Underwriting Agreement

The Underwriting Agreement (UA), or purchase agreement, is an agreement between the issuer and lead manager on behalf of all underwriters in the syndicate. It is usually executed around the time the registration statement becomes effective. Unlike the letter of intent, the UA is a binding commitment, subject to certain standard “outs” as later described. The UA specifies the price of the offering, if known, or a formula for determining the public offering price. The UA will also specify the per-share “underwriting spread”—the difference between the public offering price and the price at which the issuer will sell shares to the underwriters. This spr