American Business Financial Services, Inc.
1,000,000 Shares(1)
COMMON STOCK
UNDERWRITING AGREEMENT
February ____, 1997
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
Potomac Tower
0000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
American Business Financial Services, Inc., a Delaware corporation (the
"Company") hereby confirms its agreement with you (the "Underwriter") as set
forth below.
1. Securities. Subject to the terms and conditions herein contained,
the Company proposes to issue and sell to the Underwriters named in Schedule 1
hereto (the "Underwriters"), for whom you have been duly authorized to act as
representative (in such capacity, the "Representative") 1,000,000 shares (the
"Firm Securities") of the Company's Common Stock $.001 par value per share (the
"Common Stock"). The Company also proposes to issue and sell to the Underwriters
not more than 150,000 additional shares of Common Stock if requested by, and
pursuant to the option of, the Representative as provided in Section 3 of this
Agreement. Any and all shares of Common Stock to be purchased by the Underwriter
pursuant to such option are referred to herein as the "Option Securities." The
Firm Securities and any Option Securities are collectively referred to herein as
the "Securities."
The Representative has advised the Company that the Underwriters
propose to make a public offering of the Securities on the effective date of the
registration statement hereinafter referred to, or as soon thereafter as in the
Representative's judgment is advisable (the "Offering").
2. Representations, Warranties and Agreements of the Company.
The Company represents and warrants to and agrees with the several
Underwriters that:
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(1) Plus an option to purchase from American Business Financial Services, Inc.
up to 150,000 additional shares to cover over-allotments.
(a) A registration statement on Form SB-2 (File No.
333-18919 with respect to the Securities, including a prospectus
subject to completion, has been prepared by the Company in material
compliance with the requirements of the Securities Act of 1933, as
amended (the "Act"), and the rules and regulations of the Securities
and Exchange Commission (the "Commission") thereunder (the "Rules and
Regulations") and has been filed by the Company with the Commission
under the Act and one or more amendments to such registration statement
may have been so filed. The Company will next file with the Commission
one of the following: (i) prior to effectiveness of such registration
statement, a further amendment thereto, including the form of final
prospectus, or (ii) a final prospectus in accordance with Rules 430A
and 424(b) of the Rules and Regulations. As filed, such amendment and
form of final prospectus, or such prospectus, shall include all Rule
430A Information, as hereinafter defined, and, except to the extent
that the Representative shall agree in writing to a modification, shall
be in all substantive respects in the form furnished to the
Representative prior to the date and time that this Agreement was
executed and delivered by the parties hereto, or, to the extent not
completed at such date and time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectus, as hereinafter defined) as the Company
shall have previously advised the Underwriter in writing would be
included or made therein.
As used in Agreement, the term "Registration
Statement" means the registration statements referred to above filed
relating to the Securities, as amended at the time when they were or
are declared effective or otherwise became effective, including all
financial schedules and exhibits thereto and including any information
omitted therefrom pursuant to Rule 430A under the Act and included in
the Prospectus (as hereinafter defined); the term "Preliminary
Prospectus" means each prospectus subject to completion filed with such
registration statement or any amendment thereto (including the
prospectus subject to completion, if any, included in the Registration
Statement or any amendment thereto at the time it was or is declared
effective); the term "Prospectus" means the prospectus first filed with
the Commission pursuant to Rule 424(b) under the Act or, if no
prospectus is required to be filed pursuant to Rule 424(b) under the
Act, the form of final prospectus included in the Registration
Statement at the time such Registration Statement becomes effective;
and the term "Rule 430A Information" means information with respect to
the Securities and the offering thereof permitted to be omitted from
the Registration Statement when it becomes effective pursuant to Rule
430A of the Rules and Regulations.
(b) The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus. When
any Preliminary Prospectus was filed with the Commission it (A)
contained all statements required to be stated therein in material
compliance with, and complied in all material respects with the
requirements of, the Act and the Rules and Regulations and (B) did not
include any
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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, not misleading. When the
Registration Statement or any amendment thereto was or is declared
effective, and at all times subsequent thereto up to and including the
Firm Closing Date and any Option Closing Date, as the case may be, each
as hereinafter defined, it (A) contained or will contain all statements
required to be stated therein in material compliance with, and complied
or will comply in all material respects with the requirements of the
Act and the Rules and Regulations and (B) did not or will not include
any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading. When the
Prospectus or any amendment or supplement to the Prospectus is filed
with the Commission pursuant to Rule 424(b) (or, if the Prospectus or
any part thereof or such amendment or supplement is not required to be
so filed, when the Registration Statement or the amendment thereto
containing such amendment or supplement to the Prospectus was or is
declared effective) and at all times subsequent thereto up to and
including the Firm Closing Date and any Option Closing Date, as the
case may be, the Prospectus, as amended or supplemented at any such
time, (A) contained or will contain all statements required to be
stated therein in material compliance with, and complied or will comply
in all material respects with the requirements of, the Act and the
Rules and Regulations and (B) did not or will not include any 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, not misleading. The foregoing
provisions of this paragraph (ii) do not apply to statements or
omissions made in any Preliminary Prospectus, the Registration
Statement or any amendment thereto or the Prospectus or any amendment
or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representative specifically for use therein.
(c) The Company has been duly incorporated and is
validly existing and in good standing as a corporation under the laws
of its jurisdiction of organization, with full corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and Prospectus (or
if the Prospectus is not in existence, the most recent Preliminary
Prospectus); and the Company is duly qualified to do business and in
good standing as a foreign corporation in all other jurisdictions where
its ownership or leasing of properties or the conduct of its business
requires such qualification, except where the failure to so qualify
would not result in a material adverse change in the condition
(financial or otherwise), earnings, prospects, business, properties, or
results of operations of the Company and its Subsidiaries (as
hereinafter defined) taken as a whole (hereinafter, a "Material Adverse
Effect").
(d) Except for stock holdings occurring from the
liquidation of loan collateral, the Company does not own or control
over 50% of the voting stock,
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directly or indirectly, of any corporation, association or other entity
other than ABFS 1995-1 Inc., ABFS 1995-2 Inc., ABFS 1996-1, ABFS 1996-2
and American Business Credit, Inc. ("ABC") and its wholly owned
subsidiaries, HomeAmerican Credit, Inc. d/b/a Upland Mortgage ("HAC"),
Processing Service Center, Inc. ("PSC"), American Business Leasing,
Inc. ("ABL"), Home American Consumer Discount, Inc. ("HACD"), ABC
Holdings Corp. ("AHC") and American Business Finance Corp. ("ABFC").
ACB, HAC, PSC, ABL, HACD, AHC, ABFC, ABFS 1995-1, ABFS 1995-2, ABFS
1996-1 and ABFS 1996-2 are individually referred to as "Subsidiary" and
collectively referred to herein as the "Subsidiaries". Except for stock
holdings occurring from the liquidation of loan collateral, neither the
Company nor the Subsidiaries own more than a 50% equity interest in any
firm or partnership, association or other entity except as disclosed in
the Prospectus.
(e) Each Subsidiary has been duly incorporated and
is validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, with full corporate power and
authority to own, lease and operate its properties and conduct its
business as described in the Registration Statement and the Prospectus;
all of the issued and outstanding shares of capital stock of the
Subsidiaries have been duly authorized and are validly issued, are
fully paid and nonassessable, and are directly or indirectly owned by
the Company free and clear of any security interest, claim, lien,
charge and encumbrance; each of the Company and the Subsidiaries are in
possession of and operating in compliance with all authorizations,
licenses, permits, consents, certificates and orders necessary for the
conduct of their respective businesses, all of which are valid and in
full force and effect (except where the failure to hold any such
authorization, license, permit, consent, certificate or order would not
have a Material Adverse Effect) and neither the Company nor any such
Subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse
Effect, except as described in or contemplated by the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary
Prospectus); each Subsidiary is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction in which
the ownership or leasing of properties or the conduct of its business
requires such qualification, except where the failure to be so
qualified would not have a Material Adverse Effect. The Company has
full power (corporate and other) and authority to enter into this
Agreement and to carry out all the terms and provisions hereof to be
carried out by it.
(f) The Company has, and upon consummation of the
Offering, will have, an authorized, issued and outstanding
capitalization as set forth in the Prospectus under the caption
"Capitalization" (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus). All of the issued shares of Common
Stock of the Company have been duly authorized and validly issued and
are
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fully paid and nonassessable. The description of the Company's stock
option plans and the options to be granted thereunder, set forth in the
Prospectus, accurately and fairly presents the information required to
be shown with respect to such plans and options.
(g) The Securities to be sold by the Company
hereunder have been duly authorized and, when issued, delivered and
paid for in the manner set forth in this Agreement, will be validly
issued, fully paid and nonassessable, and will conform to the
description thereof contained in the Prospectus. Good title to the
Securities will be transferred from the Company to the purchasers
thereof against payment therefor. No preemptive rights or other rights
to subscribe for or purchase exist with respect to sale of the
Securities by the Company pursuant to this Agreement. The certificates
used to evidence shares of Common Stock are in due and proper form. The
Common Stock of the Company conforms to the description thereof
contained in the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus).
(h) Except as disclosed in the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus), there are no outstanding (A) securities or obligations of
the Company or the Subsidiaries convertible into or exchangeable for
any capital stock of the Company or any such Subsidiary, (B) warrants,
rights or options to subscribe for or purchase from the Company or any
such Subsidiary any such capital stock or any such convertible or
exchangeable securities or obligations, or (C) obligations of the
Company or any such Subsidiary to issue any shares of capital stock,
any such convertible or exchangeable securities or obligations, or any
such warrants, rights or options.
(i) The consolidated financial statements and
schedules of the Company included in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) fairly present the financial position of the
Company and the Subsidiaries and the results of operations and changes
in financial condition as of the dates and for the periods therein
specified. Such financial statements and schedules have been prepared
in accordance with generally accepted accounting principles
consistently applied throughout the periods involved (except as
otherwise noted therein) as expressed in opinions by the independent
accountants named in subsection (j). The selected financial data set
forth under the captions "Summary Consolidated Financial Data" and
"Selected Consolidated Financial Date" in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus)
fairly present, on the basis stated in the Prospectus (or such
Preliminary Prospectus), the information included therein. No other
financial statements or schedules are required to be included in the
Registration Statement.
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(j) BDO Xxxxxxx, LLP and Xxxxxxxx & Company, P.C.,
who have expressed their opinion on certain financial statements of the
Company and its consolidated Subsidiaries and delivered their opinions
with respect to the audited consolidated financial statements and
schedules included in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), are independent public accountants as required by the Act
and the applicable rules and regulations thereunder.
(k) The Company has full legal right, power and
authority to enter into this Agreement and to perform the transactions
contemplated hereby. This Agreement has been duly and validly
authorized by the Company and upon due execution and delivery by the
Company and the other parties hereto will constitute the valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, except to the extent that such
enforceability may be subject to bankruptcy, insolvency,
reorganization, moratorium, or other similar laws, regulations or
procedures of general applicability relating to or affecting creditors'
or other obligees' rights generally, or by general equitable
principles. The making and performance of this Agreement by the Company
and the consummation of the transactions herein contemplated will not
violate any provisions of the certificate of incorporation or bylaws,
or other organization documents of the Company or the Subsidiaries and
will not conflict with, result in the breach of violation of, or
constitute, either by itself or upon notice or the passage of time or
both, a default under any material agreement, mortgage, deed of trust,
lease, franchise, license, indenture, permit or other instrument to
which the Company or any of the Subsidiaries is a party or by which the
Company or the Subsidiaries or any of their respective properties may
be bound or affected, any statute or any authorization, judgment,
decree, order, rule or regulation of any court or any regulatory body,
administrative agency or other governmental body applicable to the
Company or any of the Subsidiaries or any of their respective
properties. No consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other governmental
body or any other third party is required for the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for compliance with the Act, the Securities
Exchange Act of 1934, as amended ("Exchange Act"), the blue sky laws
applicable to the public offering of the Securities by the
Underwriters, the clearance of such offering with the National
Association of Securities Dealers, Inc. (the "NASD"), and the listing
of the Common Stock to be sold by the Company on the Nasdaq National
Market.
(l) No contract or other document is required to be
described in the Registration Statement or the Prospectus or to be
filed as an exhibit to the Registration Statement that is not described
therein (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) or filed as required. The contracts so
described in the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus) are in full force and effect on
the date hereof;
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the descriptions thereof or references thereto are correct in all
material respects, and neither the Company nor any of the Subsidiaries,
nor, to the knowledge of the Company, any other party, is in breach of
or default under any of such contracts.
(m) Other than routine legal proceedings in the
ordinary course of business, no legal or governmental proceedings are
pending to which the Company or any of the Subsidiaries is a party or
to which the property of the Company or any of the Subsidiaries is
subject that are required to be described in the Registration Statement
or the Prospectus and are not described therein (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus), and, to
the Company's knowledge, no such proceedings have been threatened
against the Company or the Subsidiaries or with respect to any of their
respective properties. Except as disclosed in the Registration
Statement, no enforcement proceedings, whether formal or informal, have
been commenced against the Company or any of the Subsidiaries by the
Commission or any other governmental authority, nor have any such
proceedings been instituted, threatened or recommended. Except as
disclosed in the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus), neither the Company nor any of
the Subsidiaries, or any of their respective officers, employees or
directors is a party or subject to the provisions of any regulatory
action, injunction, judgment, decree or order of any court, regulatory
body, administrative agency or other governmental body affecting the
business of the Company or any of the Subsidiaries and, except as
disclosed in the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus), there is no charge, action,
suit, proceeding, or investigation before or by any court or
regulatory, administrative or governmental agency or body pending or,
to the Company's knowledge, threatened which might affect the
performance of this Agreement.
(n) No further approval, consent or authority of the
stockholders of the Company or the Board of Directors of the Company
will be required for the issuance and sale of the Securities to be sold
by the Company as contemplated herein, except such as have been
obtained.
(o) Since the respective dates as of which
information is given in the Registration Statement and Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary
Prospectus) and except as described in or specifically contemplated by
the Prospectus: (i) the Company and the Subsidiaries have not incurred
any material liabilities or obligation, indirect, direct or contingent,
or entered into any material verbal or written agreement or other
transaction whether or not arising in the ordinary course of business
or which could result in a material reduction in the future earnings of
the Company and the Subsidiaries (taken as a whole); (ii) there has not
been any material increase in the long-term debt of the Company and the
Subsidiaries (taken as a whole) or in the aggregate dollar or principal
amount of the assets of the Company and the Subsidiaries (taken as a
whole) which are 31 days or more past due or real estate acquired by
foreclosure;
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(iv) there has not been any material adverse change in the consolidated
stockholders' equity of the Company and the Subsidiaries (taken as a
whole); (v) there has been no material adverse change in the Company's
and the Subsidiaries' relationship with its insurance carriers,
including, without limitation, cancellation or other termination of the
Company's or the Subsidiaries' fidelity bond or any other type of
insurance coverage; (vi) there has been no material change in
management of the Company or the Subsidiaries; (vii) the Company and
the Subsidiaries are not in default in the payment of principal or
interest on any outstanding debt obligations; (viii) there has not been
any change in the Common Stock (other than upon the sale of the
Securities hereunder); and (ix) there has not been any Material Adverse
Effect.
(p) Neither the Company nor any of the Subsidiaries
is in violation of any directive from the Commission or any other
regulatory, administrative or governmental agency or body regarding the
method of conducting its business; the Company and the Subsidiaries
have conducted and are conducting their respective businesses in a
manner so as to comply in all material respects with all applicable
Federal and state statutes and regulations that regulate or are
concerned with their respective businesses, including without
limitation, the Truth-in-Lending Act and Regulation Z, the Equal
Credit Opportunity Act and Regulation B, the Real Estate Settlement
Procedures Act and Regulation X, the Home Mortgage Disclosure Act and
the Debt Collection Practices Act and all regulations, directives and
orders of the Commission.
(q) The offer and sale of subordinated debentures by
the Company and ABFC have been conducted in compliance in all material
respects with all applicable federal and state laws and regulations
including, but not limited to, the Act, the Exchange Act and the Rules
and Regulations.
(r) The Company is not an investment company under
the Investment Company Act of 1940, as amended, and the Offering will
not cause the Company to become an investment company subject to
registration under such act.
(s) The Company and the Subsidiaries have filed all
requested and obtained foreign, federal, state and local tax returns
that are requested to be filed or has requested and obtained extensions
thereof and has paid all taxes required to be paid by it and any other
assessment, fine or penalty levied against it, to the extent that any
of the foregoing is due and payable, except for any such assessment,
fine or penalty that is currently being contested in good faith or as
described in or contemplated by the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus) except
where the failure to take such actions would not have a Material
Adverse Effect on the Company or its Subsidiaries (taken as a whole).
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(t) The Company and the Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(u) Except as described in the Registration
Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), no default exists,
and no event has occurred which, with notice or lapse of time or both
would constitute a default under any indenture, mortgage, deed of
trust, lease or other agreement or instrument to which the Company or
any of the Subsidiaries is a party or by which the Company or the
Subsidiaries or any of their respective properties is bound or may be
affected which would have a Material Adverse Effect on the Company and
its Subsidiaries (taken as a whole).
(v) The description of past securitization
transactions effected by the Company, as contained in the Registration
Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), is true and
complete in all material respects and to the Company's best knowledge,
no event or series of events has occurred that would result in any of
the securities issued in connection with any of such transactions being
downgraded or placed on a watch list with negative implications by any
rating agency or similar organization, or that would impair the
Company's or its Subsidiaries' ability to consummate future
securitization transactions upon economic terms consistent with past
securitization transactions (assuming no change in the securitization
market in general) or otherwise cause the Company and its Subsidiaries
to suffer any Material Adverse Effect with respect to any past or
future securitization transaction (other than any such event or series
of events described in the Prospectus, or, if the Prospectus is not yet
in existence, the most recent Preliminary Prospects).
(w) The Company has not distributed and, prior to
the later of (A) the Firm Closing Date or the Option Closing Date, as
the case may be, and (B) the completion of the distribution of the
Securities, will not distribute any offering material in connection
with the offering and sale of Common Stock other than the Registration
Statement or any amendment thereto, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto, or other materials,
if any, permitted by the Act.
(x) No labor dispute with the employees of the
Company or the Subsidiaries exists or, to the Company's knowledge, is
threatened or imminent that
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could result in a Material Adverse Effect, except as described in or
contemplated by the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus).
(y) The Company and each of the Subsidiaries are
insured by insurers of recognized financial responsibility as rated by
A. M. Best against such losses and risks and in such amounts as are
prudent and customary in the businesses in which they are engaged;
neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for; and neither the Company nor
any such subsidiary has any reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a
Material Adverse Effect, except as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(z) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), neither the Company nor any of its Subsidiaries has
sustained any loss or interference with their respective businesses or
properties having or resulting in a Material Adverse Effect from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental
proceeding and there has not been any event, circumstance, or
development that results in, or that the Company believes would result
in, a Material Adverse Effect, except in each case as described in or
contemplated by the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus).
(aa) Neither the Company nor its Subsidiaries own
any items of real property other than real property obtained as a
result of the exercise of remedies under deeds of trust, deeds in lieu
of foreclosure or mortgages securing loans made in the ordinary course
of business by the Company or its Subsidiaries, and each of them has
good and marketable title to all personal property owned by each of
them, in each case free and clear of any security, liens, encumbrances,
equities, claims and other defects, except such as do not have a
Material Adverse Effect on the value of such property and do not
interfere with the use made or proposed to be made of such property by
the Company or such Subsidiary, and any real property and buildings
held under lease by the Company or any such Subsidiary are held under
valid, subsisting and enforceable leases, with such exceptions as are
not material and do not interfere with the use made or proposed to be
made of such property and buildings by the Company or such Subsidiary,
in each case except as described in or contemplated by the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus).
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(ab) The Company and its Subsidiaries own or
possess, or can acquire on reasonable terms, all material trademarks,
service marks, trade names, licenses, copyrights and proprietary or
other confidential information currently employed by them in connection
with their respective businesses, and neither the Company nor any such
Subsidiary has received any notice of infringement of or conflict with
asserted rights of any third party with respect to any of the foregoing
which, singly or in the aggregate, if the subject of an unfavorable
decisions, ruling or finding, would have a Material Adverse Effect,
except as described in or contemplated by the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus).
(ac) None of the Company, the Subsidiaries or, to
the Company's knowledge, any employee of the Company or the
Subsidiaries have, directly or indirectly, at any time during the last
five years, made any payment of funds of the Company or any Subsidiary
or received or retained any funds in violation of any law, rule or
regulation.
(ad) All material transactions occurring during the
two most recent completed fiscal years between the Company and the
Subsidiaries and the officers, directors and major stockholders of the
Company that are required to be disclosed under the Act and the Rules
and Regulations have been accurately disclosed in the Prospectus (or if
the Prospectus is not in existence, the most recent Preliminary
Prospectus).
(ae) The Company has complied in all material
respects with the provisions under the Act and the Securities Exchange
Act of 1934, as amended ("Exchange Act").
(af) Except as disclosed in the Registration
Statement, neither the Company nor the Subsidiaries have: (i) placed
any securities within the last 18 months (except for notes evidencing
subordinate indebtedness of the Company); (ii) had any material
dealings with any member of the NASD or any person related to or
associated with such member, other than discussions and meetings
relating to the proposed Offering and routine purchases and sales of
U.S. Government and agency securities and other assets; (iii) entered
into a financial or management consulting agreement except as
contemplated hereunder and except for the engagement letter with
Friedman, Billings, Xxxxxx & Co., Inc., dated November 20, 1996; or
(iv) engaged any intermediary between the Underwriters and the Company
in connection with the Offering, and no person is being compensated in
any manner for such service.
(ag) The Company has not taken and will not take,
directly or indirectly, any action designed to cause or result in, or
which has constituted or which
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reasonably might be expected to constitute, the stabilization or
manipulation of the price of the Common Stock to facilitate the sale or
resale of the Common Stock.
(ah) The Company has not relied and will not rely
upon the Representative or legal counsel for the Representative for any
legal, tax or accounting advice in connection with the Offering (except
with respect to the qualification of the Securities for offering and
sale under the securities laws of certain states).
To the extent that any statements or omissions made in the
Registration Statement, the Prospectus or any amendment or supplement thereto
are made in reliance upon and in conformity with written information furnished
to the Company by the Principal Stockholders specifically for use therein, the
Registration Statement and the Prospectus and any amendments or supplements to
the Registration Statement or the Prospectus will not, when they become
effective or are filed with the Commission, as the case may be, contain any
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 not misleading.
Any certificate signed by an officer of the Company and
delivered to you or to your counsel shall be deemed a representation and
warranty by the Company to you as to the matters covered thereby. Any
certificate delivered by the Company to its counsel for purposes of enabling
such counsel to render the opinions referred to in Section 7(c)(i) will also be
furnished to the Representative and its counsel and shall be deemed to be
additional representations and warranties by the Company to the several
Underwriters as to the matters covered thereby and the Underwriters and their
counsel are entitled to rely thereon.
4. Purchase, Sale and Delivery of the Securities.
(a) On the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to the several Underwriters, and the
Underwriters agree to purchase from the Company, at a purchase price of
$________ per share, the number of Firm Securities set forth opposite the name
of each Underwriter in Schedule 1 hereto. One or more certificates in definitive
form for the Firm Securities that each Underwriter has agreed to purchase
hereunder, and in such denomination or denominations and registered in such name
or names as the Representative requests upon notice to the Company at least 48
hours prior to the Firm Closing Date, shall be delivered by or on behalf of the
Company to the Representative for the account of each such Underwriter, against
payment by or on behalf of the Underwriters of the aggregate purchase price
therefor by wire transfer or certified or official bank check or checks payable
in federal (same day) funds, to the order of the Company. Such delivery of and
payment for the Firm Securities shall be made at the offices of Friedman,
Billings, Xxxxxx & Co., Inc., Potomac Tower, 0000 Xxxxxxxxxx Xxxxxx Xxxxx,
Xxxxxxxxx, Xxxxxxxx 00000 at 9:30 A.M., Washington D.C. time, on ____________,
1997, or at such other place, time or date as the Representative and the Company
may agree upon
12
or as the Representative may determine, pursuant to Section 9 hereof, such time
and date of delivery against payment being herein referred to as the "Firm
Closing Date." The Company will make such certificate or certificates for the
Firm Securities available for checking and packaging by the Representative at
the offices in New York of the Company's transfer agent or registrar at least 24
hours prior to the Firm Closing Date. Time shall be of the essence, and delivery
at the time and place specified in the Agreement is a further condition to the
obligations of the Underwriters.
(b) For the purpose of covering any over-allotments in connection with
the distribution and sale of the Firm Securities as contemplated by the
Prospectus, on the basis of the representations, warranties, agreements and
covenants herein contained, but subject to the terms and conditions herein set
forth, the Company hereby grants to the several Underwriters, severally and not
jointly, an option to purchase the Option Securities. The purchase price to be
paid for any Option Securities shall be the same price per share as the price
per share for the Firm Securities set forth above in paragraph (a) of this
Section 3. The option granted hereby may be exercised as to all or any part of
the Option Securities once at any time within thirty days after the date of the
Prospectus (or, if such 30th day shall be a Saturday or Sunday or a holiday, on
the next business day thereafter when the New York Stock Exchange is open for
trading). The Underwriters shall not be under any obligation to purchase any of
the Option Securities prior to the exercise of such option. The Underwriters may
exercise the option granted hereby by notice from the Representative in writing
or by telephone (confirmed in writing) to the Company setting forth the
aggregate number of Option Securities as to which the Underwriters are
exercising the option and the date and time for delivery of and payment for such
Option Securities. Such date of delivery shall be determined by the
Representative but shall not be earlier than two business days or later than
five business days after such exercise of the option and, in any event, shall
not be earlier than the Firm Closing Date. The time and date set forth in such
notice, or such other time on such other date as the Representative and the
Company may agree upon or as the Representative may determine pursuant to
Section 9 hereof, is herein called the "Option Closing Date" with respect to
such Option Securities. If the option is exercised as to all or any portion of
the Option Securities, one or more certificates in definitive form for such
Option Securities, and payment therefor, shall be delivered on the related
Option Closing Date in the manner, and upon the terms and conditions, set forth
in paragraph (a) of this Section 3, except that reference therein to Firm
Securities and the Firm Closing Date shall be deemed, for purposes of this
paragraph 3(b), to refer to such Option Securities and Option Closing Date,
respectively.
(c) It is understood that you, individually and not as the
Representative, may (but shall not be obligated to) make payment on behalf of
any Underwriter or Underwriters for any of the Securities to be purchased by
such Underwriter or Underwriters. No such payment shall relieve such Underwriter
or Underwriters from any of its or their obligations hereunder.
13
(d) The Company hereby acknowledges that the wire transfer by or on
behalf of the Underwriters of the purchase price for any Securities does not
constitute closing of a purchase and sale of the Securities. Only execution and
delivery of a receipt (by facsimile or otherwise) for the Securities by the
Underwriters indicates completion of the closing of a purchase of the Securities
from the Company. Furthermore, in the event that the Underwriters wire funds to
the Company prior to the completion of the closing of a purchase of Securities,
the Company hereby acknowledges that until the Underwriters execute and deliver
a receipt for the Securities, by facsimile or otherwise, the Company will not by
entitled to the wired funds and shall return the wired funds to the Underwriters
as soon as practical (by wire transfer of same-day funds) upon demand. In the
event that the closing of a purchase of Securities is not completed and the wire
funds are not returned by the Company to the Underwriters on the same day the
wired funds were received by the Company, the Company agrees to pay to the
Underwriters in respect of each day the wire funds are not returned by it, in
same-day funds, interest at the Prime Rate as stated in the Wall Street Journal
on the date hereof on the amount of such wire funds.
4. Offering by the Underwriters. Upon the authorization by the
Representative of the release of the Firm Securities, the several Underwriters
propose to offer the Firm Securities for sale to the public upon the terms and
conditions set forth in the Prospectus.
5. Covenants of the Company. The Company covenants and agrees with the
several Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date that
this Agreement is executed and delivered by the parties hereto, to become
effective. If the Registration Statement has become or becomes effective
pursuant to Rule 430A of the Rules and Regulations, or the filing of the
Prospectus is otherwise required under Rule 424(b) of the Rules and Regulations,
the Company will file the Prospectus, properly completed, pursuant to the
applicable paragraph of Rule 424(b) of the Rules and Regulations within the time
period prescribed and will provide evidence satisfactory to the Representative
of such timely filing. The Company will promptly advise the Representative in
writing (i) of the receipt of any comments of the Commission, (ii) of any
request of the Commission for amendment of or supplement to the Registration
Statement (either before or after it becomes effective), any Preliminary
Prospectus or the Prospectus or for additional information, (iii) when the
Registration Statement shall have become effective and (iv) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution of any proceedings for the purpose. If
the Commission shall enter any such stop order at any time, the Company will use
its best efforts to obtain the lifting of such order at the earliest possible
moment. The Company will not file any amendment or supplement to the
Registration Statement (either before or after it becomes effective), any
Preliminary Prospectus or the Prospectus of which the Representative has not
been furnished with a copy a reasonable time prior to such filing or to which
the Representative reasonably objects or which is not in compliance with the Act
and Rules and Regulations.
14
(b) The Company will prepare and file with the Commission, promptly
upon the Representative's request, any amendments or supplements to the
Registration Statement or the Prospectus which in the Representative's
reasonable judgment may be necessary or advisable to enable the Underwriters to
continue the distribution of the Securities and will use its best efforts to
cause the same to become effective as promptly as possible. The Company will
comply in all material respects with the provisions of Rule 430A of the Rules
and Regulations with respect to information omitted from the Registration
Statement in reliance upon such Rule.
(c) The Company shall cooperate with the Representative and counsel to
the Underwriters in order to qualify or register the Securities for sale under
(or obtain exemptions from the application of) the blue sky laws of such
jurisdictions as the Representative designates, will comply with such laws and
will continue such qualifications, registrations and exemptions in effect so
long as reasonably required for the distribution of the Securities. 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 presently
qualified or where it would by subject to taxation as a foreign corporation. The
Company will advise you promptly of the suspension of the qualification or
registration of (or any such exemption relating to) the Securities for offering,
sale or trading in any jurisdiction or any initiation or threat of any
proceeding for any such purpose, and in the event of the issuance of any order
suspending such qualification, registration or exemption, the Company, with your
cooperation, will use its best efforts to obtain the withdrawal thereof.
(d) If at any time prior to the later of (i) the final date when a
prospectus relating to the Securities is required to be delivered under the Act
or (ii) the Option Closing Date, any event occurs as a result of which the
Prospectus, as then amended or supplemented, would include any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, or if for any other reason it is necessary at any time to
amend or supplement the Prospectus to comply with the Act or the Rules and
Regulations thereunder, the Company will promptly notify the Representative
thereof and, subject to Section 5(a) hereof, will prepare and file with the
Commission, at the Company's expense, an amendment to the Registration Statement
or an amendment or supplement of the Prospectus that corrects such statement or
omission or effects such compliance.
(e) The Company will, without charge, provide (i) to the Representative
and to counsel for the Underwriters a copy of the Registration Statement
originally filed with respect to the Securities and each amendment thereto (in
each case including exhibits thereto) and (ii) so long as a prospectus relating
to the Securities is required to be delivered under the Act, as many copies of
each Preliminary Prospectus, the Prospectus or any amendment or supplement
thereto as the Representative may reasonably request; without limiting the
application of clause (ii) of this sentence, the Company, not later than (A)
8:00 P.M., Washington, D.C. time, on the date of determination of the public
offering price, if
15
such determination occurred at or prior to 10:00 A.M., Washington, D.C. time, on
such date, or (B) 2:00 P.M., Washington, D.C. time, on the business day
following the date of determination of the public offering price if such
determination occurred after 10:00 A.M., Washington, D.C. time, on such date,
will deliver to the Representative, without charge, as many copies of the
Prospectus and any amendment or supplement thereto as the Representative may
reasonably request for purposes of confirming orders that are expected to settle
on the Firm Closing Date.
(f) The Company shall promptly prepare and file with the Commission
from time to time, such reports as may be required to be filed by the Act and
the Exchange Act including, without limitation, reports with respect to the sale
of the Securities and the application of the proceeds thereof as may be required
in accordance with Rule 463 under the Act. The Company will provide or cause to
be provided to the Representative, a copy of each report on Form SR filed by the
Company as required by Rule 463 under the Act.
(g) The Company, as soon as practicable, but not later than 45 days
after the end of the first quarter ending after one year following the
"effective date of the Registration Statement" (as defined in Rule 158(c) of the
Rules and Regulations), will make generally available to its security holders
and to the Representative a consolidated earnings statement of the Company and
the Subsidiaries that satisfies the provisions of Section 11(a) of the Act and
Rule 158 thereunder.
(h) The Company will apply the net proceeds from the sale of the
Securities to be sold by the Company as set forth under "Use of Proceeds" in the
Prospectus.
(i) The Company will not, directly or indirectly, without the
Representative's prior written consent, offer, sell, offer to sell, contract to
sell, pledge, grant any option to purchase or otherwise sell or dispose (or
announce any offer, sale, offer of sale, contract of sale, pledge, grant of any
option to purchase or other sale or disposition) of any shares of Common Stock
or any securities convertible into, or exchangeable or exercisable for, shares
of Common Stock for a period of 180 days after the date hereof, except pursuant
to this Agreement or as otherwise set forth in the Prospectus and except for the
grant of options to purchase an aggregate of 150,500 shares of Common Stock
under the Company's stock option plans as disclosed in the Prospectus.
(j) The Company will obtain the agreements described in Section 7(c)(v)
hereof prior to the Firm Closing Date.
(k) The Company will not, directly or indirectly, (i) take any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities or (ii) (A) sell, bid for, purchase, or pay anyone any compensation
for soliciting purchases of, the Securities or (B) pay or agree to pay to any
16
person any compensation for soliciting another to purchase any other securities
of the Company.
(l) If at any time during the 25-day period after the Registration
Statement becomes effective or the period prior to the Option Closing Date, any
rumor, publication or event relating to or affecting the Company shall occur as
a result of which in the Representative's opinion the market price of the Common
Stock has been or is likely to be materially affected (regardless of whether
such rumor, publication or event necessitates a supplement to or amendment of
the Prospectus), the Company will, after written notice from the Representative
advising the Company to the effect set forth above, forthwith prepare, consult
with the Representative concerning the substance of, and disseminate a press
release or other public statement, reasonably satisfactory to the
Representative, counsel of the Representative and counsel to the Company
responding to or commenting on such rumor, publication or event.
(m) The Company will cause the Common Stock to be duly included for
quotation on the Nasdaq National Market prior to the commencement of the
Offering. The Company will use its best efforts to ensure that the Securities
remain included for quotation on the Nasdaq National Market following the
commencement of the Offering.
(n) During the period of three years hereafter, the Company will
furnish to the Representative: (i) as soon as practicable after the end of each
fiscal year and the public release of such material, copies of the Annual Report
of the Company containing the consolidated balance sheet of the Company and
Subsidiaries as of the close of such fiscal year and consolidated statements of
operations, stockholders' equity and cash flows for the year then ended and the
opinion thereon of the Company's independent public accountants; (ii) as soon as
practicable after filing thereof, copies of each proxy statement, Annual Report
on Form 10-K, Quarterly Report on Form 10-Q, Report on Form 8-K or other report
filed by the Company with the Commission, the NASD or any securities exchange;
(iii) as soon as available, copies of any report or communication of the Company
mailed generally to holders of its Common Stock; (iv) as soon as practicable
after the filing thereof, copies of each non-confidential report or other
statement or document filed by the Company with the Commission, or with any
national securities exchange or quotation system on which any securities of the
Company may be listed or quoted; and (v) from time to time, such other
non-confidential information concerning the Company as the Representative may
reasonably request.
(o) The Company shall continue to maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary in order to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain accountability for assets; and (iii)
access to material assets is permitted only in accordance with management's
general or specific authorization and (iv) the recorded accountability for
assets is compared with the
17
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
The Representative may, in its sole discretion, waive in writing the
performance by the Company of any one or more of the foregoing covenants or
extend the time for their performance.
6. Expenses. The Company will pay all costs and expenses incident to
the authorization, issuance, sale and delivery of the Securities and the
performance of its obligations under this Agreement, and any taxes payable in
that connection, whether or not the actions contemplated herein are consummated
or this Agreement is terminated pursuant to Section 12 hereof, including all
costs and expenses incident (i) to the printing or other production of documents
with respect to the transactions contemplated by this Agreement, including any
costs of printing the Registration Statement originally filed with respect to
the Securities and any amendment thereto, any Preliminary Prospectus and the
Prospectus and any amendment or supplement thereto, this Agreement and any blue
sky memoranda, (ii) all arrangements relating to the delivery to the
Representative of copies of the foregoing documents, (iii) the costs of
distributing the terms of agreement relating to the organization of the
underwriting syndicate and selling group to the members thereof by mail, telex
or other means of communication, (iv) the fees and disbursements of the counsel,
the accountants and any other experts or advisors retained by the Company, (v)
preparation, issuance and delivery to the Representative of any certificates
evidencing the Common Stock, including transfer agent's and registrar's fees,
(vi) the qualification of the Common Stock under state securities and blue sky
laws, including filing fees and fees and disbursements of counsel for the
Underwriters relating thereto not to exceed $10,000, (vii) the filing fees of
the Commission and the NASD relating to the Common Stock, (viii) any quotation
of the Securities on the Nasdaq National Market, (ix) any meetings with
prospective investors in the Common Stock including travel and out-of-pocket
expenses of the Company's personnel (other than as shall have been specifically
approved by the Representative to be paid for by the Representative), (x)
advertising relating to the offering of the Common Stock (other than as shall
have been specifically approved by the Representative to be paid for by the
Representative), (xi) the cost of preparing bound volumes of the documents
relating to the offering for the Representative and counsel for the
Underwriters, and (xii) the Representative's actual out-of-pocket expenses,
including the reasonable fees and disbursements of the counsel for the
Underwriters, provided, however that the total amount of reimbursement under
this subsection (xii) shall not exceed $125,000. If the sale of the Securities
provided for herein is not consummated because any condition to the obligations
of the several Underwriters set forth in Section 5 hereof is not satisfied,
because this Agreement is terminated pursuant to Section 9 hereof or because of
any failure, refusal or inability on the part of the Company to perform all
obligations and satisfy all conditions on its part to be performed or satisfied
hereunder other than by reason of a default by the Underwriters, the Company
will reimburse the Underwriters upon demand for all out-of-pocket expenses
(including counsel fees and disbursements) that shall have been incurred by the
Representative in connection with the proposed purchase and sale of
18
the Securities, subject to the limitation set forth in subsection (xii) above.
The Company shall not in any event be liable to the Representative for the loss
of anticipated profits from the transactions covered by this Agreement.
7. Conditions of the Underwriters' Obligations. The obligations of he
Underwriters to purchase and pay for the Firm Securities shall be subject, in
the Underwriters' sole discretion, to the accuracy of the representations and
warranties of the Company contained herein as the date hereof and as of the Firm
Closing Date, as if made on and as of the Firm Closing Date, to the accuracy of
the statements of the Company's officers made pursuant to the provisions hereof,
to the performance by the Company of its covenants and agreements hereunder and
to the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 P.M., Washington, D.C. time, on the date of this Agreement, or at such
later time as shall have been consented to by the Representative; if the filing
of the Prospectus, or any supplement thereto, is required pursuant to Rule
424(b) of the Rules and Regulations, the Prospectus shall have been filed in the
manner and within the time period required by Rule 424(b) of the Rules and
Regulations; and prior to the Firm Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or shall be pending or,
to the knowledge of the Company or the Representative, shall be contemplated by
the Commission; and any request of the Commission for inclusion of additional
information in the Registration Statement, or otherwise, shall have been
complied with to the Representative's reasonable satisfaction.
(b) The Representative shall be reasonably satisfied that since the
respective dates as of which information is given in the Registration Statement
and Prospectus, (i) there shall not have been any change in the Common Stock of
the Company or any material change in the indebtedness (other than in the
ordinary course of business) of the Company, (ii) except as set forth or
contemplated by the Registration Statement or the Prospectus, no material verbal
or written agreement or other transaction shall have been entered into by the
Company, which is not in the ordinary course of business and which could result
in a material reduction in the future earnings of the Company, (iii) no loss or
damage (whether or not insured) to the property of the Company shall have been
sustained which has or would have a Material Adverse Effect, (iv) no legal or
governmental action, suit or proceeding affecting the Company which is material
to the Company or which affects or may affect the transactions contemplated by
this Agreement shall have been instituted or threatened, (v) no enforcement
proceeding, whether formal or informal, shall have been commenced against the
Company or any of the Subsidiaries by the Commission, or any other governmental
agency nor shall any such proceeding have been instituted, threatened or
recommended, and (vi) there shall not have been any Material Adverse Effect
which makes it impractical or inadvisable in the reasonable judgment of the
Representative to proceed with the public offering or purchase the Common Stock
as contemplated hereby.
19
(c) There shall have been furnished to the Representative in form and
substance reasonably satisfactory to counsel for the Underwriters:
(i) An opinion of Blank, Rome, Xxxxxxx & XxXxxxxx, counsel for
the Company, addressed to the Underwriters and dated the Firm Closing
Date, or the Option Closing Date, as the case may be, in the form of
Exhibit A to this Agreement which may be relied upon by counsel for the
Underwriters in giving their opinion. In rendering opinions set forth
in clauses ____, _____, _____ and _____ of Exhibit A hereto, such
counsel may rely to the extent such counsel deems necessary and proper
on opinions of such other counsel as are reasonably acceptable to the
Representative, provided, however, that such counsel shall state that
they believe that they and counsel for the underwriters' are justified
in relying on such counsel. As to matters of fact, such counsel may
rely on certificates of officers and directors of the Company and
certificates of public officials.
(ii) Such opinion of Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P.,
counsel for the Underwriters, dated the Firm Closing Date or the Option
Closing Date, as the case may be, with respect to the sufficiency of
all corporate proceedings and other legal matters relating to this
Agreement, the validity of the Common Stock, the Registration Statement
and the Prospectus and other related matters as the Representative may
reasonably require, and such counsel shall have received such documents
and shall have had exhibited to them such papers and records as they
may reasonably request for the purpose of enabling them to pass upon
such matters. In connection with such opinions, such counsel may rely
on representations or certificates of officers of the Company, the
Principal Stockholders and governmental officials.
(iii) Certificate of the Company executed by the President and
the Chief Financial Officer, dated the Firm Closing Date or the Option
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 in all
material respects as of the date of this Agreement and as of the Firm
Closing Date or the Option Closing Date, as the case may be, and the
Company has complied in all material respects with all the agreements
and satisfied all the conditions on its part to be performed or
satisfied on or prior to such Closing Date;
(2) The Commission has not issued any 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 of the
knowledge of the respective signers, no proceedings for that purpose
have been instituted or are pending or contemplated under the Act;
20
(3) Neither the Registration Statement nor the
Prospectus nor any amendment or supplement thereto includes any untrue
statement of a material fact or omits 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;
(4) Since the initial date on which the Registration
Statement was filed with the Commission, no material agreement, written
or oral, transaction or event has occurred which should have been set
forth in an amendment to the Registration Statement or in a supplement
to or amendment of any prospectus which has not been disclosed in such
a supplement or amendment;
(5) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus
and except as disclosed in or contemplated by the Prospectus, the
Company and the Subsidiaries have not sustained a material loss or
damage by strike, fire, flood, windstorm, accident or other calamity
(whether or not insured), or from any labor dispute or any legal or
governmental proceeding, and there has not been any event,
circumstance, or development that results in, or that the Company
believes would result in, a Material Adverse Effect, except in each
case as described in or contemplated by the Prospectus (exclusive of
any amendment or supplement thereto).
(iv) On the date immediately preceding the date this Agreement
is executed and also on the Firm Closing Date and the Option Closing
Date, if applicable, a letter addressed to the Underwriter, from BDO
Xxxxxxx, L.L.P., independent accountants, the first one to be dated the
day before the date of this Agreement, the second one to be dated the
Firm Closing Date and the third one to be dated the Option Closing
Date, if applicable, in form and substance reasonably satisfactory to
the Representative, to the effect that:
(1) they are independent accountants with respect to
the Company and the Subsidiaries within the meaning of the Act and the
applicable Rules and Regulations thereunder;
(2) in their opinion, the audited consolidated
financial statements examined by them and included in the Registration
Statement and the Prospectus comply in form in all material respects
with the applicable accounting requirements of the Act and the Rules
and Regulations;
(3) on the basis of carrying out certain specified
procedures, a reading of the minute books of the stockholders, the
board of directors and any committees thereof of the Company and each
of its Subsidiaries, and inquiries of certain officials of the Company
and its Subsidiaries who have responsibility for financial and
accounting matters, nothing came to their attention that caused them to
believe that
21
at a specific date not more than five business days prior to the date
of such letter, there were any changes in the capital stock or total
debt of the Company and its Subsidiaries or any decreases in total
assets or stockholders' equity from the amounts shown on the December
31, 1996 consolidated balance sheet included in the Registration
Statement and the Prospectus, or for the period from January 1, 1997 to
such specified date there were any decreases, as compared with
$__________ or $___________ in total revenues or net income,
respectively, of the Company and its Subsidiaries, except in all
instances for changes, decreases or increases set forth in such letter;
and
(4) they have carried out certain specified
procedures, not constituting an audit, with respect to certain amounts,
percentages and financial information that are derived from the general
accounting records of the Company and its Subsidiaries and are included
in the Registration Statement and the Prospectus, and have compared
such amounts, percentages and financial information with such records
of the Company and its Subsidiaries and with information derived from
such records and have found them to be in agreement, excluding any
questions of legal interpretation.
In the event the letters referred to above set forth any such changes,
decreases or increases which, in the reasonable judgement of the Representative,
are likely to result in a Material Adverse Effect, it shall be a further
condition to the obligations of the Underwriters that such letters shall be
accompanied by a written explanation of the Company as to the significance
thereof, unless the Representative deems such explanation unnecessary.
References to the Registration Statement and the Prospectus in
subsection (iv) with respect to either letter referred to above shall include
any amendment or supplement thereto at the date of such letter.
(v) The Representative shall have received from each person
who is a director or officer of the Company an agreement to the effect that such
person will not, except to the extent otherwise specifically permitted by the
terms of each such person's agreement, directly or indirectly, without the prior
written consent of the Representative, which consent may be withheld in the
reasonable discretion of the Representative, offer, sell, offer to sell,
contract to sell, pledge, grant any option to purchase or otherwise sell or
dispose (or announce any offer, sale, offer of sale, contract of sale, pledge,
grant of an option to purchase or other sale or disposition) of any shares of
Common Stock or any securities convertible into, or exchangeable or exercisable
for, shares of Common Stock for a period of 180 days after the date of this
Agreement except for options covering up to 150,500 shares of Common Stock to be
granted pursuant to the Company's stock option plans in connection with the
Offering as described in the Prospectus or the exercise of options (but not the
sale of shares of Common Stock received upon the exercise thereof) granted
pursuant to the Company's stock option plan.
22
(vii) On or before the Firm Closing Date, the Representative
and counsel for the Underwriters shall have received such further certificates,
documents or other information as they may have reasonably requested from the
Company.
(viii) Prior to the commencement of the offering of the
Securities, the Securities shall have been included for trading on the Nasdaq
National Market.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
to the Representative and to Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P., counsel for
the Underwriters. The Company shall furnish the Representative with such
manually signed or conformed copies of such opinions, certificates, letters and
documents as the Representative reasonably request.
If any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at the Firm Closing Date is not so satisfied, this
Agreement at the Representative's election will terminate upon written
notification by the Representative to the Company without liability on the part
of any Underwriter or the Company, except for the expenses to be paid or
reimbursed by the Company pursuant to Sections 6 and 8 hereof and except to the
extent provided in Section 12 hereof.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls an Underwriter within the meaning of
Section 15 of the Act or Section 20 of 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 Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon:
(i) any untrue statement or alleged untrue statement made by
the Company in, or the breach of, Section 2 of this Agreement;
(ii) any untrue statement or alleged untrue statement of any
material fact contained in (A) the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto or (B) any application or other
document, or any amendment or supplement thereto, executed by the
Company or based upon written information furnished by or on behalf of
the Company filed in any jurisdiction in order to qualify the
Securities under the securities or blue sky laws thereof or filed with
the Commission or any securities association or securities exchange
(each an "Application");
(iii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus or any
23
amendment or supplement thereto, or any Application a material fact
required to be stated therein or necessary to make the statements
therein not misleading;
(iv) any untrue statement or alleged untrue statement of any
material fact contained in any audio or visual materials used in
connection with the marketing of the Securities, including without
limitation, slides, videos, films, tape recordings;
(v) any act or failure to act or any alleged act or failure to
act by any Underwriter in connection with, or relating in any manner
to, the Securities or the Offering contemplated hereby, and which is
included as part of or referred to in any loss, claim, damage,
liability or action arising out of or based upon matters covered by
clause (i) above;
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by each Underwriter
or such controlling person in connection with investigating, defending against
or appearing as a third party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such Registration Statement or
any amendment thereto, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto or any Application in reliance upon and in
conformity with written information furnished to the Company by the
Representative specifically for use therein; and provided, further, that the
Company will not be liable to the Underwriters or any person controlling an
Underwriter with respect to any such untrue statement or omission made in any
Preliminary Prospectus that is corrected in the Prospectus (or any amendment or
supplement thereto) if the person asserting any such loss, claim, damage or
liability purchased Securities from an Underwriter but was not sent or given a
copy of the Prospectus (as amended or supplemented) at or prior to the written
confirmation of the sale of such Securities to such person in any case where
such delivery of the Prospectus (as amended or supplemented) is required by the
Act, unless such failure to deliver the Prospectus (as amended or supplemented)
was a result of noncompliance by the Company with Section 5(d) or (e) of this
Agreement. This indemnity agreement will be in addition to any liability which
the Company or the Principal Stockholders may otherwise have. The Company will
not, without the prior written consent of the Underwriters, settle or compromise
or consent to the entry of any judgment in any pending or threatened claim,
action, suit or proceeding in respect of which indemnification may be sought
hereunder (whether or not any Underwriter or any person who controls any
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act is a party to such claim, action, suit or proceeding), unless such
settlement, compromise or consent includes an unconditional release of all the
Underwriters and such controlling persons from all liability arising out of such
claim, action, suit or proceeding.
24
(b) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act against
any losses, claims, damages or liabilities to which the Company or any such
director, officer of the Company, or controlling person of the Company 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 (i) any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement or any amendment thereto, any
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto,
or any Application or (ii) the omission or the alleged omission to state therein
a material fact required to be stated in the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus or any amendment
or supplement thereto, or any Application 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 reliance upon and in conformity with written information
furnished to the Company by the Representative specifically for use therein;
and, subject to the limitation set forth immediately preceding this clause, will
reimburse, as incurred, any legal or other expenses reasonably incurred by the
Company or any such director, officer or controlling person thereof in
connection with investigating or defending any such loss, claim, damage,
liability or any action in respect thereof. 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 8
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, 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 otherwise than under this
Section 8, except to the extent it was unaware of such action and has been
prejudiced in any material respect by such failure or otherwise forfeits
substantive rights or defenses by reason of such failure or from liability which
it may have to any identified party other than under the provisions of Section 8
hereof. In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will 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;
provided, however, that 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 one or more legal defenses available
to it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to direct the defense of such action on behalf of such indemnified
party or parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. After such notice from the indemnifying party to such
indemnified party of its
25
election so to assume the defense thereof and approval by such indemnified party
of counsel appointed to defend such action, the indemnifying party will not be
liable to such indemnified party under this Section 8 for any expenses, other
than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that in
connection with such action the indemnifying party shall not be liable for the
expenses of more than one separate counsel in addition to local counsel) in any
one action or separate but substantially similar actions in the same
jurisdiction arising out of the same general allegations or circumstances,
designated by the Representative in the case of paragraph (a) of this Section 8,
representing the indemnified parties under such paragraph (a) who are parties to
such action or actions) or (ii) the indemnifying party does not promptly retain
counsel satisfactory to the indemnified party or (iii) the indemnifying party
has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party. After such notice from the indemnifying party
to such indemnified party, the indemnifying party will not be liable for the
costs and expenses, of any settlement of such action effected by such
indemnified party without the consent of the indemnifying party.
(d) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 8 is unavailable or insufficient, for
any reason, to hold harmless an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
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) in such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the Offering of the Securities or (ii) if,
but only if, the allocation provided by the foregoing clause (i) is not
permitted by applicable law, not only such relative benefits but also the
relative fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or omissions or
alleged statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total proceeds from the Offering (before deducting expenses)
received by the Company bear to the total underwriting discounts and commissions
(but excluding expense reimbursement) received by the Underwriters. The relative
fault of the parties shall be determined by reference to, among other things,
whether the untrue, or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters, the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission, and any other equitable considerations appropriate in the
circumstances. The Company and the Underwriters agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per
26
capita allocation or by any other method of allocation that does not take into
account the equitable considerations referred to above in this Section 8(d).
Notwithstanding any other provision of this Section 8, no Underwriter shall be
obligated to make contributions hereunder that in the aggregate exceed the total
public offering price of the Securities purchased by such Underwriter under this
Agreement, less the aggregate amount of any damages that such Underwriter has
otherwise been required to pay in respect of the same or any substantially
similar claim, and 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 to contribute hereunder are several in proportion to
their respective underwriting obligations and not joint, and the contributions
among Underwriters shall be governed by the provisions of the Representative's
Agreement Among Underwriters. For the purposes of this Section 8(d), each
person, if any, who controls an Underwriter within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act shall have the same rights to
contribution as such Underwriter, and each director of the Company, each officer
of the Company who signed the Registration Statement, and each person, if any,
who controls the Company or within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, shall have the same rights to contribution as
the Company.
9. Default of Underwriters. If one or more Underwriters default in
their obligations to purchase Firm Securities or Option Securities hereunder and
the aggregate number of such Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase is ten percent or less of the
aggregate number of Firm Securities or Option Securities to be purchased by all
of the Underwriters at such time hereunder, then the other Underwriters may make
arrangements satisfactory to the Representative for the purchase of such
Securities by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representative), but if no such arrangements are
made by the Firm Closing Date or the related Option Closing Date, as the case
may be, the other Underwriters shall be obligated severally in proportion to
their respective commitments hereunder to purchase the Firm Securities or Option
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase. If one or more Underwriters so default with respect to an aggregate
number of shares of Securities that is more than ten percent of the aggregate
number of Firm Securities or Option Securities, as the case may be, to be
purchased by all of the Underwriters at such time hereunder, and within 36 hours
after such default by any Underwriter, the Representative does not arrange for
the purchase of such Securities, then the Company shall be entitled to a further
period of 36 hours within which to procure another party or other parties
reasonably satisfactory to the Representative to purchase such Securities. In
the event that, within the respective prescribed periods, the Representative
notifies the Company that the Representative has so arranged for the purchase of
such Securities or the Company notifies the Representative that it has so
arranged for the purchase of such Securities, the Representative or the Company
shall have the right to postpone the Firm Closing Date or the Option Closing
Date, as the case may be, for a period of not more than seven days in order that
any necessary changes may be made in the arrangements or documents for the
purchase and
27
delivery of the Firm Securities or Option Securities, as the case may be. If
arrangements satisfactory to the Representative are not made within 36 hours
after such default for the purchase by other persons (who may include one more
of the non-defaulting Underwriters, including the Representative) of the
Securities with respect to which such default occurs, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or the
Company except for the expenses to be paid by the Company pursuant to Section 6
hereof and except to the extent provided in Section 8 hereof. As used in this
Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 9. Nothing herein shall relieve any defaulting
Underwriter from liability for its default.
10. Survival. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company, its officers and the
several Underwriters 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 made by or on behalf of the Company, any
of its officers or directors, any Underwriter or any controlling person, as the
case may be, and will survive delivery of and payment for the Securities sold
hereunder and any termination of the Agreement. Without limiting the generality
of the foregoing, the respective agreements, covenants, indemnities and other
statements set forth in Sections 6 and 8 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
11. Effective Date. This Agreement shall become effective at 11:00
A.M., Washington, D.C. time, on the first full business day following the date
this Agreement is executed, or at such earlier time after the Registration
Statement becomes effective as the Representative shall release the Firm
Securities for the public offering. The Representative shall notify the Company
immediately after it has taken any action which causes this Agreement to become
effective. Until this Agreement is effective, it may be terminated by the
Company by notice to the Representative or by the Representative by notice to
the Company. For purposes of this Agreement, the release of the public offering
of the Securities shall be deemed to have been made when the Representative
releases, by telegram or otherwise, firm offers of the Securities to securities
dealers or releases for publication a newspaper advertisement relating to the
Securities, whichever occurs first.
12. Termination. Without limiting the right to terminate this Agreement
pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice to you or
by you by notice to the Company at any time prior to the time this Agreement
shall become effective as to all its provisions, and any such termination shall
be without liability on the part of the Company to any Underwriter (except for
the expenses to be paid or reimbursed by the Company pursuant to Section 6
hereof and except to the extent provided in Section 8 hereof) or of any
Underwriter to the Company (except to the extent provided in Section 8 hereof).
28
(b) This Agreement may also be terminated with respect to the Firm
Securities or any Option Securities in the sole discretion of the Representative
by notice to the Company given prior to the Firm Closing Date or the related
Option Closing Date, respectively, in the event that the Company shall have
failed, refused or been unable to perform all obligations and satisfy all
conditions on their part to be performed or satisfied hereunder at or prior
thereto or, if at or prior to the Firm Closing Date or such Option Closing Date,
respectively,
(i) the Company or the Subsidiaries shall have, in the sole
judgment of the Representative, sustained any material loss or interference with
their respective businesses or properties from fire, flood, hurricane, accident
or other calamity, whether or not covered by insurance, or from any labor
dispute or any legal or governmental proceeding or there shall have been any
event. change, or development which has or prospectively could have a Material
Adverse Effect, except in each case as described in or contemplated by the
Prospectus (exclusive of any amendment or supplement thereto);
(ii) a banking moratorium shall have been declared by New York
or United States authorities; or
(iii) trading in the Common Stock shall have been suspended by
the Commission or the Nasdaq National Market or trading in securities generally
on the New York Stock Exchange or Nasdaq National Market shall have been
suspended or minimum or maximum prices shall have been established on either
such exchange or market system;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an outbreak or
escalation of any other insurrection or armed conflict involving the United
States or (C) any other calamity or crisis or material adverse change in general
economic, political or financial conditions having an effect on the U.S.
financial markets that, in the sole judgment of the Representative, makes it
impractical or inadvisable to proceed with the public offering or the delivery
of the Securities as contemplated by the Registration Statement, as amended as
of the date hereof.
13. Information Supplied by the Underwriter. The statements set forth
in the Prospectus (i) on the cover page with respect to price, underwriting
discounts and commissions and terms of the offering, (ii) under the heading
"Underwriting" in any Preliminary Prospectus or the Prospectus and (iii) on the
inside cover page in any Preliminary Prospectus or the Prospectus pertaining to
stabilization (to the extent such statements relate to the Underwriters)
constitute the only information furnished by and on behalf of the Representative
or the Underwriters to the Company for use in connection with the preparation of
the Registration Statement and the Prospectus. The Representative confirms that
such statements (to such extent) are correct in all material respects.
29
14. Notices. All communications hereunder shall be in writing and, if
sent to the Underwriter, shall be delivered or sent by mail, telex or facsimile
transmission and confirmed in writing to Friedman, Billings, Xxxxxx & Co., Inc.,
Potomac Tower, 0000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000,
Attention: Xxxxx X. Xxxxxxxxx with a copy to Elias, Matz, Xxxxxxx & Xxxxxxx
L.L.P., 000 00xx Xxxxxx, X.X., 00xx Xxxxx, Xxxxxxxxxx, X.X. 00000, Attention:
Xxxxxx X. Xxxxx, Esq.; if sent to the Company, shall be delivered or sent by
mail, telex confirmed in writing to the Company at 000 Xxxxxxxxxxxx Xxxxxxxxx,
Xxxxx 000, Xxxx Xxxxxx, Xxxxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxxx, Xx.
Chairman, President and Chief Executive Officer with a copy to Blank, Rome,
Xxxxxxx & XxXxxxxx, 0 Xxxx Xxxxxx Xxxxx, 00-0, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000,
Attention: Xxxxxxxxx X. Xxxxxx, Esq.
15. Successors. This Agreement shall inure to the benefit of and shall
be binding upon the Underwriter, the Company and their respective successors and
legal representatives, and nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any other person any legal or equitable
right, remedy or claim under or in respect of this Agreement, or any provisions
herein contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person except that (i) the indemnities and
contribution agreements of the Company contained in Section 8 of this Agreement
shall also be for the benefit of any person or persons who control any
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act and (ii) the indemnities of the Underwriters contained in Section 8
of this Agreement shall also be for the benefit of the directors of the Company,
the officers of the Company who have signed the Registration Statement and any
person or persons who control the Company within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act. No purchaser of Securities from any
Underwriter shall be deemed a successor because of such purchase.
16. Applicable Law. The validity and interpretation of this Agreement,
and the terms and conditions set forth herein shall be governed by and construed
in accordance with the laws of the Commonwealth of Virginia, without giving
effect to any provisions relating to conflicts of laws.
17. Consent to Jurisdiction and Service of Process. All judicial
proceedings arising out of or relating to this Agreement may be brought in any
state or federal court of competent jurisdiction in the Commonwealth of
Virginia, and by execution and delivery of this Agreement, the Company accepts
for itself and in connection with its properties, generally and unconditionally,
the nonexclusive jurisdiction of the aforesaid courts and waives any defense of
forum non conveniens and irrevocably agree to be bound by any judgment rendered
thereby in connection with this Agreement. The Company designates and appoints
_____________ and such other persons as may hereafter be selected by the Company
irrevocably agreeing in writing to so serve, as its agents to receive on its
behalf service of all process in any such proceedings in any such court, such
service being hereby acknowledged by the Company to be effective and binding
service in every respect. A copy
30
of any such process so served shall be mailed by registered mail to the Company
at its address provided in Section 14 hereof; provided, however, that, unless
otherwise provided by applicable law, any failure to mail such copy shall not
affect the validity of service of such process. If any agent appointed by the
Company refuses to accept service, the Company hereby agrees that service of
process sufficient for personal jurisdiction in any action against the Company
in the Commonwealth of Virginia may be made by registered or certified mail,
return receipt requested, to the Company at the address provided in Section 14
hereof, and the Company acknowledges that such service shall be effective and
binding in every respect. Nothing herein shall affect the right to serve process
in any other manner permitted by law or shall limit the right of any Underwriter
to bring proceedings against the Company in the courts of any other
jurisdiction.
18. General. This Agreement constitutes the entire agreement of the
parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may be executed in several
counterparts, each one of which shall be an original, and all of which shall
constitute one and the same document.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not effect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by writing signed by the Company and the Representative.
If the foregoing correctly sets forth our understanding please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter shall constitute an agreement binding the Company and the
Representative.
Very truly yours,
AMERICAN BUSINESS FINANCIAL
SERVICES, INC.
By:
-----------------------------------------
Xxxxxxx X. Xxxxxxxx, Xx.
Chairman, President and Chief Executive
Officer
31
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written,
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
By:
---------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Managing Director
As Representative of the several
Underwriters named in Schedule
1 hereto
32
Schedule 1
UNDERWRITER
Number of Firm Securities
Underwriters to be Purchased
------------ -------------------------
Friedman, Billings, Xxxxxx & Co., Inc.
-----------
Total 1,000,000
===========
33
EXHIBIT A
FORM OF OPINION OF BLANK, ROME, XXXXXXX & XxXXXXXX
(i) The Company and each of its Subsidiaries have been duly organized
and are validly existing as corporations in good standing under the laws of
their respective jurisdictions of incorporation and are duly qualified to
transact business as foreign corporations and are in good standing under the
laws of all other jurisdictions where the ownership or leasing of their
respective properties or the conduct of their respective businesses required
such qualification, except where the failure to be so qualified does not or
would not have a material adverse effect on the financial condition, business,
properties or results of operation of the Company and its Subsidiaries (taken as
a whole) (thereinafter, a "Material Adverse Effect").
(ii) The Company and each of the Subsidiaries have the corporate power
to own or lease their respective properties and conduct their respective
businesses as described in the Registration Statement and the Prospectus, and
the Company has corporate power to enter into this Agreement and to carry out
all the terms and provisions thereof to be carried out by them.
(iii) To our knowledge, except for stock holdings occurring from the
liquidation of loan collateral, the Company does not own or control more than
50% of the voting stock, directly or indirectly, any corporation, association or
other entity other than its Subsidiaries. All of the issued and outstanding
shares of capital stock of the Subsidiaries have been duly authorized and are
validly issued, fully paid and nonassessable, and are directly or indirectly
owned by the Company free and clear of any security interest, claim, lien,
charge and encumbrance. Neither the Company nor the Subsidiaries own any equity
interests in any firm or partnership, association or other entity except as
disclosed in the Prospectus.
(iv) Each of the Company and the Subsidiaries has obtained and is
operating in compliance with all authorizations, licenses, permits, consents,
certificates and orders of federal and state regulatory agencies material to the
conduct of their respective businesses, all of which are valid and in full force
and effect (except where the failure to obtain or to comply with such
certificates, licenses, authorizations or permits would not have a Material
Adverse Effect) and neither the Company nor the Subsidiaries have received any
notice of proceedings relating to the revocation or modification of any such
certificate, license, authorization or permit which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would have a
Material Adverse Effect.
(vi) As of the date of the Prospectus, the Company had an authorized,
issued and outstanding capitalization as set forth in the Prospectus under the
caption "Capitalization" under the heading "Actual," and at the Firm Closing
Date the Company will have an authorized and outstanding capitalization as set
forth in the Prospectus under the caption "Capitalization" under the heading "As
Adjusted." All of the issued shares of Common Stock of the Company have been
duly authorized and validly issued and are fully paid and nonassessable and were
not issued in violation of or subject to any preemptive rights or
other rights to subscribe for or purchase securities. The description of the
Company's stock option plans and the options to be granted and exercised
thereunder, set forth in the Prospectus, accurately and fairly presents the
information shown with respect to such plans.
(vii) The Common Stock to be sold by the Company pursuant to the
Agreement has been duly authorized and, when issued, delivered and paid for in
the manner set forth in the Agreement, will be validly issued, fully paid and
nonassessable, and will conform in all material respects to the description
thereof contained in the Prospectus. Good title to the Common Stock will be
transferred from the Company to the Purchasers thereof against payment therefor,
subject to such claims as may be asserted against the purchasers thereof by
third-party claimants. No preemptive rights or other rights to subscribe for or
purchase exist with respect to the sale of the Common Stock by the Company
pursuant to the Agreement.
(viii) Except as disclosed in the Prospectus, there are no outstanding
(a) securities or obligations of the Company or the Subsidiaries convertible
into or exchangeable for any capital stock of the Company or any such
Subsidiary, (b) warrants, rights or options to subscribe for or purchase from
the Company or any such subsidiary any such capital stock or any such
convertible or exchangeable securities or obligations other than the
overallotment option set forth in the Agreement, or (c) obligations of the
Company or any such Subsidiary to issue any shares of capital stock, any such
convertible or exchangeable securities or obligations, or any such warrants,
rights or options.
(ix) The Company has the legal right power and authority to enter into
the Agreement and to perform the transactions contemplated thereby. The
Agreement has been duly authorized by the Company and upon due execution and
delivery by the Company and the other parties thereto will constitute a valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except to the extent the enforceability thereof may
be limited by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, receivership, conservatorship, or other similar laws, regulations or
procedures of general applicability now or hereafter in effect relating to or
affecting creditors, or other obligees' rights generally and (ii) general equity
principles and to the discretion of the court, regardless of whether such
enforceability is considered in a proceeding in equity or at law. The execution,
delivery and performance of the Agreement by the Company and the consummation of
the transactions therein contemplated will not violate any provisions of the
certificate of incorporation or bylaws, or other organizational documents of the
Company or the Subsidiaries, and will not conflict with, result in the breach or
violation of, or constitute, either by itself or upon notice or the passage of
time or both, a default under any agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument known to us to which
the Company or any of the Subsidiaries is a party or by which the Company or the
Subsidiaries or any of their respective properties may be bound or affected, any
federal or state statute or any authorization, judgment, decree, order, rule or
regulation of any federal or state court or any federal or state regulatory
agency applicable to the Company or any of the Subsidiaries
2
(other than state securities or blue sky laws as to which we express no opinion)
or any of their respective properties, except where any violation, conflict,
breach of default would not have a Material Adverse Effect. No consent,
approval, authorization or other order of any federal or state court or federal
or state regulatory agency is required for the execution and delivery of the
Agreement or the consummation of the transactions contemplated thereby, except
for compliance with the Act, the blue sky laws applicable to the public offering
of the Securities, the clearance of such offering with NASD, and the listing of
the Common Stock on the Nasdaq Stock Market as well as such consents, approvals
or authorizations, as have been obtained and are in full force and effect.
(x) Other than litigation incident to the conduct of the business
conducted by the Company and the Subsidiaries, no legal or governmental
proceedings are pending to which the Company or any of the Subsidiaries is a
party or to which the property of the Company or any of the Subsidiaries is
subject that are required to be described in the Registration Statement or the
Prospectus and are not described therein, and, to the knowledge of counsel, no
such proceedings have been threatened against the Company or the Subsidiaries or
with respect to any of their respective properties. No legal or governmental
proceedings, whether formal or informal, have been commenced against the Company
or any of the Subsidiaries by any federal or state regulatory agency nor have
any such proceedings been instituted or, to the knowledge of counsel, have any
such proceedings been threatened or recommended. Neither the Company nor any of
the Subsidiaries, nor to such counsel's knowledge, any of their respective
officers, employees or directors, is a party or subject to the provisions of any
regulatory action, injunction, judgment, decree or order of any federal or state
court or federal or state regulatory agency, and there is no charge, action,
suit proceeding or investigation before or by any federal or state court or
federal or state regulatory agency pending or, to the knowledge of counsel,
threatened which might affect the performance of the Agreement.
(xi) No further approval, consent or authority of the stockholders of
the Company or the Board of Directors of the Company is required for the
issuance and sale of the Securities by the Company as contemplated in the
Agreement, except such as have been obtained.
(xii) The Company is not in breach of its certificate of incorporation
or bylaws and to such counsel's knowledge, the Company is not in default and no
event has occurred which, with notice or lapse of time or both, would constitute
a default under any contract, indenture, mortgage, loan agreement, note, lease
or other instrument known to such counsel to which the Company is a party or by
which the Company or any of its properties may be bound, the result of which
could have a Material Adverse Effect.
(xiii) The offer and sale by the Company and ABFC of the notes
evidencing subordinated indebtedness thereof have been conducted in compliance
in all material respects with all applicable federal and state laws and
regulations including, but not limited to, the Act and the Rules and
Regulations.
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(xiv) To such counsel's knowledge, there are no contracts, agreements
or other documents of a type required to be described or referred to in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement other than those described or referred to therein or
filed as exhibits thereto, and the description in the Prospectus of all
contracts, agreements and other documents therein fairly presents in all
material respects the information shown.
(xv) The description of past securitization transactions effected by
the Company (other than the financial data as to which such counsel need express
no opinion), as contained in the Registration Statement and the Prospectus, is
true and complete in all material respects.
(xvi) The Registration Statement, the Prospectus and each amendment or
supplement thereto, other than the financial statements, the notes thereto,
financial tables and other financial and statistical 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 Act and the Rules and Regulations. The
statements contained in the Prospectus under the captions "Risk Factors -
Regulatory Restrictions and Licensing Requirements," "Environmental Concerns, "-
Anti-takeover Effect of Delaware Law, "Business-Regulation," "Description of
Capital Stock " - Certain Provisions of Delaware Law," - "Certain Certificate of
Incorporation Bylaw Provisions", "Shares Eligible for Future Sale" and
"Additional Information," to the extent such statements relate to statements of
law or legal conclusions, have been reviewed by such counsel and are accurate in
all material respects.
(xvii) The Registration Statement has become effective under the Act
and no stop order suspending the effectiveness of the Registration Statement has
been issued by the Commission, and no proceedings for such purpose have been
instituted or, to such counsel's knowledge, threatened by the Commission. Any
required filing of the Prospectus and any supplement thereto pursuant to Rule
424(b) of the Rules and Regulations has been made in the manner and within the
time period required by such Rule 424(b).
(xviii) The Securities have been approved for quotation on the Nasdaq
National Market upon notice of issuance.
(xix) Neither the Company nor any of the Subsidiaries is in violation
of any directive from the Commission, or any other federal or state regulatory
agency regarding the method of conducting its business; the Company and the
Subsidiaries are conducting their business in a manner so as to comply with all
applicable federal or state statutes and regulations that regulate its business,
except where the failure to so be in such compliance would not have a Material
Adverse Effect.
(xx) To such counsel's knowledge, all material transactions between the
Company and the Subsidiaries and the officers, directors and major stockholders
of the Company that
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are required to be disclosed under the Act and the Rules and Regulations have
been accurately disclosed in the Prospectus in all material respects.
(xxi) The Company is not an "investment company" as such term is deemed
in the Investment Company Act of 1940, as amended and the Offering will not
cause the Company to become an investment company subject to registration under
such Act.
(xxii) To such counsel's knowledge, subsequent to the respective dates
as of which information is given in the Registration Statement and the
Prospectus, (1) the Company and its Subsidiaries have not incurred any material
liability or obligation, direct or contingent, nor entered into any material
transaction not in the ordinary course of business; and (2) the Company has not
purchased any of its outstanding capital stock, nor declared, paid or otherwise
made any dividend or distribution of any kind on its capital stock, except in
each case ads described in or contemplated by the Prospectus.
(xxiii) If the Company elects to rely on Rule 434, the Prospectus is
not "materially different," as such term in used in Rule 434, from the
prospectus included in the Registration Statement at the time of its
effectiveness or an effective post-effective amendment thereto (including such
information that is permitted to be omitted pursuant to Rule 430 A).
(xxiv) The specimen stock certificate of the Company filed as an
exhibit to the Registration Statement is in due and proper form to evidence
shares of Common Stock, has been duly authorized and approved by the Board of
Directors of the Company and complies with all legal requirements applicable
under the Delaware General Corporation Law.
Such counsel shall also state in a separate letter that no facts have
come to such counsel's attention that would lead such counsel to believe that
the Registration Statement, at the time it was declared effective by the
Commission, 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 of the date it was filed with the
Commission and as of the date hereof, 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 are made, not misleading, it being understood that such counsel need
make no comment with respect to the financial statements, the notes thereto,
financial tables or any other financial or statistical data or information
regarding the Underwriter included in the Registration Statement or Prospectus,
and provided, further, that such counsel may state that (i) they have not
independently verified the accuracy, completeness or fairness of the financial
statements and the notes thereto contained in the Registration Statement and the
Prospectus or in any amendments or supplements thereto, (ii) they have not
independently calculated or verified the accuracy, completeness or fairness of
any financial, statistical or accounting data contained in the Registration
Statement and the Prospectus or in any amendments or supplements thereto, and
(iii) the limitations
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inherent in their participation in the preparation of the Registration Statement
and the Prospectus and the knowledge available to them are such that they are
unable to assume, and do not assume, any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus or any amendment or supplement thereof (except as
set forth in clause (xvi) above).
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