Exhibit 1.1



                       Portfolio Recovery Associates, Inc.
                        3,000,000 Shares Common Stock(1)


                             UNDERWRITING AGREEMENT

                                                                [________], 2003

William Blair & Company, L.L.C.
U.S. Bancorp Piper Jaffray Inc.
  As Representatives of the Several
  Underwriters Named in Schedule A
c/o William Blair & Company, L.L.C.
222 West Adams Street
Chicago, Illinois 60606

Ladies and Gentlemen:


            Section 1. Introductory. Portfolio Recovery Associates, Inc., a
Delaware corporation ("Company"), has an authorized capital stock consisting of
2,000,000 shares of Preferred Stock, $0.01 par value, of which no shares were
outstanding as of the date hereof and 30,000,000 shares of common stock, $0.01
par value ("Common Stock"), of which [________] shares will be outstanding
immediately prior to the closing of the offering of shares contemplated by this
Agreement. Certain stockholders of the Company (collectively referred to as the
"Selling Stockholders" and named in Schedule B) propose to sell in aggregate
3,000,000 shares (the "Firm Shares") of the Company's issued and outstanding
Common Stock(2) to the several underwriters named in Schedule A as it may be
amended by the Pricing Agreement hereinafter defined ("Underwriters"), who are
acting severally and not jointly. In addition, the Selling Stockholders propose
to grant to the Underwriters an option to purchase in aggregate up to 450,000
additional shares of Common Stock ("Option Shares") as provided in Section 5
hereof. The Firm Shares and, to the extent such option is exercised, the Option
Shares, are hereinafter collectively referred to as the "Shares." William Blair
& Company, L.L.C. has the authority, subject to the terms and conditions
contained herein, to act on behalf of the several Underwriters and the
Representatives hereunder.



(1) Plus an option to acquire up to 450,000 additional shares to cover
overallotments.

(2) Immediately prior to the closing of the offering of the shares contemplated
by this Agreement, the Selling Stockholders will exercise warrants (the
"Warrants") to purchase from the Company 1,835,000 shares of Common Stock,
930,000 of which will be sold in this offering (1,069,500 if the Underwriters'
over-allotment is exercised in full). The Selling Stockholders will deliver an
aggregate of _______ outstanding shares of Common Stock in satisfaction of the
aggregate exercise price of such Warrants. These transactions, including the
amendments to the Warrants to allow payment of the exercise price with shares of
Common Stock, are referred to herein, collectively, as the "Warrant Exercise
Transactions."

      You have advised the Company and the Selling Stockholders that the
Underwriters propose to make a public offering 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, the Selling Stockholders and the Representatives,
acting on behalf of the several Underwriters, shall enter into an agreement
substantially in the form of Exhibit A hereto ("Pricing Agreement"). The Pricing
Agreement may take the form of an exchange of any standard form of written
telecommunication between the Company, the Selling Stockholders and the
Representatives 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.

      The Company and each of the Selling Stockholders hereby confirm their
agreements with the Underwriters as follows:

            Section 2. Representations and Warranties of the Company. The
Company represents and warrants to the several Underwriters and the Selling
Stockholders that:

            (a) A registration statement on Form S-1 (File No. 333-[ ]) and a
      related 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 indicated to the contrary, all references herein to specific
      rules are rules promulgated under the 1933 Act, including, without
      limitation, Regulation G); 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. There have been or will promptly be delivered to you a signed
      copy of such registration statement and amendments, a copy of each exhibit
      filed therewith, and conformed copies of such registration statement and
      amendments (but without exhibits) and of the related preliminary
      prospectus or prospectuses and final forms of prospectus for each of the
      Underwriters. For purposes of this Agreement, delivery or furnishing of
      certain documents may take the form of access to such documents as filed
      with the Commission using EDGAR and available on the Commission's website
      at www.sec.gov.

            Such registration statement (as amended, if applicable) at the time
      it becomes effective and the prospectus constituting a part thereof
      (including the information, if any, deemed to be part thereof pursuant to
      Rule 430A(b) and/or Rule 434, and including any exhibits incorporated by


                                      -2-

      reference therein), 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. If the Company elects to rely on Rule 434 of
      the 1933 Act, all references to "Prospectus" shall be deemed to include,
      without limitation, the form of prospectus and the term sheet, taken
      together, provided to the Underwriters by the Company in accordance with
      Rule 434 of the 1933 Act ("Rule 434 Prospectus"). 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. The
      Securities Exchange Act of 1934, as amended, and the rules and regulations
      of the Commission thereunder are hereinafter collectively referred to as
      the "Exchange Act." 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 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) 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 not misleading; and when the Registration Statement became or
      becomes 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 of effectiveness pursuant
      to Rule 430A(b), if applicable, and the Prospectus and any amendments or
      supplements thereto, contained or will contain all statements that are
      required to be stated therein in accordance with the 1933 Act and 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 required to be stated therein or necessary
      to make the statements therein, in light of the circumstances under which
      they were made, not misleading; provided, however, that the Company makes
      no representation or warranty as to information contained in or omitted
      from any preliminary prospectus, the Registration Statement, the
      Prospectus or any such amendment or supplement in reliance upon


                                      -3-

      and in conformity with written information furnished to the Company by or
      on behalf of any Underwriter through the Representatives specifically for
      use in the preparation thereof or the Selling Stockholders expressly for
      use in the preparation thereof.

            (c) The Company and its subsidiaries have been duly incorporated 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 requisite power and
      authority 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 limited liability
      companies under the laws 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 qualification.

            (d) 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, except as described in the Prospectus and the
      Registration Statement, including the exhibits thereto, and all of such
      limited liability company interests have been duly authorized and validly
      issued and are fully paid and nonassessable.

            (e) 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.

            (f) The Shares to be sold by the Selling Stockholders have been duly
      authorized and when issued (with respect to Shares delivered to the
      Selling Stockholders in connection with the Warrant Exercise
      Transactions), 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.

            (g) The making and performance by the Company of this Agreement and
      the Pricing Agreement and, to the extent necessary, the consummation of
      the Warrant Exercise Transactions have been duly authorized by all
      necessary corporate action and will not violate any provision of the
      Company's charter or bylaws and will not result in the breach, or be in
      contravention, of any provision of 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 any
      order, rule or regulation applicable to the Company or any subsidiary of
      any


                                      -4-

      court or 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 or governmental agency or
      authority entered in any proceeding to which the Company or any subsidiary
      was or is now a party or by which it is bound, except for such violations,
      breaches or defaults which would not have a Material Adverse Effect. 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 or in
      connection with the Warrant Exercise Transactions, 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 National Association of Securities Dealers, Inc. ("NASD"). This
      Agreement has been duly executed and delivered by the Company.

            (h) The accountants who have expressed their opinions with respect
      to certain of the financial statements included in the Registration
      Statement are independent accountants as required by the 1933 Act.

            (i) The consolidated financial statements of the Company included in
      the Registration Statement present fairly the consolidated financial
      position of the Company as of the respective dates of such financial
      statements, and the consolidated statements of operations and cash flows
      of the Company for the respective periods covered thereby, all in
      conformity with generally accepted accounting principles consistently
      applied throughout the periods involved, except as disclosed in the
      Prospectus. The financial information set forth in the Prospectus under
      "Selected Consolidated Financial Data" presents fairly, on the basis
      stated in the Prospectus, the information set forth therein.

               The pro forma information included in the Prospectus presents
      fairly the information shown therein, has been prepared in accordance
      with generally accepted accounting principles and the Commission's
      rules and guidelines with respect to pro forma information, has been
      properly compiled on the pro forma basis described therein, and, in the
      opinion of the Company, the assumptions used in the preparation thereof
      are reasonable and the adjustments used therein are appropriate under the
      circumstances.

            (j) 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 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 which neither
      singly nor in the aggregate would have a Material Adverse Effect.


                                      -5-

            (k) 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, in each case, which
      are not disclosed in the Prospectus, or which question the validity of
      this Agreement or the Pricing Agreement or any action taken or to be taken
      pursuant hereto or thereto.

            (l) There are no holders of securities of the Company having rights
      to registration thereof or preemptive rights to purchase Common Stock.

            (m) 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 which 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 which are material to
      the Company and its subsidiaries taken as a whole under valid and binding
      leases.

            (n) 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.

            (o) Subsequent to the respective dates as of which information is
      given in the Registration Statement and 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, nor 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.

            (p) There is no material document of a character required to be
      described in the Registration Statement or the Prospectus or to be filed
      as an exhibit to the Registration Statement which is not described or
      filed as required.

            (q) 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


                                      -6-

      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.

            (r) 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.

            (s) All offers and sales of the Company's capital stock or
      membership interests of its subsidiaries prior to the date hereof were
      either (1) made pursuant to a registration statement filed by the Company
      with the Commission under the 1933 Act or (2) at all relevant times exempt
      from the registration requirements of the 1933 Act and, in each case, were
      duly registered with or the subject of an available exemption from the
      registration requirements of the applicable state securities or blue sky
      laws.

            (t) The Company has filed all necessary federal and state income and
      franchise tax returns 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 that would or could be expected to have a Material Adverse Effect.

            (u) A registration statement pursuant to Section 12(g) 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 have been approved for
      listing on the Nasdaq National Market, subject to notice of issuance or
      sale of the Shares, as the case may be.

            (v) 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").

            Section 3. Representations, Warranties and Covenants of the Selling
      Stockholders.


            (a) Each Selling Stockholder severally, and not jointly, represents
and warrants to, and agrees with, the Company and the Underwriters that:


                  (i) Such Selling Stockholder (1) has valid marketable title to
            the Shares proposed to be sold by such Selling Stockholder hereunder
            (or Warrants which such Selling Stockholder will validly exercise
            for such Shares prior to the offering of Shares contemplated
            hereby), (2) on the First Closing Date or the Second Closing Date
            hereinafter defined, as the


                                      -7-

            case may be, will have, valid marketable title to the Shares
            proposed to be sold by such Selling Stockholder hereunder on such
            date and (3) has full right, power and authority to enter into this
            Agreement, the Pricing Agreement and the Warrant Exercise
            Transactions and to sell, assign, transfer and deliver such Shares
            hereunder, free and clear of all voting trust arrangements, liens,
            encumbrances, equities, claims and community property rights. Upon
            delivery of and payment for such Shares hereunder, the Underwriters
            will acquire valid marketable title thereto, free and clear of all
            voting trust arrangements, liens, encumbrances, equities, claims and
            community property rights.

                  (ii) Such Selling Stockholder 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 might be reasonably 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.

                  (iii) The execution and delivery by such Selling Stockholder
            of, and the performance by such Selling Stockholder of its
            obligations under, this Agreement and the Pricing Agreement and the
            consummation of the Warrant Exercise Transactions will not
            contravene any provision of applicable law, or any material
            agreement or other instrument binding upon such Selling Stockholder
            or any judgment, order or decree of any governmental body, agency or
            court having jurisdiction over such Selling Stockholder, and no
            consent, approval, authorization or order of or qualification with
            any governmental body or agency is required for the performance by
            such Selling Stockholder of its obligations under this Agreement and
            the Pricing Agreement and in connection with the Warrant Exercise
            Transactions, 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 NASD.

                  (iv) Each preliminary prospectus, solely with respect to
            information relating to such Selling Stockholder (it being
            understood such information does not include information relating to
            the operations of the Company) provided by such Selling Stockholder
            for inclusion therein 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 not misleading; and the
            Registration Statement at the time of effectiveness, and at all
            times subsequent thereto, until the First Closing Date or the Second
            Closing Date hereinafter defined, as the case may be, neither the
            Registration Statement nor the Prospectus, nor any amendment or
            supplement thereto, solely with respect to information relating to
            such Selling Stockholder (it being understood such information does
            not include information relating to the operations of the Company)
            provided by such Selling Stockholder for inclusion therein, included
            or will


                                      -8-

            include any untrue statement of a material fact or omitted or will
            omit to state any material fact required to be stated therein or
            necessary to make the statements therein not misleading.

                  (v) Such Selling Stockholder agrees with the Company and the
            Underwriters not to (and to use its reasonable best efforts to cause
            its affiliates (including any equity holders thereof, if applicable)
            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 held of record or beneficially owned (within the
            meaning of Rule 13d-3 under the Exchange Act); 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 in each case for a period of 180 days after this Agreement
            becomes effective without the prior written consent of the William
            Blair & Company, L.L.C.

      In order to document the Underwriter's compliance with the reporting and
withholding provisions of the Internal Revenue Code of 1986, as amended, with
respect to the transactions herein contemplated, each of the Selling
Stockholders agrees to deliver to you prior to or on the First Closing Date, as
hereinafter defined, a properly completed and executed United States Treasury
Department Form W-8 or W-9 (or other applicable form of statement specified by
Treasury Department regulations in lieu thereof).

            Section 4. Representations and Warranties of the Underwriters. The
Representatives, on behalf of the several Underwriters, represent and warrant to
the Company and the Selling Stockholders 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 all paragraphs under "Underwriting" in the
Prospectus, except (i) the last sentence of paragraph 6 (expenses), (ii)
paragraph 12 (NASD affiliation of Selling Stockholder) (other than the last
sentence thereof) and (iii) paragraph 13, was furnished to the Company by and on
behalf of the Underwriters for use in connection with the preparation of the
Registration Statement and is correct and complete in all material respects.

            Section 5. 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 Selling Stockholders, severally
and not jointly, agree to sell to the Underwriters named in Schedule A hereto,
and the Underwriters agree, severally and not jointly, to purchase from the
Selling Stockholders the respective number of Firm Shares set forth opposite the
names of the Selling Stockholders in Schedule B hereto at the price per share
set forth in the Pricing Agreement. The obligation of each Underwriter to each
Selling Stockholder shall be to purchase from such Selling Stockholder the
number of full shares which (as nearly as practicable, as determined by you)
bears to the number of Firm Shares set forth opposite the name of such Selling
Stockholder in Schedule B hereto, the same proportion as the number of Shares
set forth opposite the name of such Underwriter in Schedule A hereto bears to
the total number of Firm Shares to be purchased by all


                                      -9-

Underwriters under this Agreement. 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 430A, 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 Representatives and
the Company, the Selling Stockholders will deliver to you at the offices of
counsel for the Company 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 them, respectively, 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 so to be 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 in New York City at the Company's expense for checking
and packaging in New York City by the Representatives 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 Selling Stockholders hereby grant an option to the several
Underwriters to purchase, severally and not jointly, up to an aggregate of
450,000 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 upon notice by you to the Company and the
Selling Stockholders 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 from each Selling Stockholder shall be as set forth on
Schedule B hereto. 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 Selling Stockholders pursuant to such notice of exercise 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).


                                      -10-

Certificates for the Option Shares will be made available at the Company's
expense for checking and packaging in New York City at 10:00 A.M., Chicago Time,
on the business day preceding the Second Closing 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 and the Selling Stockholders that each
Underwriter has authorized you to accept delivery of its Shares, to make payment
and to receipt therefor. You, individually and not as the Representatives 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.

      The Company hereby engages William Blair & Company, L.L.C. to act as a
"qualified independent underwriter" within the meaning of Rule 2720(b)(15) of
the Rules of Conduct of the National Association of Securities Dealers, Inc. in
connection with the pricing of the offering of the Shares.


            Section 6. Covenants of the Company. The Company covenants and
agrees that:


            (a) The Company will advise you and the Selling Stockholders
      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, and will
      also advise you and the Selling Stockholders 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 and the Selling Stockholders 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 any
      term sheet as contemplated by Rule 434) and will furnish you and the
      Selling Stockholders 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 the Company elects to rely on Rule 434 of the 1933 Act, the
      Company will prepare a term sheet that complies with the requirements of
      Rule 434. If the Company elects not to rely on


                                      -11-

      Rule 434, the Company will provide the Underwriters with copies of the
      form of prospectus, in such numbers as the Underwriters may reasonably
      request, and file with the Commission such prospectus in accordance with
      Rule 424(b) of the 1933 Act by the close of business in New York City on
      the second business day immediately succeeding the date of the Pricing
      Agreement. If the Company elects to rely on Rule 434, the Company will
      provide the Underwriters with copies of the form of Rule 434 Prospectus,
      in such numbers as the Underwriters may reasonably request, by the close
      of business in New York on the business day immediately succeeding the
      date of the Pricing Agreement.

            (d) 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 the 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.

            (e) Neither the Company nor any of its subsidiaries will, prior to
      the earlier of the Second Closing Date or termination or expiration of the
      related option, incur any liability or obligation, direct or contingent,
      or enter into any material transaction, other than in the ordinary course
      of business, except as contemplated by the Prospectus.

            (f) 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 after the
      date hereof and 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.

            (g) Not later than August 15, 2004 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


                                      -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.

            (h) 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, the Company will furnish to you at its expense,
      subject to the provisions of subsection (d) hereof, copies of the
      Registration Statement, the Prospectus, 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.

            (i) The Company and Selling Stockholders 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.

            (j) 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 the NASD; and (ii) as soon
      as available, of each report of the Company mailed to stockholders.

            (k) If, at the time of effectiveness of the Registration Statement,
      any information shall have been omitted therefrom in reliance upon Rule
      430A and/or Rule 434, then immediately following the execution of the
      Pricing Agreement, the Company will prepare, and file or transmit for
      filing with the Commission in accordance with such Rule 430A, Rule 424(b)
      and/or Rule 434, copies of an amended Prospectus, or, if required by such
      Rule 430A and/or Rule 434, 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) The Company will comply with all registration, filing and
      reporting requirements of the Exchange Act and the Nasdaq National Market.

            (m) 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


                                      -13-

      exercisable for, Common Stock held of record or beneficially owned (within
      the meaning of Rule 13d-3 under the Exchange Act); 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 issued pursuant to currently outstanding options,
      warrants or convertible securities and except for options to be granted
      under the 2002 Stock Option Plan in the ordinary course or as disclosed in
      the Prospectus) for a period of 180 days after this Agreement becomes
      effective without the prior written consent of the Representatives. The
      Company has obtained similar agreements from each of its officers and
      directors and any holder of at least 1% of its outstanding equity.

            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 Company's obligations 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 of the Registration Statement, each
preliminary prospectus and the Prospectus (including all exhibits and financial
statements) and all amendments and supplements provided for herein, this
Agreement, the Pricing Agreement and the Blue Sky Memorandum, (ii) all costs,
fees and expenses (including legal fees, not to exceed $15,000, and
disbursements of counsel for the Underwriters) 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 the preparation of a blue sky
memorandum relating to the Shares and clearance of such offering with the NASD;
and (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.

      The provisions of this Section shall not affect any agreement which the
Company and the Selling Stockholders may make for the allocation or sharing of
such expenses and costs.

            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 and the Selling Stockholders 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 made pursuant to
the provisions hereof, to the performance by the Company and the Selling
Stockholders of their respective 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


                                      -14-

      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, the Selling Stockholders or you, shall be
      contemplated by the Commission. If the Company has elected to rely upon
      Rule 430A and/or Rule 434, the information concerning the public offering
      price of the Shares and price-related information shall have been
      transmitted to the Commission for filing pursuant to Rule 424(b) within
      the prescribed period and the Company will provide evidence satisfactory
      to the Representatives 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 430A 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 Representatives.

            (c) The legality and sufficiency of the authorization, issuance and
      sale or transfer and sale of the Shares hereunder and of the Warrant
      Exercise Transactions, 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 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 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 change, or any development involving a
      prospective change, in or affecting particularly the business or
      properties of the Company or its subsidiaries not disclosed in the
      Registration Statement, whether or not arising in the ordinary course of
      business, which, in the judgment of the Representatives, makes it
      impractical or inadvisable to proceed with the public offering or purchase
      of the Shares as contemplated hereby.


                                      -15-


            (f) There shall have been furnished to you, as Representatives of
      the Underwriters, on the First Closing Date or the Second Closing Date, as
      the case may be, except as otherwise expressly provided below:

                  (i) Opinions of Swidler Berlin Shereff Friedman, LLP, special
            counsel for the Company and for the Selling Stockholders, and the
            General Counsel of the Company, in each case addressed to the
            Underwriters and dated the First Closing Date or the Second Closing
            Date, as the case may be, to the collective effect that:

                        (1) the Company has been duly incorporated and is
                  validly existing as a corporation in good standing under the
                  laws of the State of Delaware with corporate power and
                  authority to own its properties and conduct its business as
                  described in the Prospectus; and the Company has been duly
                  qualified to do business as a foreign corporation under the
                  corporation law of, and is in good standing as such in, every
                  jurisdiction where the ownership or leasing of property, or
                  the conduct of its business requires such qualification except
                  where the failure so to qualify would not have a material
                  adverse effect upon the condition (financial or otherwise) or
                  results of operations of the Company and its subsidiaries
                  taken as a whole;

                        (2) an opinion to the same general effect as clause (1)
                  of this subparagraph (i) in respect of each subsidiary of the
                  Company named in Schedule C hereto (each a "Subsidiary");

                        (3) based solely on a review of the minute books,
                  operating agreements and equity records of each Subsidiary,
                  all of the issued and outstanding limited liability company
                  interests of each Subsidiary has been duly authorized, validly
                  issued and is fully paid and nonassessable, and the Company
                  owns directly or indirectly 100 percent of the outstanding
                  limited liability company interests of each Subsidiary, and to
                  the best knowledge of such counsel, such interests are owned
                  free and clear of any claims, liens, encumbrances or security
                  interests;

                        (4) the authorized capital stock of the Company, of
                  which there is outstanding the amount set forth in the
                  Registration Statement and Prospectus (except for subsequent
                  issuances, if any, pursuant to stock options or other rights
                  referred to in the Prospectus), conforms as to legal matters
                  in all material respects to the description thereof in the
                  Registration Statement and Prospectus;

                        (5) the issued and outstanding capital stock of the
                  Company has been duly authorized and validly issued and is
                  fully paid and nonassessable;



                                      -16-

                        (6) the certificates for the Shares to be delivered
                  hereunder are in due and proper form, and when duly
                  countersigned by the Company's transfer agent and delivered to
                  you or upon your order against payment of the agreed
                  consideration therefor in accordance with the provisions of
                  this Agreement and the Pricing Agreement, the Shares
                  represented thereby will be duly authorized and validly
                  issued, fully paid and nonassessable;

                        (7) to the best knowledge of such counsel, the
                  Registration Statement (including the information deemed to be
                  part of the Registration Statement at the time of
                  effectiveness pursuant to Rule 430A(b) and/or Rule 434, if
                  applicable), the Prospectus and each amendment or supplement
                  thereto (except for the financial statements and other
                  statistical or financial data included therein as to which
                  such counsel need express no opinion) comply as to form in all
                  material respects with the requirements of the 1933 Act, and
                  the Registration Statement has become effective under the 1933
                  Act; no stop order suspending the effectiveness of the
                  Registration Statement has been issued and no proceedings for
                  that purpose have been instituted or are pending or
                  contemplated under the 1933 Act, the Registration Statement
                  (including the information deemed to be part of the
                  Registration Statement at the time of effectiveness pursuant
                  to Rule 430A(b) and/or Rule 434, if applicable) and the
                  Prospectus, and the Registration Statement or the Prospectus
                  as amended or supplemented (except as aforesaid), as of their
                  respective effective or issue dates, did not contain any
                  untrue statement of a material fact and did not omit to state
                  a material fact required to be stated therein or necessary to
                  make the statements therein not misleading in light of the
                  circumstances under which they were made; the statements in
                  the Registration Statement and the Prospectus summarizing
                  statutes, rules and regulations are accurate and fairly and
                  correctly present the information required to be presented by
                  the 1933 Act or the rules and regulations thereunder, in all
                  material respects and such counsel does not know of any
                  statutes, rules and regulations required to be described or
                  referred to in the Registration Statement or the Prospectus
                  that are not described or referred to therein as required; and
                  such counsel does not know of any legal or governmental
                  proceedings pending or threatened required to be described in
                  the Prospectus which are not described as required, nor of any
                  contracts or documents of a character required to be described
                  in the Registration Statement or Prospectus or to be filed as
                  exhibits to the Registration Statement which are not described
                  or filed, as required;

                        (8) to the best knowledge of such counsel, all documents
                  that have been filed by the Company pursuant to the Exchange
                  Act (except for the financial statements and other statistical
                  or financial data included therein as to which such counsel
                  need express no opinion), when they were filed with the
                  Commission,


                                      -17-

                  complied as to form in all material respects with the
                  requirements of the Exchange Act; and such counsel has no
                  reason to believe that any of such documents, when they were
                  so filed, contained any untrue statement of a material fact or
                  omitted to state a material fact necessary in order to make
                  the statements therein not misleading in light of the
                  circumstances under which they were made when such documents
                  were so filed,;

                        (9) the statements under the captions "Management - 2002
                  Stock Option Plan," "Certain Relationships and Related
                  Transactions," "Description of Capital Stock" and "Shares
                  Eligible for Future Sale" in the Prospectus, insofar as such
                  statements constitute a summary of documents referred to
                  therein or matters of law, are accurate summaries and fairly
                  and correctly present, in all material respects, the
                  information called for with respect to such documents and
                  matters;

                        (10) this Agreement, the Pricing Agreement and, to the
                  extent necessary, the Warrant Exercise Transactions and the
                  performance of the Company's obligations hereunder and
                  thereunder have been duly authorized by all necessary
                  corporate action and this Agreement and the Pricing Agreement
                  have been duly executed and delivered by and on behalf of the
                  Company, and are legal, valid and binding agreements of the
                  Company, except as enforceability of the same may be limited
                  by bankruptcy, insolvency, reorganization, moratorium or other
                  similar laws affecting creditors' rights and by the exercise
                  of judicial discretion in accordance with general principles
                  applicable to equitable and similar remedies and except as to
                  those provisions relating to indemnities for liabilities
                  arising under the 1933 Act as to which no opinion need be
                  expressed; and no approval, authorization or consent of any
                  public board, agency, or instrumentality of the United States
                  or of any state or other jurisdiction is necessary in
                  connection with the issue or sale of the Shares by the Company
                  pursuant to the Warrant Exercise Transactions (other than
                  under the 1933 Act, applicable blue sky laws and the rules of
                  the NASD, as to which such counsel need express no opinion) or
                  the consummation by the Company of any other transactions
                  contemplated hereby (such opinion may assume that Illinois Law
                  is the same as New York Law for this purpose);

                       (11) the execution and performance of this Agreement and
                  the consummation of the Warrant Exercise Transactions will not
                  contravene any of the provisions of, or result in a default
                  under, any agreement set forth, or known to such counsel and
                  required to be set forth, as an exhibit to the Registration
                  Statement; or violate any of the provisions of the
                  organizational documents of the Company or any of its
                  subsidiaries or, so far as is known to such counsel, violate
                  any statute, order, rule or regulation of any regulatory or
                  governmental body having jurisdiction over


                                      -18-

                  the Company or any of its subsidiaries, except such
                  contraventions or defaults which would not have a Material
                  Adverse Effect;

                       (12) to such counsel's knowledge, based solely on a
                  review of the minute books and equity records of each
                  Subsidiary, all offers and sales of the Company's capital
                  stock or membership interests of any of the Company's
                  subsidiaries since April 30, 2000 were at all relevant times
                  exempt from the registration requirements of the 1933 Act and
                  were duly registered or the subject of an available exemption
                  from the registration requirements of the applicable state
                  securities or blue sky laws;

                       (13) to such counsel's knowledge, this Agreement and the
                  Pricing Agreement have been duly authorized, executed and
                  delivered by or on behalf of each of the Selling Stockholders,
                  and the performance of this Agreement and the Pricing
                  Agreement and the consummation of the transactions herein
                  contemplated by each of the Selling Stockholders will not
                  result in a breach or violation of any of the terms and
                  provisions of, or constitute a default under, any statute
                  known to such counsel and applicable to transactions of the
                  type contemplated by this agreement or agreement set forth, or
                  known to such counsel and required to be set forth, as an
                  exhibit to the Registration Statement; and no consent,
                  approval, authorization or order of any court or governmental
                  agency or body is required for the consummation of the
                  transactions contemplated by this Agreement and the Pricing
                  Agreement in connection with the sale of Shares to be sold by
                  the Selling Stockholders hereunder (other than under the 1933
                  Act, applicable blue sky laws and the rules of the NASD, as to
                  which such counsel need express no opinion) (such opinion may
                  assume that Illinois Law is the same as New York Law for this
                  purpose);

                       (14) to such counsel's knowledge, each of the Selling
                  Stockholders has full right, power and authority to enter into
                  this Agreement and the Pricing Agreement and to sell, transfer
                  and deliver the Shares to be sold on the First Closing Date or
                  the Second Closing Date, as the case may be, by such Selling
                  Stockholder hereunder and good and marketable title to such
                  Shares so sold, free and clear of all voting trust
                  arrangements, liens, encumbrances, equities, claims and
                  community property rights whatsoever, has been transferred to
                  the Underwriters (who counsel may assume to be bona fide
                  purchasers) who have purchased such Shares hereunder; and

                       (15) this Agreement and the Pricing Agreement are legal,
                  valid and binding agreements of each of the Selling
                  Stockholders except as enforceability of the same may be
                  limited by bankruptcy, insolvency, reorganization, moratorium
                  or


                                      -19-

                  other similar laws affecting creditors' rights and by the
                  exercise of judicial discretion in accordance with general
                  principles applicable to equitable and similar remedies and
                  except with respect to those provisions relating to
                  indemnities for liabilities arising under the 1933 Act, as to
                  which no opinion need be expressed.

                       (16) the Company is not an "investment company" or a
                  person "controlled by" an "investment company" within the
                  meaning of the Investment Company Act.

                        In rendering such opinion, such counsel may rely and
            state that they are relying upon the certificate of Continental
            Stock Transfer and Trust Company, the transfer agent for the Common
            Stock, as to the number of shares of Common Stock at any time or
            times outstanding, and that insofar as their opinion under clause
            (7) above relates to the accuracy and completeness of the Prospectus
            and Registration Statement, it is based upon a general review with
            the Company's representatives and independent accountants of the
            information contained therein, without independent verification by
            such counsel of the accuracy or completeness of such information.
            Such counsel may also rely upon the opinions of other competent
            counsel and, as to factual matters, on certificates of the Selling
            Stockholders and of officers of the Company and of state officials
            including, but not limited to, certificates relating to the opinion
            of such counsel under clause (1) above relating to the due
            qualification and good standing of the Company, in which case their
            opinion is to state that they are so doing and copies of said
            opinions or certificates are to be attached to the opinion unless
            said opinions or certificates (or, in the case of certificates, the
            information therein) have been furnished to the Representatives in
            other form.

                        Such counsel's opinion shall be limited to matters
            governed by federal securities laws and by the General Corporation
            Law of the State of Delaware and any opinion rendered by such
            counsel with respect to the enforcement of this Agreement or the
            Pricing Agreement shall assume that the laws of the State of
            Illinois are the same as the laws of the State of New York. For
            purposes of such opinions, no proceedings shall be deemed to be
            pending, no order or stop order shall be deemed to be issued, and no
            action shall be deemed to be instituted unless, in each case, a
            director or executive officer of the Company shall have received a
            copy of such proceedings, order, stop order or action. For purposes
            of such opinion, no proceedings shall be deemed to be threatened
            unless the potential litigant or government authority has manifested
            in writing to the directors or management of the Company, or to
            counsel thereof, a present intention to initiate such litigation or
            proceedings. In addition, such opinion may be limited to present
            statutes, regulations and judicial interpretations and to facts as
            they presently exist as of the date of such opinion, In rendering
            such opinion, such counsel need assume no obligation to revise or
            supplement it should the present laws be changed by legislative or
            regulatory action, judicial action or otherwise. Such


                                      -20-

            counsel may make certain customary assumptions relating to parties
            other than the Company. In addition, in lieu of an opinion with
            respect to the fourth clause of paragraph (7) above, such counsel
            may confirm in writing that in connection with the preparation of
            the Registration Statement, they have participated in conferences
            with officers, employees and other representatives of the Company,
            independent accountants of the Company, the Underwriters and counsel
            for the Underwriters, at which the contents of the Registration
            Statement and Prospectus were discussed and, although such counsel
            is not passing upon and does not assume responsibility for the
            accuracy, completeness or fairness of the statements contained in
            the Registration Statement or Prospectus, and has not made any
            independent check or verification thereof, on the basis of the
            foregoing (relying as to materiality to a large extent upon the
            statements of officers, employees and other representatives of the
            Company), such counsel have no reason to believe that either the
            Registration Statement (including the information deemed to be part
            of the Registration Statement at the time of effectiveness pursuant
            to Rule 430A(b) and/or Rule 434, if applicable) or the Prospectus,
            or the Registration Statement or the Prospectus as amended or
            supplemented (except as aforesaid), as of their respective effective
            dates, contained any untrue statement of a material fact or omitted
            to state a material fact required to be stated therein or necessary
            to make the statements therein, in light of the circumstances under
            which they were made, not misleading or that the Prospectus as
            amended or supplemented, if applicable, as of the First Closing Date
            or the Second Closing Date, as the case may be, contained any untrue
            statement of a material fact or omitted to state any material fact
            necessary to make the statements therein not misleading in light of
            the circumstances under which they were made (it being understood
            that, in each case, such counsel need express no view with respect
            to the financial statements and other financial and statistical data
            and schedules included in the Registration Statement or Prospectus
            or the information from the Underwriters in the Prospectus as
            described in Section).

                        In addition, such counsel shall confirm in writing that,
            although such counsel need not pass upon, and need not assume any
            responsibility for, the accuracy, completeness or fairness of the
            statements contained in the Registration Statement and the
            Prospectus and need not make any independent check or verification
            thereof, during the course of such participation (relying as to
            materiality to a large extent upon the Selling Stockholder
            Questionnaire completed by the Selling Stockholders, the statements
            of officers and other representatives of the Company), no facts have
            come to such counsel's attention that causes such counsel to believe
            either the Registration Statement (including the information deemed
            to be part of the Registration Statement at the time of
            effectiveness pursuant to Rule 430A(b) and/or Rule 434, if
            applicable) at the time it became effective, insofar as it relates
            to the Selling Stockholders, contained any untrue statement of
            material fact or omitted to state a material fact required to be
            stated therein or necessary to make the statements therein, in light
            of the circumstances under which they were made, not misleading or
            that the Prospectus, as


                                      -21-

            amended or supplemented, if applicable, as of its date and as of the
            First Closing Date or the Second Closing Date, as the case may be,
            insofar as it relates to the Selling Stockholders, contained any
            untrue statement of a material fact or omitted to state a material
            fact necessary in order to make the statements therein, in light of
            the circumstances under which they were made, not misleading.

                 (ii) Such opinion or opinions of Sidley Austin Brown & Wood,
            counsel for the Underwriters ("SABW"), dated the First Closing Date
            or the Second Closing Date, as the case may be, with respect to the
            incorporation of the Company, the validity of the Shares to be sold
            by the Company, the Registration Statement 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 request for the
            purpose of enabling them to pass upon such matters.

                (iii) 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; and

                        (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.

                        (3) subsequent to the date of the most recent financial
                  statements included in the Registration Statement and
                  Prospectus, and except as set forth or contemplated in the
                  Prospectus, (A) none of the Company and its 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 material adverse change in the condition (financial or
                  otherwise), business, assets or operations of the Company and
                  its subsidiaries, taken as a whole, or any change in the
                  capital stock or any material change in their short-term debt
                  or long-term debt.



                                      -22-

                        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) and (2) of this subparagraph to be set forth in said
            certificate.

                 (iv) A certificate of each of the Selling Stockholders dated
            the First Closing Date or the Second Closing Date, as the case may
            be, to the effect that the representations and warranties of such
            Selling Stockholder set forth in Section 3 of this Agreement are
            true and correct as of such date and such Selling Stockholder has
            complied with all the agreements and satisfied all the conditions on
            the part of such Selling Stockholder to be performed or satisfied at
            or prior to such date.

                  (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
            Representatives of the Underwriters, from PricewaterhouseCoopers
            LLP. independent accountants, the first one to be dated the date of
            the 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 such form reasonably satisfactory
            to SABW, counsel 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 Representatives 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 the specific statistical or financial figures
            included in the Prospectus which has not been otherwise verified by
            the letters referred to in clause (v) 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 Brown & Wood, 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 and
the Selling Stockholders without liability on the part of any Underwriter or the
Company or the


                                      -23-

Selling Stockholders, 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 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 or any
of the Selling Stockholders 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 not to exceed $15,000) 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 this Section, Section 7 and Section 11 shall at
all times be effective and shall apply.

      Section 10. Effectiveness of Registration Statement. You, the Company and
the Selling Stockholders will use your, its and their reasonable 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, and each Selling Stockholder severally (based upon the percentage that
the number of Shares sold hereunder by such Selling Stockholder bears to the
total number of Shares sold hereunder by the Selling Stockholders) and not
jointly 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 and/or the Selling Stockholders), 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 of effectiveness pursuant to Rule
430A and/or Rule 434, if applicable, any preliminary 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 required to be
stated therein or necessary to make the statements therein 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 neither the Company nor any
of the Selling Stockholders will be liable in any such case to the extent that
(i) 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


                                      -24-

prospectus, the Prospectus or any amendment or supplement thereto in reliance
upon and in conformity with the information with respect to which the
Underwriters have made representations and warranties in Section 4 of this
Agreement; or (ii) if such statement or omission was contained or made in any
preliminary prospectus and corrected in the Prospectus and (1) any such loss,
claim, damage or liability suffered or incurred by any Underwriter (or any
person who controls any Underwriter) resulted from an action, claim or suit by
any person who purchased Shares which are the subject thereof from such
Underwriter in the offering and (2) such Underwriter failed to deliver or
provide a copy of the Prospectus to such person at or prior to the confirmation
of the sale of such Shares in any case where such delivery is required by the
1933 Act. In addition to their other obligations under this Section 11(a), the
Company and the Selling Stockholders agree 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), they 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
and/or the Selling Stockholders' 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 and the Selling
Stockholders may otherwise have.

      Without limiting the full extent of the Company's agreement to indemnify
the Underwriters, as herein provided, (i) each of Steven Fredrickson, Kevin
Stevenson, Craig Grube, Andrew Holmes and James Keown shall be liable under the
indemnity agreements contained in paragraph (a) of this Section only for an
amount not exceeding the proceeds received by such Selling Stockholder from the
sale of Shares hereunder, net of taxes actually paid by such Selling Stockholder
as a result of the Warrant Exercise Transactions, and (ii) each other Selling
Stockholder shall be liable under the indemnity agreements contained in
paragraph (a) of this Section only for an amount not exceeding the proceeds
received by such Selling Stockholder from the sale of Shares hereunder.


      (b) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers, and each of the Selling
Stockholders 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, Selling
Stockholder 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, 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 required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in the
Registration Statement, any preliminary prospectus, the Prospectus, or any
amendment or supplement thereto in reliance upon and in conformity with the
information with respect to which the Underwriters have made representations and
warranties in Section 4 of this Agreement; and will reimburse any legal or other
expenses reasonably incurred by the Company, or any such director, officer,
Selling Stockholder 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 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 and the Selling Stockholders on a monthly


                                      -25-

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 and the Selling Stockholders 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 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
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 immediately 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 Representatives (or the Company if none of the
indemnified parties is an Underwriter) 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 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.



                                      -26-

      (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, the
Selling Stockholders 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 appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company, the Selling Stockholders 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, the Selling Stockholders
and the Underwriters shall be deemed to be in the same proportion in the case of
the Company and the Selling Stockholders, as the total price paid to the Selling
Stockholders for the Shares by the Underwriters (net of underwriting discount
but before deducting expenses), and in the case of the Underwriters as the
underwriting discount received by them bears to the total of such amounts paid
to the Selling Stockholders and received by the Underwriters as underwriting
discount in each case as contemplated by the Prospectus. The relative fault of
the Company and the Selling Stockholders 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 by the Selling Stockholders or
by 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, the Selling Stockholders 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 1933 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 11 are several in proportion to their
respective underwriting commitments and not joint.

      (e) The provisions of this Section shall survive any termination of this
Agreement.

      Section 12. Default of Underwriters. It shall be a condition to the
agreement and obligation of the Selling Stockholders to sell and deliver the
Shares hereunder, and of each Underwriter to purchase the


                                      -27-

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 Representatives 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 Representatives may make arrangements satisfactory to
the Company and the Selling Stockholders 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 Representatives
and the Company and the Selling Stockholders 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 or
the Company or the Selling Stockholders, except for the expenses to be paid by
the Company pursuant to Section 7 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
Representatives 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. 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 and the Selling Stockholders or by release of any Shares
for sale to the public. For the purposes of this Section, 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
telegrams (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:


                                      -28-

            (a) This Agreement may be terminated by the Company by notice to you
      and the Selling Stockholders or by you by notice to the Company and the
      Selling Stockholders 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 or the Selling
      Stockholders to any Underwriter (except for the expenses to be paid or
      reimbursed pursuant to Section 7 hereof and except to the extent provided
      in Section 11 hereof) or of any Underwriter to the Company or the Selling
      Stockholders.

            (b) This Agreement may also be terminated by you prior to the First
      Closing Date, and the option referred to in Section 5, 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 National 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 adverse change in financial markets or in
      political, economic or financial conditions which, in the opinion of the
      Representatives, 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 Representatives 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 (except to the extent provided in Section 11 hereof) or the
      Selling Stockholders or on the part of the Company to any Underwriter or
      the Selling Stockholders (except for expenses to be paid or reimbursed
      pursuant to Section 7 hereof and except to the extent provided in Section
      11 hereof).

      Section 15. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of the Selling Stockholders 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, or the
Selling Stockholders as the case may be, 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 William Blair & Company, L.L.C., 222 West Adams Street,
Chicago, Illinois 60606, with a copy to Jon A. Ballis c/o Sidley Austin Brown &
Wood, Bank One Plaza, Chicago, Illinois 60603; if sent to the Company will be
mailed, delivered or telegraphed and confirmed to the Company at its corporate
headquarters with a copy to Charles I. Weissman, Esq. c/o Swidler Berlin Shereff
Friedman, LLP, 405 Lexington Avenue, 12th Floor, New York, New York 10174; if
sent to any of the Selling Stockholders, will be mailed, delivered or
telegraphed and confirmed to David Roberts and Steve Fredrickson at
such addresses as they have previously furnished


                                      -29-

to the Company and the Representatives, with a copy to Charles I. Weissman, Esq.
c/o Swidler Berlin Shereff Friedman, LLP, 405 Lexington Avenue, 12th Floor, New
York, New York 10174.

      Section 17. 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 18. Representation of Underwriters. You will act as
Representatives 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 19. 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 20. Applicable Law. This Agreement and the Pricing Agreement shall
be governed by and construed in accordance with the laws of the State of
Illinois.





                                      -30-

      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 among the Company, each of the
Selling Stockholders and the several Underwriters including you, all in
accordance with its terms.

                                       Very truly yours,
                                       PORTFOLIO RECOVERY ASSOCIATES, INC.


                                       By:
                                           -----------------------
                                           Judy S. Scott
                                           Senior Vice President, General
                                           Counsel and Secretary

                                       PRA INVESTMENTS, L.L.C.

                                       By: Angelo, Gordon & Co., L.P., its
                                           Managing Member

                                       By:
                                           -----------------------
                                       Name:
                                       Title:

                                       ANGELO, GORDON & CO., L.P.

                                       By:
                                           -----------------------

                                       ---------------------------
                                       Steven Frederickson

                                       ---------------------------
                                       Kevin Stevenson

                                       ---------------------------
                                       Craig Grube

                                       ---------------------------
                                       Andrew Holmes

                                       ---------------------------
                                       James Keown


The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.

WILLIAM BLAIR & COMPANY, L.L.C.
U.S. BANCORP PIPER JAFFRAY, INC.

Acting as Representatives of the
several Underwriters named in
Schedule A.

By William Blair & Company, L.L.C.


By:
    --------------------------
         Principal


                                      -31-

                                   SCHEDULE A



                                                          Number of
                                                         Firm Shares
Underwriter                                            to be Purchased
- -----------                                            ---------------
                                                    

William Blair & Company, L.L.C.


U.S. Bancorp Piper Jaffray, Inc.





                        Total


                                   SCHEDULE B



                                              Number of           Number of
                                             Firm Shares        Option Shares
                                              to be Sold         to be Sold
                                              ----------         ----------
                                                          
PRA Investments, L.L.C.                        1,339,612            200,942
Angelo, Gordon & Co., L.P.                       730,388            109,558
Steven Fredrickson                               322,893             48,980
Kevin Stevenson                                  220,644             27,993
Craig Grube                                      156,027             21,549
Andrew Holmes                                    108,061             19,643
James Keown                                      122,375             21,335
                                              ----------         ----------

                        Total                  3,000,000            450,000


                                   SCHEDULE C

                                  Subsidiaries

Portfolio Recovery Associates, L.L.C.

PRA Funding, LLC

PRA Holding I, LLC

PRA III, LLC

PRA Receivables Management, LLC

                                                                       Exhibit A


                       PORTFOLIO RECOVERY ASSOCIATES, INC.

3,000,000 Shares Common Stock(3)


                                PRICING AGREEMENT

                                                                 [_______], 2003


William Blair & Company, L.L.C.
U.S. Bancorp Piper Jaffray, Inc.
  As Representatives of the Several
  Underwriters
c/o William Blair & Company, L.L.C.
222 West Adams Street
Chicago, Illinois 60606


Ladies and Gentlemen:


      Reference is made to the Underwriting Agreement dated [________], 2003
(the "Underwriting Agreement") relating to the sale by the Selling Stockholders
and the purchase by the several Underwriters for whom William Blair & Company,
L.L.C. and U.S. Bancorp Piper Jaffray, Inc. are acting as representatives (the
"Representatives"), of the above Shares. All terms herein shall have the
definitions contained in the Underwriting Agreement except as otherwise defined
herein.


      Pursuant to Section 5 of the Underwriting Agreement, the Company and the
Selling Stockholders agree with the Representatives as follows:

      1. The public offering price per share for the Shares shall be $[ ].


      2. The purchase price per share for the Shares to be paid by the several
Underwriters shall be $[ ], being an amount equal to the public offering price
set forth above less $[ ] per share.

- --------------------
(3) Plus an option to acquire up to 450,000 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 among the Company, each of the
Selling Stockholders and the several Underwriters, including you, all in
accordance with its terms.

                                       Very truly yours,

                                       PORTFOLIO RECOVERY ASSOCIATES, INC.


                                       By:
                                           ----------------------------------
                                           Judy S. Scott
                                           Senior Vice President, General
                                             Counsel and Secretary

                                       PRA INVESTMENTS, L.L.C.


                                       By:
                                           ----------------------------------


                                       ANGELO, GORDON & CO., L.P.

The foregoing Agreement is hereby
confirmed and accepted as of the       By:
date first above written.                  ----------------------------------

WILLIAM BLAIR & COMPANY, L.L.C.
U.S. BANCORP PIPER JAFFRAY, INC.       --------------------------------------
                                       Steven Fredrickson
Acting as Representatives of the
several Underwriters
                                       --------------------------------------
By William Blair & Company, L.L.C.     Kevin Stevenson


By:                                    --------------------------------------
   ---------------------------------   Craig Grube
         Principal

                                       --------------------------------------
                                       Andrew Holmes


                                       --------------------------------------
                                       James Keown