FLAGSTAR CAPITAL CORPORATION
____% Noncumulative Preferred Stock, Series A
(Liquidation Preference $25.00 per share)
Exchangeable into Preferred Stock of
Flagstar Bank, FSB
Underwriting Agreement
_________, 1998
Xxxxx & Co., L.L.C.
XxXxxxxx & Company Securities, Inc.
As representatives of the several Underwriters
named in Schedule I hereto,
c/x Xxxxx & Co., L.L.C.,
Xxx Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Flagstar Capital Corporation, a Michigan corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters") an aggregate
of 2,000,000 shares (the "Firm Shares") of ____% Noncumulative Preferred Stock,
Series A (the "Preferred Stock") of the Company and up to an aggregate of
300,000 shares (the "Optional Shares") of Preferred Stock (the Firm Shares and
the Optional Shares that the Underwriters elect to purchase pursuant to Section
2 hereof being collectively referred to as the "Shares").
Flagstar Bank, a federally chartered and federally insured savings bank
and the parent of the Company (the "Bank"), has prepared and filed on December
___, 1997 with the Office of Thrift Supervision (the "OTS") a preliminary
offering circular under cover of Form OC (Docket No. ____), also filed with the
Securities and Exchange Commission (the "Commission") as an attachment to the
Registration Statement (as defined below), for the registration of the preferred
stock of the Bank for which the Preferred Stock will be exchanged automatically
under certain conditions (the "Bank Preferred Shares") pursuant to 12 C.F.R.
ss.563g of the rules and regulations of the OTS (all of the rules and
regulations set forth in Chapter V of Title 12 of the Code of Federal
Regulations, including without limitation, 12 C.F.R. ss.563g, and the rules and
regulations of the Commission made applicable to the offering circular by the
rules and regulations of the OTS, are hereinafter collectively referred to as
the "OTS Rules and Regulations"). The Bank will promptly prepare and file an
offering circular, which includes the information (the "Pricing Information")
excluded from the preliminary offering circular in reliance upon 12 C.F.R.
ss.563g.2(c)(2) of the OTS Rules and Regulations and 17 C.F.R. ss.230-430A, in
accordance with the provisions of Rule 424(b). Each
offering circular used before the time such offering circular is declared
effective by the OTS and any offering circular that omits the Pricing
Information that is used after such effectiveness and prior to the date hereof
is herein called a "Preliminary Offering Circular." Such filing under the cover
of Form OC, and the offering circular constituting a part thereof, as amended at
the time the offering circular becomes effective under the OTS Rules and
Regulations (and including the Pricing Information), including all documents
incorporated by reference therein, are hereinafter referred to as the "Form OC"
and the "Offering Circular," respectively, except that if any amended or
supplemented offering circular shall be provided to the Underwriters by the Bank
for use in connection with the offering of the Bank Preferred Shares which
differs from the Offering Circular at the time it becomes effective, the term
"Offering Circular" shall refer to such newly amended or supplemented offering
circular from and after the time it is first provided to the Underwriters for
such use.
1. (a) The Company represents and warrants to, and agrees with,
each of the Underwriters that:
(i) A registration statement on Form S-11 (File No. 333-_____)
as amended by any pre-effective amendment thereto in respect of the
Shares (the "Initial Registration Statement") has been filed with the
Commission; the Initial Registration Statement and any post-effective
amendment thereto, each in the form heretofore delivered to you, and,
excluding exhibits thereto, as the same may have been amended from time
to time, to each of the other Underwriters, have been declared
effective by the Commission in such form; other than a registration
statement, if any, increasing the size of the offering (a "Rule 462(b)
Registration Statement"), filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended (the "Act"), which became effective
upon filing, no other document with respect to the Initial Registration
Statement has heretofore been filed with the Commission; no stop order
suspending the effectiveness of the Initial Registration Statement, any
post-effective amendment thereto or the Rule 462(b) Registration
Statement, if any, has been issued and no proceeding for that purpose
has been initiated or threatened by the Commission (any preliminary
prospectus included in the Initial Registration Statement or filed with
the Commission pursuant to Rule 424(a) of the rules and regulations of
the Commission under the Act, as amended, is hereinafter called a
"Preliminary Prospectus"); the various parts of the Initial
Registration Statement and the Rule 462(b) Registration Statement, if
any, including all exhibits thereto and including the information
contained in the form of final prospectus filed with the Commission
pursuant to Rule 424(b) under the Act in accordance with Section 5(a)
hereof and deemed by virtue of Rule 430A under the Act to be part of
the Initial Registration Statement at the time it was declared
effective or such part of the Rule 462(b) Registration Statement, if
any, that became or hereafter becomes effective, each as amended at the
time such part of the registration statement became effective, is
hereinafter collectively called the "Registration Statement;" and such
final prospectus, in the form first filed pursuant to Rule 424(b) under
the Act, is hereinafter called the "Prospectus;"
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(ii) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in all
material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder, and did not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company
by an Underwriter through Xxxxx & Co., L.L.C. or XxXxxxxx & Company
Securities, Inc. (the "Representatives") expressly for use therein; and
(iii) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration Statement
or the Prospectus will conform, in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date
of the Registration Statement and any amendment thereto, and as of the
applicable filing date of the Prospectus and any amendment or
supplement thereto, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter
through the Representatives expressly for use therein;
(b) The Company represents and warrants to, and agrees with, each
of the Underwriters that:
(i) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not
been any material adverse change in or affecting the general affairs,
business, management, financial position, stockholders' equity, results
of operations or prospects of the Company, otherwise than as set forth
or contemplated in the Prospectus;
(ii) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Michigan, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, and
has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any
business so as to require such qualification and is subject to no
material liability or disability by reason of the failure to be so
qualified in any such jurisdiction;
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(iii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital stock
of the Company have been duly and validly authorized and issued and are
fully paid and nonassessable;
(iv) The Shares have been duly and validly authorized and,
when issued and delivered against payment therefor as provided herein,
will be duly and validly issued and fully paid and nonassessable and
will conform in all material respects to the description of the
Preferred Stock contained in the Prospectus;
(v) The issue and sale of the Shares by the Company and the
compliance by the Company with all of the provisions of this Agreement
and the consummation of the transactions herein contemplated will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which
the Company is a party or by which the Company is bound or to which any
of the property or assets of the Company is subject, nor will such
action result in any violation of the provisions of the Articles of
Incorporation (or other charter document) or By-laws of the Company or
any statute, ordinance, rule or regulation or any order, decree, rule
or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its properties; and no consent,
approval, authorization, order, registration or qualification of or
with any such court or governmental agency or body is required for the
issue and sale of the Shares or the consummation by the Company of the
transactions contemplated by this Agreement and the agreements listed
in Annex II hereto, except the registration under the Act and such
consents, approvals, authorizations, registrations or qualifications as
may be required under state securities or blue sky laws in connection
with the purchase and distribution of the Shares by the Underwriters;
(vi) The Company is not in violation of its Articles of
Incorporation or By-laws or in default in the performance or observance
of any material obligation, agreement, covenant or condition contained
in any indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which it is a party or by which it or
any of its properties may be bound;
(vii) The statements set forth in the Prospectus under the
captions "Description of Series A Preferred Shares," insofar as they
purport to constitute a summary of the terms of the Preferred Stock,
"Description of Capital Stock," insofar as they purport to constitute a
summary of the terms of the capital stock of the Company, and under the
captions "Federal Income Tax Considerations," "ERISA Considerations,"
"Business and Strategy -- Acquisition of Initial Portfolio," "Business
and Strategy -- Servicing," "Management," and "Underwriting," insofar
as they purport to describe the provisions of the laws and documents
referred to therein, are accurate, complete in all material respects
and fair;
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(viii) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company is a
party or of which any property of the Company is the subject which, if
determined adversely to the Company would individually or in the
aggregate have a material adverse effect on the financial position,
stockholders' equity or results of operations of the Company; and, to
the best of the Company's knowledge, no such proceedings are threatened
or contemplated by any governmental authorities or threatened by
others;
(ix) Each of the agreements listed in Annex II hereto has
been duly authorized, executed and delivered by the Company and
constitutes the valid and legally binding obligation of the Company and
is enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights;
(x) The Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company" or
an entity "controlled" by an "investment company," as such terms are
defined in the Investment Company Act of 1940, as Amended (the
"Investment Company Act");
(xi) The Company does not do business with the government of
Cuba or with any person or affiliate located in Cuba within the meaning
of Section 517.075, Florida Statutes;
(xii) Xxxxx Xxxxxxxx L.L.P., who have certified certain
financial statements of the Company, are independent public accountants
as required by the Act and the rules and regulations of the Commission
thereunder;
(xiii) This Agreement has been duly authorized, executed and
delivered by the Company;
(xiv) There are no contracts or documents which are
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits thereto which have not been so
described and filed as required;
(xv) No filing with, or authorization, approval,
consent, license, order, registration, notification, qualification or
decree of, any court or governmental authority or agency is necessary
or required for the performance by the Company of its obligations
hereunder, in connection with the offering, issuance or sale of the
Preferred Stock hereunder or the consummation of the transactions
contemplated by this Agreement, except such as have been already
obtained or as may be required under the Act or the rules and
regulations thereunder or state securities laws or by the OTS;
(xvi) The Company possesses such permits, licenses,
approvals, consents, and other authorizations (collectively
"Governmental Licenses") issued by the appropriate federal,
5
state, local or foreign regulatory agencies or bodies necessary to
conduct the business now operated by it; the Company is in compliance
with the terms and conditions of all such Governmental Licenses, except
where the failure so to comply would not have a material adverse effect
on the financial position, stockholders' equity or results of
operations of the Company; all of the Governmental Licenses are valid
and in full force and effect, except where the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to
be in full force and effect would not have a material adverse effect on
the financial position, stockholders' equity or results of operations
of the Company; the Company has not received any notice of proceedings
relating to the revocation or modification of any such Governmental
Licenses which singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a material
adverse effect on the financial position, stockholders' equity or
results of operations of the Company;
(xvii) There are no persons with registration rights
or other similar rights to have any securities registered pursuant to
the Registration Statement or otherwise registered by the Company under
the Act; and
(xviii) The Company is organized and carries on its
business so as to qualify as a "real estate investment trust" (a
"REIT") under Sections 856 through 860 of the Internal Revenue Code of
1986, as amended (the "Code"), and no transaction or other event has
occurred which would cause the Company not to enable it to qualify as a
REIT for its current taxable year or for future taxable years.
(c) The Bank represents and warrants to, and agrees with, each of the
Underwriters that:
(i) The Bank has been duly organized and is validly existing as a
federally chartered savings bank under the laws of the United States of
America, with power and authority (corporate and other) to own its
properties and conducts its business as now being conducted;
(ii) Since December 31, 1996, there has not been any material
adverse change in or affecting the general affairs, management,
financial position, stockholders' equity, results of operations of
Flagstar Bancorp, Inc., the parent of the Bank (the "Holding Company"),
or the Bank;
(iii) The issue and sale of the Shares by the Company and the
compliance by the Company and the Bank with all of the provisions of
this Agreement and the consummation of the transactions herein
contemplated will not conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Holding Company or any of its
subsidiaries (including the Bank) is a party or by which the Holding
Company or any of its subsidiaries (including the Bank) is bound or to
which any of the property or assets of the Holding Company or any of
its subsidiaries (including the
6
Bank) is subject, nor will such action result in any violation of the
provisions of the Certificate of Incorporation (or other charter
document) or By-laws of the Bank or the Holding Company or any statute
or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Holding Company or any of its
subsidiaries (including the Bank) or any of their properties, except
where such would not result in a material adverse effect on the
financial position, stockholders' equity or results of operations of
the Company; and, except as have been obtained, no consent, approval,
authorization, order, registration or qualification of or with any such
court or governmental agency or body is required to be obtained by the
Holding Company or the Bank for the issue and sale of the Shares by the
Company or the consummation by the Bank of the transactions
contemplated by this Agreement and the agreements listed in Annex II
hereto;
(iv) Each of the agreements listed in Annex II hereto has been
duly authorized, executed and delivered by the Bank and constitutes the
valid and legally binding obligation of the Bank and is enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights;
(v) The representations and warranties of the Bank contained
in the Residential Mortgage Loan Purchase and Warranties Agreement
between the Company and the Bank, and the Residential Mortgage Loan
Servicing Agreement between the Company and the Bank, each dated
______________, 1998, are as of the date hereof and will be as of the
Time of Delivery true and correct;
(vi) This Agreement has been duly authorized, executed and
delivered by the Bank;
(vii) The Form OC and the Offering Circular, at the respective
times the Form OC and any post-effective amendments thereto became
effective, at the date hereof and at all times subsequent thereto up to
the Time of Delivery (as defined in Section 4 hereof), and if any
Optional Shares are purchased, at the Second Time of Delivery (as
defined in Section 4 hereof), complied and will comply in all material
respects with the requirements of the OTS Rules and Regulations; the
Form OC, at the respective times the Form OC and any post-effective
amendments thereto became effective, and at the date hereof, did not or
will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; the Offering Circular, at the
respective times the Form OC and any post-effective amendments thereto
up to the Time of Delivery, and if any Optional Shares are purchased,
at the Second Time of Delivery, did not and will not include an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance
7
upon, and in conformity with, information furnished in writing to the
Bank by an Underwriter through the Representatives expressly for use
therein;
(viii) The documents incorporated or deemed to be incorporated by
reference in the Form OC and the Offering Circular, at the time they
were or hereafter are filed with the OTS, complied and will comply in
all material respects with the requirements of the OTS Rules and
Regulations, and, when read together with the other information in the
Offering Circular, at the time the Form OC became effective, at the
time the Offering Circular was issued and at the Time of Delivery (and
if any Optional Shares are purchased, at the Second Time of Delivery),
did not and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
(ix) Xxxxx Xxxxxxxx L.L.P., who have certified certain financial
statements of the Bank, are independent public accountants as required
by the Act and the rules and regulations of the Commission and the OTS
thereunder;
(x) The financial statements and the related notes thereto included
in the Offering Circular present fairly the financial position of the
Bank and its subsidiaries as of the latest respective dates of such
financial statements, and the results of operations of the Bank and its
subsidiaries for the respective periods covered thereby. Such
statements and related notes have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved; the tables included in the Offering
Circular present fairly the information purported to be shown thereby
at the respective dates thereof and for the respective periods covered
thereby and conform in all material respects with the OTS Rules and
Regulations;
(xi) Except as disclosed in the Offering Circular, the Bank and its
subsidiaries are conducting their respective businesses in compliance
in all material respects with all laws, rules, regulations, decisions,
directives and orders (including, without limitation, all regulations
and orders of, or agreements with, the OTS and the FDIC) applicable to
them. There is no action, suit, investigation or proceeding before or
by any government, governmental instrumentality or court, domestic or
foreign, now pending or, to the knowledge of the Bank, threatened
against or affecting the Bank or any of its subsidiaries (A) that is
required to be disclosed in the Offering Circular and is not disclosed
therein, (B) that would likely result in any material adverse change in
the condition (financial or otherwise), earnings, business affairs of
the Bank and its subsidiaries, (C) that could materially and adversely
affect the properties, assets or leasehold interests thereof, or (D)
that would likely adversely affect the consummation of the transactions
contemplated by this Agreement; all pending legal or governmental
proceedings to which the Bank or any of its subsidiaries is a party or
of which any of their property is subject, which are not described in
the Offering Circular, including ordinary routine litigation incidental
to their respective businesses, would
8
not have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs of the Bank and its
subsidiaries;
(xii) There are no contracts or documents which are required to
be described in the Registration Statement, the Form OC, the Prospectus
or the Offering Circular or to be filed as exhibits thereto which have
not been so described and filed as required;
(xiii) No filing with, or authorization, approval, consent,
license, order, registration, notification, qualification or decree of,
any court or governmental authority or agency is necessary or required
for the performance by the Bank of its obligations hereunder, in
connection with the offering, issuance or sale of the Preferred Stock
hereunder or the consummation of the transactions contemplated by this
Agreement, except such as have been already obtained or as may be
required under applicable law or the OTS Rules and Regulations or state
securities laws;
(xiv) The Bank possesses such Governmental Licenses issued by the
appropriate federal, state, local or foreign regulatory agencies or
bodies necessary to conduct the business now operated by it; the Bank
is in compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not have a
material adverse effect on the financial position, stockholders' equity
or results of operations of the Bank; all of the Governmental Licenses
are valid and in full force and effect, except where the invalidity of
such Governmental Licenses or the failure of such Governmental Licenses
to be in full force and effect would not have a material adverse effect
on the financial position, stockholders' equity or results of
operations of the Bank; the Bank has not received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses which singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a
material adverse effect on the financial position, stockholders' equity
or results of operations of the Bank;
(xv) There are no persons with registration rights or other
similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Bank under the
Act; and
(xvi) The Bank Preferred Shares have been duly authorized and, if
and when issued and delivered by the Bank pursuant to the terms and
conditions set forth in the Registration Statement, will be validly
issued and fully paid and nonassessable; the Bank Preferred Shares
conform to the statements relating thereto in the Offering Circular and
such description conforms to the instruments defining the same; no
holder of the Bank Preferred Shares will be subject to personal
liability by reason of being such a holder and the issuance of the bank
Preferred Shares is not subject to the preemptive or other similar
rights of any stockholder of the Bank.
9
2. Subject to the terms and conditions herein set forth, (a) the
Company agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price per share of $25.00 the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto and (b) in the event
and to the extent that the Underwriters shall exercise the election to purchase
Optional Shares as provided below, the Company agrees to issue and sell to each
of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at the purchase price per share set forth
in clause (a) of this Section 2, that portion of the number of Optional Shares
as to which such election shall have been exercised (to be adjusted by you so as
to eliminate fractional shares) determined by multiplying such number of
Optional Shares by a fraction, the numerator of which is the maximum number of
Optional Shares which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of which is the maximum number of Optional Shares that all of the Underwriters
are entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to 300,000 Optional Shares, at the purchase price per share
set forth in the paragraph above, for the sole purpose of covering
overallotments in the sale of the Firm Shares. Any such election to purchase
Optional Shares may be exercised only by written notice from the Representatives
to the Company, given within a period of 30 business days after the date of this
Agreement, setting forth the aggregate number of Optional Shares to be purchased
and the date on which such Optional Shares are to be delivered, as determined by
you but in no event earlier than the First Time of Delivery (as defined in
Section 4 hereof) or, unless the Representatives and the Company otherwise agree
in writing, earlier than two or later than ten business days after the date of
such notice.
As compensation to the Underwriters for their commitments hereunder,
the Company at each Time of Delivery (as defined in Section 4 hereof) will pay
to Xxxxx & Co., L.L.C. ("Xxxxx"), for the accounts of the several Underwriters,
an amount equal to $_____ per share for the Shares to be delivered by the
Company hereunder at such Time of Delivery.
3. Upon the authorization by you of the release of the Shares, the
several Underwriters propose to offer the Shares for sale upon the terms and
conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder will be
represented by one or more definitive certificates registered in the name of
Xxxxx which will be deposited by or on behalf of the Company with The Depository
Trust Company ("DTC") or its designated custodian. The Company will deliver the
Shares to Xxxxx for the account of each Underwriter, against payment by or on
behalf of such Underwriter of the purchase price therefor by wire transfer to
the account specified by the Company in Federal (same day) funds, by causing DTC
to credit the Shares to the account of Xxxxx at DTC. The Company will cause the
certificates representing the Shares to be made available to Xxxxx for checking
at least twenty-four hours prior to the Time of Delivery at the office of DTC or
its designated custodian (the "Designated Office"). The time and date of such
delivery and payment shall be, with respect to the Firm Shares, 9:30 A.M.,
Detroit time,
10
on __________, 1998 or such other time and date as Xxxxx and the Company may
agree upon in writing, and, with respect to the Optional Shares, 9:30 A.M.,
Detroit time, on the date specified by the Representatives in the written notice
given by the Representatives of the Underwriters' election to purchase such
Optional Shares, or such other time and date as the Representatives and the
Company may agree upon in writing. Such time and date for delivery of the Firm
Shares is herein called the "First Time of Delivery," such time and date for
delivery of the Optional Shares, if not the First Time of Delivery, is herein
called the "Second Time of Delivery," and each such time and date for delivery
is herein called a "Time of Delivery."
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 8 hereof, including the
cross-receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 8(j) hereof, will be delivered at the offices
of Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx, 0000 Xxxxx Xxxxxxxx Xxxxxxxx, Xxxxxxx, XX
00000-0000 (the "Closing Location"), the Shares will be delivered at the
Designated Office, and the wire transfers will be made to the specified
accounts, all at such Time of Delivery. A meeting will be held at the Closing
Location at 2:00 P.M., Detroit time, on the Detroit Business Day next preceding
such Time of Delivery, at which meeting the final drafts of the documents to be
delivered pursuant to the preceding sentence will be available for review by the
parties hereto. For the purposes of this Section 4, "Detroit Business Day' shall
mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on
which banking institutions in Detroit are generally authorized or obligated by
law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Act; to make no further
amendment or any supplement to the Registration Statement or Prospectus which
shall be disapproved by you promptly after reasonable notice thereof; to advise
you, promptly after it receives notice thereof, of the time when any amendment
to the Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed and to
furnish you with copies thereof; to advise you, promptly after it receives
notice thereof, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
prospectus, of the suspension of the qualification of the Shares for offering or
sale in any jurisdiction, of the initiation or threatening of any proceeding for
any of the foregoing purposes, or of any request by the Commission for the
amending or supplementing of the Registration Statement or Prospectus or for
additional information; and, in the event of the issuance of any stop order or
of any order preventing or suspending the use of any Preliminary Prospectus or
prospectus or suspending any such qualification, promptly to use every
reasonable effort to obtain the withdrawal of such order;
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(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Shares for offering and
sale under the securities laws of such jurisdictions as the Representatives may
request and to comply with such laws so as to permit the continuance of sales
and dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Shares, provided that in connection therewith
the Company shall not be required to qualify as a foreign corporation or to file
a general consent to service of process in any jurisdiction;
(c) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as delivery of a
Prospectus is required in connection with the offering or sale of the Shares, to
furnish the Underwriters with copies of the Prospectus in Detroit in such
quantities as the Representatives may from time to time reasonably request, and,
if the delivery of a prospectus is required at any time prior to the expiration
of nine months after the time of issue of the Prospectus in connection with the
offering or sale of the Shares and if at such time any event shall have occurred
as a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is delivered, not
misleading, or, if for any other reason it shall be necessary during such period
to amend or supplement the Prospectus in order to comply with the Act, to notify
the Representatives and upon the Representatives' request to prepare and furnish
without charge to each Underwriter and to any dealer in securities as many
copies as you may from time to time reasonably request of an amended Prospectus
or a supplement to the Prospectus which will correct such statement or omission
or effect such compliance, and in case any Underwriter is required to deliver a
prospectus in connection with sales of any of the Shares at any time nine months
or more after the time of issue of the Prospectus, upon the Representatives'
request but at the expense of such Underwriter, to prepare and deliver to such
Underwriter as many copies as you may reasonably request of an amended or
supplemented Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to the Company's security holders as
soon as practicable, but in any event not later than 18 months after the
effective date of the Registration Statement (as defined in Rule 158(c) under
the Act), an earnings statement of the Company complying with Section 11(a) of
the Act and the rules and regulations thereunder (including, at the option of
the Company, Rule 158);
(e) During the period beginning from the date hereof and continuing to
and including the date 180 days after the effective date of the Registration
Statement, not to offer, sell, contract to sell or otherwise dispose of, except
as provided hereunder, any securities of the Company or another subsidiary of
the Holding Company that are substantially similar to the Shares;
(f) To the extent necessary to comply with NASDAQ NMS rules and
regulations or the rules and regulations of any other exchange on which the
Shares are listed, to furnish to holders of the Shares as soon as practicable
after the end of each fiscal year an annual report (including a balance sheet
and statements of income, stockholders, equity and cash flows of the Company
12
certified by independent public accountants) and, as soon as practicable after
the end of each of the first three quarters of each fiscal year (beginning with
the fiscal quarter ending after the effective date of the Registration
Statement), consolidated summary financial information of the Company for such
quarter in reasonable detail;
(g) During a period of three years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders of the Company,
and to deliver to you (i) as soon as they are available, copies of any reports
and financial statements furnished to or filed with the Commission or any
national securities exchange on which any class of securities of the Company is
listed; and (ii) such additional information concerning the business and
financial condition of the Company as you may from time to time reasonably
request (such financial statements to be on a consolidated basis to the extent
the accounts of the Company and its subsidiaries (if any) are consolidated in
reports furnished to their stockholders generally or to the Commission);
(h) To use the net proceeds received by it from the sale of the Shares
pursuant to this Agreement in the manner specified in the Prospectus under the
caption "Use of Proceeds;"
(i) If the Company elects to rely upon Rule 462(b), the Company shall
file a Rule 462(b) Registration Statement with the Commission in compliance with
Rule 462(b) by 5:00 P.M., Washington, D.C. time, on the date of this Agreement,
and the Company shall at the time of filing either pay to the Commission the
filing fee for the Rule 462(b) Registration Statement or give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under the Act;
and
(j) Except to the extent that a Tax Event (as defined in the
Prospectus) shall have occurred, to make the elections and take the procedural
steps described in the Prospectus under the heading "Federal Income Tax
Considerations" in a timely fashion, to meet the requirements to qualify, for
its taxable year ending December 31, 1998, as a REIT under the Code as in effect
on the date hereof and to otherwise use every reasonable effort to do so.
6. The Bank agrees with each of the Underwriters:
(a) The Bank will notify the Underwriters immediately, and confirm the
notice in writing, (i) of the effectiveness of the Offering Circular and any
amendment thereto, (ii) of the receipt by the Bank or its counsel of any
comments from the OTS with respect to the offering of the Shares, (iii) of any
request to the Bank or its counsel by the OTS for any amendment or supplement to
the Offering Circular or for any additional information, and (iv) of the
issuance or initiation by the OTS or by any other state or federal banking or
securities regulatory authority of any stop order or cease-and-desist proceeding
to suspend the effectiveness of the Offering Circular or interfering with the
offering of the Shares, or of the suspension of the qualification of the Shares
for offering or sale in any jurisdiction, or the initiation or threat of any
other orders or proceedings for such purposes; the Bank will make every
reasonable effort to prevent the issuance or initiation of any such stop orders
or cease-and-desist proceedings and, if any such stop orders
13
or cease-and-desist proceedings are issued or initiated, to obtain the lifting
or dismissal thereof at the earliest possible moment;
(b) The Bank will give the Representatives notice of its intention to
file or prepare any amendment to the Offering Circular (or to any Preliminary
Offering Circular, as the case may be) or any amendment, supplement or revision
to the Offering Circular, will furnish the Representatives with copies of any
such documents a reasonable amount of time prior to such proposed filing or use,
as the case may be, and will not file or use any such document to which the
Representatives or counsel for the Underwriters shall object;
(c) The Bank has furnished or will deliver to the Representatives and
counsel for the Underwriters, without charge, signed copies of the Form OC, as
originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein) and signed copies of all
consents and certificates of experts, and will also deliver to the
Representatives, without charge, a conformed copy of the Form OC, as originally
filed and each amendment thereto (without exhibits) for each of the
Underwriters;
(d) If any event shall occur as a result of which it is necessary, in
the opinion of counsel for the Underwriters, to amend or supplement the Offering
Circular in order to make the Offering Circular not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser, the Bank
will forthwith amend or supplement the Offering Circular by preparing and
furnishing to the Underwriters a reasonable number of copies of an amendment or
amendments of, or a supplement or supplements to, the Offering Circular (in form
and substance reasonably satisfactory to such counsel) so that, as so amended or
supplemented, the Offering Circular will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of circumstances existing at the time the
Offering Circular is delivered to a purchaser, not misleading, and the Bank will
furnish to each underwriter such number of copies of such amendment or
supplement as such Underwriter shall reasonably request. For the purposes of
this subsection, the Bank shall furnish such information with respect to itself
to the Representatives, counsel for the Underwriters and counsel for the Bank,
as may be necessary for counsel for the Underwriters and counsel for the Bank
with respect to the need to amend or supplement the Offering Circular and shall
furnish such further information as may from time to time be reasonably
requested; and
(e) The Bank, during the period when the Offering Circular is required
to be delivered under 12 C.F.R. ss.563g, will file all documents required to be
filed with the OTS within the time periods required by 12 C.F.R. ss.563g and the
OTS Rules and Regulations.
7. The Company and the Bank, jointly and severally, covenant and agree
with the several Underwriters to pay or cause to be paid the following: (i) the
fees, disbursements and expenses of their counsel and accountants in connection
with the registration of the Shares under the Act and all other expenses in
connection with the preparation, printing and filing of the Registration
Statement, any Preliminary Prospectus and the Prospectus and amendments and
supplements thereto
14
and the mailing and delivering of copies thereof to the Underwriters and
dealers; (ii) the cost of printing or producing any Agreement among
Underwriters, this Agreement and blue sky Memoranda, closing documents
(including any compilations thereof) and any other documents in connection with
the offering, purchase, sale and delivery of the Shares; (iii) all expenses in
connection with the qualification of the Shares for offering and sale under
state securities laws as provided in Section 5(b) hereof, including the fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the blue sky surveys; (iv) all fees and
expenses in connection with listing the Shares on the NASDAQ NMS; (v) the cost
of preparing stock certificates; (vi) the cost and charges of any transfer agent
or registrar; (vii) the cost and charges of DTC; (vii) the out-of-pocket
expenses of the Underwriters, including without limitation, road show expenses
and the Underwriter's legal fees and expenses (provided that the Company's and
the Bank's obligation to pay such out-of-pocket expenses shall not exceed the
amount of $100,000) and (viii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section.
8. The obligations of the Underwriters hereunder, as to the Shares to
be delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company and the Bank herein are, at and as of such Time of Delivery, true
and correct, the condition that the Company and the Bank shall have performed
all of their respective obligations hereunder theretofore to be performed, and
the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing by
the rules and regulations under the Act and in accordance with Section 5(a)
hereof; no stop order suspending the effectiveness of the Registration Statement
or any part thereof shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been complied
with to your reasonable satisfaction; if the Company has elected to rely upon
Rule 462(b), the Rule 462(b) Registration Statement shall have become effective
by 5:00 P.M., Washington, D.C. time, on the date of this Agreement;
(b) Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx, counsel for the Underwriters,
shall have furnished to you such opinion or opinions, dated such Time of
Delivery, with respect to the validity of the Shares as well as such other
related matters as you may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to enable
them to pass upon such matters;
(c) Xxxxx Xxxx, counsel for the Company, shall have furnished to you
their written opinion, dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Michigan, and the Bank has been
15
duly organized and is validly existing under the laws of the United
States of America as a federally chartered savings bank, each with
power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus;
(ii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital stock
of the Company (including the Shares being delivered at such Time of
Delivery) have been duly and validly authorized and issued and are
fully paid and non-assessable; and the Shares conform in all material
respects to the description of the Preferred Stock contained in the
Prospectus;
(iii) To the knowledge of such counsel, and other than as set
forth in the Prospectus or the Offering Circular, there are no legal or
governmental proceedings pending to which the Company or the Bank is a
party or of which any property of the Company or the Bank is the
subject which, if determined adversely to the Company or the Bank,
would individually or in the aggregate have a material adverse effect
on the current or future consolidated financial position, stockholders'
equity or results of operations of the Company or the Bank; and, to the
knowledge of such counsel, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(iv) This Agreement has been duly authorized, executed and
delivered by the Company and the Bank;
(v) The issue and sale of the Shares being delivered at such
Time of Delivery by the Company and the compliance by the Company with
all of the provisions of this Agreement and the consummation of the
transactions herein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument known to such counsel to which the
Company is a party or by which the Company is bound or to which any of
the property or assets of the Company is subject, nor will such action
result in any violation of the provisions of the Articles of
Incorporation (or other charter document) or By-laws of the Company or
any statute or any order, rule or regulation known to such counsel of
any court or governmental agency or body having jurisdiction over the
Company or any of its properties;
(vi) No consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency or
body is required for the issue and sale of the Shares or the
consummation by the Company or the Bank of the transactions
contemplated by this Agreement and the agreements listed in Annex II
hereto, except the registration under the Act of the Shares and such
consents, approvals, authorizations, registrations or qualifications as
may be required under the OTS Rules and Regulations, state securities
or blue sky laws in connection with the purchase and distribution of
the Shares by the Underwriters;
16
(vii) The Company is not, to the knowledge of such counsel,
(i) in violation of its Articles of Incorporation (or other charter
documents) or By-laws or (ii) in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which it is a party or by
which it or any of its properties may be bound;
(viii) The statements set forth in the Prospectus under the
captions "Description of Series A Preferred Shares," insofar as they
purport to constitute a summary of the terms of the Preferred Stock and
the Automatic Exchange, "Description of Capital Stock," insofar as they
purport to constitute a summary of the terms of the capital stock of
the Company, and under the captions "Federal Income Tax
Considerations," "ERISA Considerations," "Business and Strategy --
Acquisition of Initial Portfolio," "Business and Strategy --
Servicing," "Business and Strategy -- Legal Proceedings," "Management,"
"Business and Strategy -- Legal Proceedings," and "Underwriting,"
insofar as they constitute or purport to describe matters of law or
legal conclusions, provisions of laws and documents referred to
therein, have been reviewed by such counsel, are accurate in all
material respects and present fairly the information required to be
shown therein;
(ix) Each of the agreements listed in Annex II hereto has
been duly authorized, executed and delivered by the Bank and the
Company and constitutes the valid and legally binding obligation of the
Bank and the Company enforceable in accordance with its terms, subject
to bankruptcy, insolvency, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors' rights;
(x) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in
the Investment Company Act;
(xi) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Company prior to
such Time of Delivery (other than the financial statements, related
schedules and other financial data therein, as to which such counsel
need express no opinion) comply as to form in all material respects
with the requirements of the Act and the rules and regulations
thereunder; although such counsel does not assume any responsibility
for the accuracy, completeness or fairness of the statements contained
in the Registration Statement or the Prospectus, except as otherwise
indicated in its opinion, such counsel has no reason to believe that,
as of its effective date, the Registration Statement or any further
amendment thereto made by the Company prior to such Time of Delivery
(other than the financial statements, related schedules and other
financial data therein, as to which such counsel need express no
opinion) contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that, as of its date, the
Prospectus or any further amendment or supplement thereto made by the
Company prior to such Time of Delivery (other than the financial
statements, related schedules and other financial data therein, as to
which such counsel need express no opinion) contained an untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading or that, as of
such Time of Delivery, either the Registration Statement or the
Prospectus or any further amendment or supplement thereto made by the
Company prior to such Time of Delivery (other than the financial
statements, related schedules and other financial data therein, as to
which such counsel need express no opinion) contains an untrue
statement of
17
a material fact or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; and they do not know of any amendment to the
Registration Statement required to be filed or of any contracts or
other documents of a character required to be filed as an exhibit to
the Registration Statement or required to be described in the
Registration Statement or the Prospectus which are not filed or
described as required; and
(d) Xxxxxx Xxxxxxx, General Counsel of the Bank, shall have furnished
to you his written opinion, dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that the issue and sale of the Shares being
delivered at such Time of Delivery by the Company and the compliance by the
Company and the Bank with all of the provisions of this Agreement and the
consummation of the transactions herein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such counsel to which the
Bank is a party or by which the Bank is bound or to which any of the property or
assets of the Bank is subject, nor will such action result in any violation of
the provisions of the Articles of Incorporation (or other charter document) or
By-laws of the Bank or any statute or any order, rule or regulation known to
such counsel of any court or governmental agency or body having jurisdiction
over the Bank or any of its properties;
(e) On the date of the Prospectus at a time prior to the execution of
this Agreement, at 9:30 A.M., Detroit time, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent to the
date of this Agreement and also at each Time of Delivery, Xxxxx Xxxxxxxx L.L.P.
shall have furnished to you a letter or letters, dated the respective dates of
delivery thereof, in form and substance satisfactory to you, to the effect set
forth in Annex I hereto (the executed copy of the letter delivered prior to the
execution of this Agreement is attached as Annex I(a) hereto and a draft of the
form of letter to be delivered on the effective date of any post-effective
amendment to the Registration Statement and as of each Time of Delivery is
attached as Annex I(b) hereto);
(f) (i) Neither the Company nor the Bank shall have sustained since the
date of the latest audited financial statements included in the Prospectus or
the Offering Circular, as the case may be, any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Prospectus or the
Offering Circular, and (ii) since the respective dates as of which information
is given in the Prospectus or the Offering Circular there shall not have been
any change in the capital stock or long-term debt of the
18
Company or the Bank or any change in or affecting the general affairs,
management, business, financial position, stockholders' equity, results of
operations of the Company or the Bank, otherwise than as set forth or
contemplated in the Prospectus or the Offering Circular, the effect of which, in
any such case described in clause (i) or (ii), is in the judgment of the
Representatives after discussion with the Company so material and adverse as to
make it impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at such Time of Delivery on the terms and
in the manner contemplated in the Prospectus;
(g) (x) On or after the date hereof (i) trading in securities generally
on the NASDAQ NMS shall not have been suspended or materially limited, (ii)
trading in the common stock of the Holding Company or the Shares on the NASDAQ
NMS shall not have been suspended, (iii) a general moratorium on commercial
banking activities in Detroit shall not have been declared by Federal or Detroit
authorities, (iv) there shall not have occurred any outbreak of hostilities or
escalation thereof or other calamity or crisis having an adverse effect on the
financial markets of the United States or (v) there shall not have occurred any
material adverse development in any of the real estate markets in which the
mortgaged properties are located and (y) the occurrence or consequences of any
one or more of such events shall have, in the reasonable judgment of the
Underwriters, made it impracticable to market the Shares on the terms and in the
manner contemplated by the Prospectus;
(h) The Shares to be sold at such Time of Delivery shall have been duly
listed, subject to notice of issuance, on the NASDAQ NMS;
(i) The Company shall have complied with the provisions of Section 5(c)
hereof with respect to the furnishing of Prospectuses;
(j) The Company shall furnish or cause to be furnished to you at such
Time of Delivery certificates of officers of the Company and the Bank
satisfactory to you as to the accuracy of the representations and warranties of
the Company and the Bank herein at and as of such Time of Delivery, as to the
performance by the Company and the Bank of all of its obligations hereunder to
be performed at or prior to such Time of Delivery, as to the matters set forth
in subsections (a) and (e) of this Section and as to such other matters as you
may reasonably request; and
(k) The Company shall be furnished or caused to be furnished to you at
such Time of Delivery an opinion of Xxxxx Xxxx, in form and substance
satisfactory to you, to the effect that commencing with the Company's taxable
year ending December 31, 1998 and assuming that the elections and other
procedural steps described in the Prospectus under the heading "Federal Income
Tax Considerations," are completed by the Company in a timely fashion and based
on the other assumptions stated therein, the Company will be organized, managed
and owned in conformity with the requirements for qualification as a REIT under
the Code and its proposed method of operation will enable it to meet the
requirements for qualification and taxation as a REIT under the Code;
19
(l) The Offering Circular has become effective and at the Time of
Delivery (and, if any of the Optional Shares are purchased, at the Second Time
of Delivery), no stop order or cease-and-desist proceeding suspending the
effectiveness of the Offering Circular or interfering with the offering of the
Shares or the Bank Preferred Shares shall have been issued and no proceedings
for the purposes of issuing a stop order or cease-and-desist proceedings shall
have been instituted or shall be pending, or to the knowledge of the Bank, shall
be contemplated by the OTS or by any other state or federal banking or
securities regulatory authority. Any request on the part of the OTS for
additional information or for the inclusion of additional information in the
Form OC shall have been complied with to the reasonable satisfaction of counsel
for the Underwriters.
9. (a) The Company and the Bank, jointly and severally, will indemnify
and hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, Preliminary Offering Circular, the Registration
Statement, the Form OC, the Prospectus or the Offering Circular, 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 for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that neither
the Company nor the Bank shall be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, Preliminary Offering Circular, the Registration
Statement, the Form OC, the Prospectus or the Offering Circular, or any such
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representatives expressly for use therein; and provided, further, that with
respect to any untrue statement or omission or alleged untrue statement or
omission made in any Preliminary Prospectus or Preliminary Offering Circular,
the indemnity agreement contained in this subsection (a) shall not inure to the
benefit of any Underwriter to the extent that any such loss, claim, damage or
liability of such Underwriter results from the fact that a copy of the
Prospectus or the Offering Circular was not sent or given to any person at or
prior to the written confirmation of the sale of such securities to such person;
and will reimburse the Company and the Bank for any legal or other expenses
reasonably incurred by the Company and the Bank in connection with investigating
or defending any such action or claim as such expenses are incurred.
(b) Each Underwriter will indemnify and hold harmless the Company and
the Bank against any losses, claims, damages or liabilities to which the Company
and the Bank may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, Preliminary Offering
Circular, the Registration Statement, the Form OC, the Prospectus or the
Offering Circular, or any amendment
20
or supplement thereto, or arise out of or are based on the omission or alleged
omission to state therein a material fact required 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, alleged untrue
statement or omission or alleged omission was made in any Preliminary
Prospectus, Preliminary Offering Circular, the Registration Statement, the Form
OC, the Prospectus or the Offering Circular, or any such amendment or supplement
thereto in reliance upon and in conformity with written information furnished to
the Company by such Underwriter through the Representatives expressly for use
therein.
(c) Promptly after receipt by an indemnified party under subsections
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against an indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it has notified the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying party), and, after
notice from the indemnifying party to such indemnified party of its election to
assume the defense thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal expenses of other counsel
or any other expenses, in each case subsequently incurred by such indemnified
party, in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or claim
in respect of which indemnification or contribution may be sought hereunder
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to, or an admission of, fault,
culpability or a failure to act, by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 9 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) such proportion as is appropriate to reflect the
relative benefits received by the Company and the Bank on the one hand and the
Underwriters on the other from the offering of the Shares. If, however, the
allocation provided for by the immediately preceding sentence is not permitted
by applicable law or if the indemnified party failed to give the notice required
under subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and the Bank on the one hand and the Underwriters on the
other in connection with
21
the statements or omissions which resulted in such losses, claims, damages or
abilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Bank on the one hand and the Underwriters on the other shall be deemed to be in
the same proportion the total net proceeds from the offering (before deducting
expenses) received by the Company and the Bank bear to the total underwriting
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and the Bank on the one hand or
the Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company, the Bank and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this section (d) were determined
by pro rata allocation (even if the Underwriters are treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (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 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this subsection (d) to contribute are several in proportion to
their respective underwriting obligations and not joint.
(e) The obligations of the Company and the Bank under this Section 9
shall be in addition to any liability which the Company and the Bank may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Underwriter within the meaning of the Act; and
the obligations of the Underwriters under this Section 9 shall be in addition to
any liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of the
Company or the Bank and to each person, if any, who controls the Company or the
Bank within the meaning of the Act.
10. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at a Time of Delivery, you
may in your discretion arrange for you or another party or other parties to
purchase such Shares on the terms contained herein. If within 36 hours after
such default by any Underwriter you do not arrange for the purchase of such
Shares, then the Company shall be entitled to a further period of thirty-six
hours within which to procure another party or other parties satisfactory to you
to purchase such Shares on such terms. In the event that, within the respective
prescribed periods, you notify the Company that you have so arranged for
22
the purchase of such Shares, or the Company notifies you that it has so arranged
for the purchase of such Shares, you or the Company shall have the right to
postpone such Time of Delivery for a period of not more than seven days, in
order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall include
any person substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased does not exceed one-tenth of the aggregate number of all the
Shares to be purchased at such Time of Delivery, then the Company shall have the
right to require each non-defaulting Underwriter to purchase the number of
shares which such Underwriter agreed to purchase hereunder at such Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made, but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased exceeds one-tenth of the aggregate number of all the Shares
to be purchased at such Time of Delivery, or if the Company shall not exercise
the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Shares of a defaulting Underwriter or Underwriters,
then this Agreement (or, with respect to the Second Time of Delivery, the
obligations of the Underwriters to purchase and of the Company to sell the
Optional Shares) shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter, the Company or the Bank, except for the expenses to
be borne by the Company, the Bank, the Holding Company and the Underwriters as
provided in Section 7 hereof and the indemnity and contribution agreements in
Section 9 hereof; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
11. The respective indemnities, agreements, representations, warranties
and other statements of the Company or the Bank and the several Underwriters, as
set forth in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation (or any statement as to the results thereof) made by or on
behalf of any Underwriter or any controlling person of any Underwriter, or the
Company or the Bank, or any officer or director or controlling person of the
Company or the Bank, and shall survive delivery of and payment for the Shares.
12. If this Agreement shall be terminated pursuant to Section 10
hereof, neither the Company nor the Bank shall then be under any liability to
any Underwriter except as provided in
23
Sections 7 and 9 hereof; but, if for any other reason, any Shares are not
delivered by or on behalf of the Company as provided herein, the Company will
reimburse the Underwriters through you for all out-of-pocket expenses approved
in writing by you, including fees and disbursements of counsel, reasonably
incurred by the Underwriters in making preparations for the purchase, sale and
delivery of the Shares not so delivered, but the Company or the Bank shall then
be under no further liability to any Underwriter except as provided in Sections
7 and 9 hereof.
13. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to Xxxxx at Xxx Xxxxxxxx, Xxxxxxx, Xxxxxxxx 00000,
Attention Syndicate Department; and if to the Company or the Bank shall be
delivered or sent by mail to the address of the Company or the Bank,
respectively set forth in the Registration Statement, Attention: Xxxxxx Xxxxxxx;
provided, however, that any notice to an Underwriter pursuant to Section 9(c)
hereof shall be delivered or sent by mail, telex or facsimile transmission to
such Underwriter at its address set forth in its Underwriters' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to the
Company or the Bank by you upon request. Any such statements, requests, notices
or agreements shall take effect upon receipt thereof.
14. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company, the Bank and, to the extent provided
in Sections 9 and 11 hereof, the officers and directors of the Company, the Bank
and each person who controls the Company, the Bank or any Underwriter, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Shares from any Underwriter shall be
deemed a successor or assign by reason merely of such purchase.
15. As used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
16. This Agreement shall be governed by and construed in accordance
with the laws of the State of Michigan.
17. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us one counterpart for the Company and the Bank plus one for each
counsel thereof, and upon the acceptance hereof by you, on behalf of each of the
Underwriters, this letter and such acceptance
24
hereof shall constitute a binding agreement between each of the Underwriters,
the Company and the Bank. It is understood that your acceptance of this letter
on behalf of each of the Underwriters is pursuant to the authority set forth in
a form of Agreement among Underwriters, the form of which shall be submitted to
the Company for examination upon request, but without warranty on your part as
to the authority of the signers thereof.
Very truly yours,
Flagstar Capital Corporation
By:__________________________________
Name:
Title:
Flagstar Bank, FSB
By:__________________________________
Name:
Title:
Accepted as of the date hereof:
Xxxxx & Co., L.L.C.
By:_________________________________
Name:
Title:
XxXxxxxx & Company Securities, Inc.
By:_________________________________
Name:
Title:
25
SCHEDULE I
Number of Optional
Shares to be
Total Number of Purchased if
Shares to be Maximum Option
Underwriter Purchased Exercised
----------- --------- ---------
Xxxxx & Co, L.L.C....................
XxXxxxxx & Company Securities, Inc...
--------- --------
Total 2,000,000 300,000
Total
ANNEX I
ANNEX 1 (a)
ANNEX 1 (b)
ANNEX II
Residential Mortgage Loan Purchase and Warranties Agreement
Residential Mortgage Loan Servicing Agreement
Advisory Agreement
