This Agreement shall become effective immediately as to
Sections 7, 9, 11 and 14 and as to all other provisions at 10:00 A.M., Chicago Time, on the day
following the date upon which the Pricing Agreement is executed and delivered, unless such a day is
a Saturday, Sunday or holiday (and in that event this Agreement shall become effective at such hour
on the business day next succeeding such Saturday, Sunday or holiday); but this Agreement shall
nevertheless become effective at such earlier time after the Pricing Agreement is executed and
delivered as you may determine on and by notice to the Company or by release of any Shares for sale
to the public. For the purposes of this Section 13, the Shares shall be deemed to have been so
released upon the release for publication of any newspaper advertisement relating to the Shares or
upon the release by you of written communications (i) advising Underwriters that the Shares are
released for public offering, or (ii) offering the Shares for sale to securities dealers, whichever
may occur first.
Section 14. Termination. Without limiting the right to terminate this Agreement
pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice to you or by you by
notice to the Company at any time prior to the time this Agreement shall become effective as
to all its provisions, and any such termination shall be without liability on the part of
the Company to any Underwriter (except for the expenses to be paid or reimbursed pursuant to
Sections 7 and 9 hereof and except to the extent provided in Section 11 hereof) or of any
Underwriter to the Company.
(b) This Agreement may also be terminated by you prior to the First Closing Date, and
the option referred to in Section 4, if exercised, may be cancelled at any time prior to the
Second Closing Date, if (i) trading in securities on the New York Stock Exchange or The
Nasdaq Stock Market shall have been suspended or minimum prices shall have been established
on such exchange or market, or (ii) a banking moratorium shall have been declared by
Illinois, New York, or United States authorities, or (iii) there shall have been any
material adverse change in financial markets or any material adverse change in political,
economic or financial conditions which, in the opinion of the Representative, either renders
it impracticable or inadvisable to proceed with the offering and sale of the Shares on the
terms set forth in the Prospectus or materially and adversely affects the market for the
Shares, or (iv) there shall have been an outbreak of major armed hostilities between the
United States and any foreign power or terrorist organization which in the opinion of the
Representative makes it impractical or inadvisable to offer or sell the Shares. Any
termination pursuant to this paragraph (b) shall be without liability on the part of any
Underwriter to the Company or on the part of the Company to any Underwriter (except for
expenses to be paid or reimbursed pursuant to Sections 7 and 9 hereof and except to the
extent provided in Section 11 hereof).
-20-
Section 15. Representations and Indemnities to Survive Delivery. The respective
indemnities, agreements, representations, warranties and other statements of the Company, of its
officers 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, principals, members, officers or
directors or any controlling person, and will survive delivery of and payment for the Shares sold
hereunder.
Section 16. Notices. All communications hereunder will be in writing and, if sent to
the Underwriters will be mailed, delivered or telegraphed and confirmed to you c/o Xxxxxxx Xxxxx &
Company, L.L.C., 000 Xxxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, with a copy to Xxxxxx X. Xxxxxxx,
c/o Xxxxxx Xxxxxx LLP, Xxx Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000; if sent to the Company
will be mailed, delivered or telegraphed and confirmed to the Secretary of the Company at its
corporate headquarters, 000 Xxxxxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxxx 00000, with a copy to Xxxx X.
Xxx, Esq., c/o Dechert LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
Section 17. No Advisory or Fiduciary Relationship. The Company acknowledges and
agrees that (a) the purchase and sale of the Shares pursuant to this Agreement, including the
determination of the public offering price of the Shares and any related discounts and commissions,
is an arm’s-length commercial transaction between the Company, on the one hand, and the several
Underwriters, on the other hand, (b) in connection with the offering of the Shares contemplated by
this Agreement and the process leading to such transaction each Underwriter is and has been acting
solely as a principal and is not the agent or fiduciary of the Company, or its stockholders,
creditors, employees or any other party, (c) no Underwriter has assumed or will assume an advisory
or fiduciary responsibility in favor of the Company with respect to the offering of the Shares
contemplated by this Agreement or the process leading thereto (irrespective of whether such
Underwriter has advised or is currently advising the Company on other matters) and no Underwriter
has any obligation to the Company with respect to the offering of the Shares contemplated by this
Agreement except the obligations expressly set forth in this Agreement, (d) the Underwriters and
their respective affiliates may be engaged in a broad range of transactions that involve interests
that differ from those of the Company and (e) the Underwriters have not provided any legal,
accounting, regulatory or tax advice with respect to the offering of the Shares contemplated by
this Agreement and the Company has consulted its own legal, accounting, regulatory and tax advisors
to the extent it deemed appropriate.
Section 18. Successors. This Agreement and the Pricing Agreement will inure to the
benefit of and be binding upon the parties hereto and their respective successors, personal
representatives and assigns, and to the benefit of the officers and directors and controlling
persons referred to in Section 11, and no other person will have any right or obligation hereunder.
The term “successors” shall not include any purchaser of the Shares as such from any of the
Underwriters merely by reason of such purchase.
Section 19. Representation of Underwriters. You will act as Representative for the
several Underwriters in connection with this financing, and any action under or in respect of this
Agreement taken by you will be binding upon all the Underwriters.
Section 20. Partial Unenforceability. If any section, paragraph or provision of this
Agreement is for any reason determined to be invalid or unenforceable, such determination shall not
affect the validity or enforceability of any other section, paragraph or provision hereof.
Section 21. Applicable Law. This Agreement and the Pricing Agreement shall be
governed by and construed in accordance with the laws of the State of Illinois.
-21-
If the foregoing is in accordance with your understanding of our agreement, kindly sign and
return to us the enclosed duplicates hereof, whereupon it will become a binding agreement between
the Company and the several Underwriters including you, all in accordance with its terms.
| Very truly yours, Portfolio Recovery Associates, Inc. |
||||
| By: | /s/ Xxxxxx X. Xxxxxxxxxxx | |||
| Name: Xxxxxx X. Xxxxxxxxxxx | ||||
| Title: President and Chief Executive Officer | ||||
-22-
| The foregoing Agreement is hereby
confirmed and accepted as of
the date first above written. Xxxxxxx Xxxxx & Company, L.L.C. Acting as Representative of the several Underwriters named in Schedule A. |
||||
| By: | Xxxxxxx Xxxxx & Company, L.L.C. | |||
| By: | /s/ Xxxxx Xxxxxxx | |||
| Name: Xxxxx Xxxxxxx | ||||
| Title: Principal | ||||
-23-
Schedule A
| Number of | ||||
| Firm Shares | ||||
| Underwriter | to be Purchased | |||
Xxxxxxx Xxxxx & Company, L.L.C. |
750,000 | |||
JMP Securities LLC |
500,000 | |||
Total |
1,250,000 | |||
B-2
Schedule B
Issuer General Use Free Writing Prospectuses
Issuer General Use Free Writing Prospectuses
None
B-2
Exhibit A
Portfolio Recovery Associates, Inc.
1,250,000 Shares of Common Stock2
Pricing Agreement
February 17, 2010
Xxxxxxx Xxxxx & Company, L.L.C.
As Representative of the Several
Underwriters
c/o Xxxxxxx Xxxxx & Company, L.L.C.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
As Representative of the Several
Underwriters
c/o Xxxxxxx Xxxxx & Company, L.L.C.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement dated February 17, 2010 (the “Underwriting
Agreement”) relating to the sale by the Company, and the purchase by the several Underwriters for
whom Xxxxxxx Xxxxx & Company, L.L.C. is acting as representative (the “Representative”), of the
above Shares. All terms herein shall have the definitions contained in the Underwriting Agreement
except as otherwise defined herein.
Pursuant to Section 4 of the Underwriting Agreement, the Company agrees with the
Representative as follows:
1. The public offering price per share for the Shares shall be $52.50.
2. The purchase price per share for the Shares to be paid by the several Underwriters shall be
$50.006, being an amount equal to the public offering price set forth above less $2.494 per share.
| 2 | Plus an option to acquire up to an aggregate of 187,500 additional shares to cover overallotments. |
If the foregoing is in accordance with your understanding of our agreement, kindly sign and
return to us the enclosed duplicates hereof, whereupon it will become a binding agreement between
the Company and the several Underwriters, including you, all in accordance with its terms.
| Very truly yours, Portfolio Recovery Associates, Inc. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| The foregoing Agreement is hereby
confirmed and accepted as of
the date first above written. Xxxxxxx Xxxxx & Company, L.L.C. Acting as Representative of the several Underwriters named in Schedule A to the Underwriting Agreement. |
||||
| By: | Xxxxxxx Xxxxx & Company, L.L.C. | |||
| By: | ||||
| Name: | ||||
| Title: | ||||
Schedule A to Pricing Agreement
Pricing Information
Pricing Information
| • | Total Shares Offered: 1,250,000 (with overallotment option: 1,437,500) | |
| • | Price to Public: $52.50 | |
| • | Underwriting Discount: $2.494 | |
| • | Expected Settlement Date: February 22, 2010 |
