EXHIBIT 1.1
MUNICIPAL MORTGAGE & EQUITY, LLC
(Delaware limited liability company)
1,950,000 Common Shares
PURCHASE AGREEMENT
Dated: March 2, 2004
TABLE OF CONTENTS
SCHEDULES
Schedule A - Commitments
Schedule B - List of Subsidiaries
Schedule C - Price of Securities
Schedule D - List of Persons Subject to Lock-Up
EXHIBITS
Exhibit A-1 - Form of Opinion of Xxxxxxxx Chance US LLP
Exhibit A-2 - Form of Opinion of Xxxxxxxxx, Xxxxxxx & Xxxxx, LLP
Exhibit B - Form of Lock-Up
MUNICIPAL MORTGAGE & EQUITY, LLC
(Delaware limited liability company)
1,950,000 Common Shares
(No Par Value Per Share)
PURCHASE AGREEMENT
March 2, 2004
RBC Capital Markets Corporation
0 Xxxxxxx Xxxxx, 000 Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Municipal Mortgage & Equity, LLC, a Delaware limited liability company
(the "Company"), confirms its agreements with RBC Capital Markets Corporation
and Xxxx Xxxxx Xxxx Xxxxxx, Incorporated (each an "Underwriter," and together,
the "Underwriters"), with respect to (i) the sale by the Company, and the
purchase by the Underwriters of the respective numbers of Common Shares, no par
value per share, of the Company ("Common Shares") set forth in Schedule A hereto
and (ii) the grant by the Company to the Underwriters of the option described in
Section 2(b) hereof to purchase all or any part of 195,000 additional Common
Shares to cover over-allotments, if any. The aforesaid 195,000 Common Shares
(the "Initial Securities") to be purchased by the Underwriters and all or any
part of the 195,000 Common Shares subject to the option described in Section
2(b) hereof (the "Option Securities") are hereinafter called, collectively, the
"Securities".
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as they deem advisable after this Agreement
has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (No. 333-107277) and
Pre-Effective Amendment No. 1 thereto for the registration of the Securities
under the Securities Act of 1933, as amended (the "1933 Act"), and the offering
thereof from time to time in accordance with Rule 415 of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations").
Such registration statement has been declared effective by the Commission, and
the Company has filed such post-effective amendments thereto as may be required
prior to the execution of this Agreement and each such post-effective amendment,
if any, has been declared
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effective by the Commission. Such registration statement (as so amended, if
applicable), including the information, if any, deemed to be a part thereof
pursuant to Rule 430A(b) of the 1933 Act Regulations (the "Rule 430A
Information") or Rule 434(d) of the 1933 Act Regulations (the "Rule 434
Information"), is referred to herein as the "Registration Statement"; and the
final prospectus and the final prospectus supplement relating to the offering of
the Securities, in the forms first furnished to the Underwriters by the Company
for use in connection with the offering of the Securities, are collectively
referred to herein as the "Prospectus"; provided, however, that all references
to the "Registration Statement" and the "Prospectus" shall also be deemed to
include all documents incorporated therein by reference pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"), prior to the
execution of this Agreement; provided, further, that if the Company files a
registration statement with the Commission pursuant to Rule 462(b) of the 1933
Act Regulations (the "Rule 462(b) Registration Statement"), then all references
to "Registration Statement" shall also be deemed to include the Rule 462(b)
Registration Statement; and provided, further, that if the Company elects to
rely upon Rule 434 of the 1933 Act Regulations, then all references to
"Prospectus" shall also be deemed to include the final or preliminary prospectus
and the applicable term sheet or abbreviated term sheet (the "Term Sheet"), as
the case may be, in the forms first furnished to the Underwriters by the Company
in reliance upon Rule 434 of the 1933 Act Regulations, and all references to the
date of the Prospectus shall mean the date of the Term Sheet. A "preliminary
prospectus" shall be deemed to refer to (i) any prospectus used before the
Registration Statement became effective and (ii) any prospectus that omitted, as
applicable, the Rule 430A Information, the Rule 434 Information or other
information to be included upon pricing in a form of prospectus filed with the
Commission pursuant to Rule 424(b) of the 1933 Act Regulations and was used
after such effectiveness and prior to the initial delivery of the Prospectus to
the Underwriters by the Company. For purposes of this Agreement, all references
to the Registration Statement, Prospectus, Term Sheet or preliminary prospectus
or to any amendment or supplement to any of the foregoing shall be deemed to
include any copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("XXXXX").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" (or other
references of like import) in the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, Prospectus or any
preliminary prospectus shall be deemed to mean and include the filing of any
document under the 1934 Act which is incorporated by reference in the
Registration Statement, the Prospectus or preliminary prospectus, as the case
may be.
1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to each Underwriter as of the date hereof, as of the
Closing Time referred to in Section
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2(c) hereof, and as of each Date of Delivery (if any) referred to in Section
2(b) hereof, and agrees with each Underwriter, as follows:
(1) Compliance with Registration Requirements.
(i) The conditions for use of Form S-3, as set
forth in the General Instructions thereto, have been satisfied
with respect to the Registration Statement. During the period
of at least the last 12 calendar months prior to the date of
this Agreement, the Company has timely filed with the
Commission all documents and other material required to be
filed pursuant to Sections 13, 14 and 15(d) under the 1934 Act
except that the Company did not include a signature page in
its Quarterly Report on Form 10-Q for the quarter ended June
30, 2003 when it was originally filed on August 13, 2003,
which it subsequently added through an amendment filed on
December 11, 2003. The Registration Statement has become
effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement has been issued
under the 1933 Act and no proceedings for that purpose have
been instituted or are pending or, to the knowledge of the
Company, are contemplated by the Commission, and any request
on the part of the Commission for additional information has
been complied with.
(ii) At the respective times the Registration
Statement became effective and at the Closing Time (and, if
any Option Securities are purchased, at the Date of Delivery),
the Registration Statement, and any amendments and supplements
thereto complied and will comply in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations
and did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading. Neither the Prospectus nor any amendments or
supplements thereto, at the time the Prospectus or any such
amendment or supplement was issued and at the Closing Time
(and, if any Option Securities are purchased, at the Date of
Delivery), included or will include an untrue statement of a
material fact or omitted or will 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. If Rule 434 is used, the Company will comply with
the requirements of Rule 434. The representations and
warranties in this subsection shall not apply to statements in
or omissions from the Registration Statement or Prospectus
made in reliance upon and in conformity with information
furnished to the Company in writing by either Underwriter
expressly for use in the Registration Statement or Prospectus
as described in Section 17 below.
(iii) Each preliminary prospectus and the
prospectus filed as part of the Registration Statement as
originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations
and the Prospectus to be delivered to the Underwriters for use
in connection with this offering will be
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identical to the electronically transmitted copies thereof to
be filed with the Commission in accordance with Rule 424(b)
pursuant to XXXXX, except to the extent permitted by
Regulation S-T.
(2) Incorporated Documents. The documents incorporated or
deemed to be incorporated by reference in the Registration Statement
and the Prospectus, when they became effective or at the time they were
or hereafter are filed with the Commission, complied and will comply in
all material respects with the requirements of the 1933 Act and the
1933 Act Regulations or the 1934 Act and the rules and regulations of
the Commission thereunder (the "1934 Act Regulations"), as applicable,
and, when read together with the other information in the Prospectus,
at the time the Registration Statement became effective, at the time
the Prospectus was issued and at the Closing Time (and, if any Option
Securities are purchased, at the Date of Delivery), did not and will
not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
(3) Independent Accountants. The accountants who
certified the financial statements and supporting schedules included in
the Registration Statement are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.
(4) Financial Statements.
(i)The financial statements included or incorporated
by reference in the Registration Statement and the Prospectus,
together with the related schedules and notes, except for
information as to cash available for distribution, present
fairly the financial position of the Company and its
consolidated subsidiaries at the dates indicated and the
statement of operations, stockholders' equity and cash flows
of the Company and its consolidated subsidiaries for the
periods specified. Except for information as to cash available
for distribution, said financial statements have been prepared
in conformity with U.S. generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout
the periods involved. The supporting schedules, if any,
included or incorporated by reference in the Registration
Statement present fairly in accordance with GAAP the
information required to be stated therein. The selected
financial data, the summary financial information and
capitalization information included or incorporated by
reference in the Prospectus present fairly the information
shown therein and have been compiled on a basis consistent
with the audited financial statements included in the
Registration Statement, except for normal year-end
adjustments. The information presented as cash available for
distribution fairly presents the Company's cash available for
distribution, and is based on information derived from the
Company's accounting records on a basis consistent with the
description of the calculation of cash available for
distribution as set forth in the applicable footnote. In
addition, the pro forma information included in the Company's
Current Report on Form 8-K filed with the Commission on
September 17, 2003 and any other pro forma information and the
related notes
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thereto included or incorporated by reference in the
Prospectus present fairly the information shown therein, have
been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial information and
have been properly compiled on the bases described therein,
and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to
give effect to the transactions and circumstances referred to
therein.
(ii) Based upon its current understanding of the
effects of FIN 46, "Consolidation of Variable Interest
Entities" ("FIN 46") and FASB Statement No. 150, "Accounting
for Certain Financial Instruments with both Characteristics of
Liabilities and Equity" ("FAS 150"), with respect to periods
beginning after the date of the last interim financial
statements including in the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended September 30, 2003, except
as disclosed in such quarterly report and except as previously
disclosed to the Underwriters, the Company has no knowledge of
any material increase in its total liabilities, as compared
with amounts shown in the September 30, 2003 unaudited
condensed consolidated balance sheet incorporated by reference
in the Registration Statement, as a result of the application
of FIN 46 and FAS 150.
(5) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, except as otherwise stated therein, (A)
there has been no material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business
(a "Material Adverse Effect"), (B) there have been no transactions
entered into by the Company or any of its subsidiaries, other than
those in the ordinary course of business, which are material with
respect to the Company and its subsidiaries considered as one
enterprise, and (C) there have been no dividends or distributions on
any shares of capital stock of the Company except for regular quarterly
distributions on the Common Shares in amounts per share that are
consistent with past practice.
(6) Good Standing of the Company. The Company has been
duly organized and is validly existing as a limited liability company
in good standing under the laws of the State of Delaware and has
limited liability company power and authority to own, lease and operate
its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this
Agreement. The Company is duly qualified as a foreign limited liability
company to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would
not result in a Material Adverse Effect.
(7) Good Standing of Subsidiaries. Each "significant
subsidiary" of the Company (as such term is defined in Rule 1-02 of
Regulation S-X) (each a "Subsidiary" and,
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collectively, the "Subsidiaries") has been duly organized or
incorporated and is validly existing as a corporation or limited
liability company in good standing under the laws of the jurisdiction
of its incorporation, has corporate or limited liability company power
and authority to own, lease and operate its properties and to conduct
its business as described in the Prospectus and is duly qualified as a
foreign corporation or limited liability company to transact business
and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a
Material Adverse Effect. Except as otherwise disclosed in the
Prospectus or on Schedule B hereto, all of the issued and outstanding
equity interests of each such Subsidiary have been duly authorized and
validly issued, are fully paid and non-assessable and are owned by the
Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity. None of the outstanding shares of equity interest of any
Subsidiary was issued in violation of the preemptive or similar rights
of any securityholder of such Subsidiary. The only subsidiaries of the
Company are the subsidiaries listed on Schedule B hereto.
(8) Capitalization. The issued and outstanding Common
Shares have been duly authorized and validly issued and are fully paid
and non-assessable to the extent permitted under the Delaware Limited
Liability Company Act; none of the outstanding shares of membership
interests of the Company was issued in violation of the preemptive or
other similar rights of any securityholder of the Company.
(9) Authorization of Agreement. This Agreement has been
duly authorized, executed and delivered by the Company.
(10) Authorization and Description of Securities. The
Securities to be purchased by the Underwriters from the Company have
been duly authorized for issuance and sale to the Underwriters pursuant
to this Agreement and, when issued and delivered by the Company
pursuant to this Agreement against payment of the consideration set
forth herein, will be validly issued and fully paid and non-assessable
to the extent permitted under the Delaware Limited Liability Company
Act. The Common Shares conform to all statements relating thereto
contained in the Prospectus and such description conforms to the rights
set forth in the instruments defining the same. No holder of the
Securities will be subject to personal liability by reason of being
such a holder; and the issuance of the Securities is not subject to the
preemptive or other similar rights of any securityholder of the
Company.
(11) Absence of Defaults and Conflicts. Neither the
Company nor any of its subsidiaries is in violation of its certificate
of organization or operating agreement or charter or by-laws, as the
case may be, or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which it or any of them may be bound,
or to which any of the property or assets of the Company or any
subsidiary is subject (collectively, "Agreements and Instruments")
except for such
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defaults that would not result in a Material Adverse Effect; and the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein and in the
Prospectus (including the issuance and sale of the Securities and the
use of the proceeds from the sale of the Securities as described under
the caption "Use of Proceeds") and compliance by the Company with its
obligations hereunder have been duly authorized by all necessary
limited liability company action and do not and will not, whether with
or without the giving of notice or passage of time or both, conflict
with or constitute a breach of, or default or Repayment Event (as
defined below), except for any Repayment Event that will be satisfied
by the payment of proceeds as described in the Prospectus, under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any subsidiary pursuant
to, the Agreements and Instruments (except for such conflicts, breaches
or defaults or liens, charges or encumbrances that would not result in
a Material Adverse Effect), nor will such action result in any
violation of the provisions of the certificate of organization or
operating agreement or the charter or by-laws of the Company or any
subsidiary or any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Company or any
subsidiary or any of their assets, properties or operations. As used
herein, a "Repayment Event" means any event or condition which gives
the holder of any note, debenture or other evidence of indebtedness (or
any person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any subsidiary.
(12) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any subsidiary exists or, to the knowledge
of the Company, is imminent, and the Company is not aware of any
existing or imminent labor disturbance by the employees of any of its
or any subsidiary's principal suppliers, manufacturers, customers or
contractors, which, in either case, may reasonably be expected to
result in a Material Adverse Effect.
(13) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against or affecting the
Company or any subsidiary, which is required to be disclosed in the
Prospectus (other than as disclosed therein), or which might reasonably
be expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the
properties or assets thereof or the consummation of the transactions
contemplated in this Agreement or the performance by the Company of its
obligations hereunder; the aggregate of all pending legal or
governmental proceedings to which the Company or any subsidiary is a
party or of which any of their respective property or assets is the
subject which are not described in the Prospectus, including ordinary
routine litigation incidental to the business, could not reasonably be
expected to result in a Material Adverse Effect.
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(14) Accuracy of Exhibits; No Termination. There are no
contracts, agreements or documents which are required to be described
in the Registration Statement, the Prospectus or the documents
incorporated by reference therein or to be filed as exhibits thereto
which have not been so described and filed as required. Neither the
Company nor any of its subsidiaries has sent or received any written
notice indicating the termination of or intention to terminate any of
the contracts, agreements or documents referred to or described in the
Registration Statement or the Prospectus, or filed as an exhibit to the
Registration Statement, and no such termination has been threatened by
the Company, any subsidiary or, to the knowledge of the Company, any
other party to any such contract, agreement or document.
(15) Possession of Intellectual Property. The Company and
its subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") necessary
to carry on the business now operated by them, and neither the Company
nor any of its subsidiaries has received any notice or is otherwise
aware of any infringement of or conflict with asserted rights of others
with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Company or any of its
subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity
or inadequacy, singly or in the aggregate, would result in a Material
Adverse Effect.
(16) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations hereunder, in connection with the offering, issuance or
sale of the Securities hereunder or the consummation of the
transactions contemplated by this Agreement, except such as have been
already obtained or as may be required under the 1933 Act or the 1933
Act Regulations or state securities laws.
(17) Possession of Licenses and Permits. The Company and
its subsidiaries possess such permits, licenses, approvals, consents
and other authorizations (collectively, "Governmental Licenses") issued
by the appropriate federal, state, local or foreign regulatory agencies
or bodies necessary to conduct the business now operated by them; the
Company and its subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, have a Material
Adverse Effect; all of the Governmental Licenses are valid and in full
force and effect, except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full
force and effect would not have a Material Adverse Effect; and neither
the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.
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(18) Title to Investments. The Company and its
subsidiaries have good and marketable title to all investments owned by
the Company and its subsidiaries, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as do not, singly or in the
aggregate, materially affect the value of such property and do not
interfere with the use made and proposed to be made of such investment,
except as otherwise described in or contemplated by the Prospectus.
(19) Compliance with Cuba Act. The Company has complied
with, and is and will be in compliance with, the provisions of that
certain Florida act relating to disclosure of doing business with Cuba,
codified as Section 517.075 of the Florida statutes, and the rules and
regulations thereunder (collectively, the "Cuba Act") or is exempt
therefrom.
(20) Investment Company Act. Neither the Company nor any
of the Company's subsidiaries is, or upon the issuance and sale of the
Securities as herein contemplated and the application of the net
proceeds therefrom as described in the Prospectus will become, an
"investment company" or an entity "controlled" by an "investment
company" as such terms are defined in the Investment Company Act of
1940, as amended (the "1940 Act").
(21) Environmental Laws. Except as described in the
Prospectus and except as would not, singly or in the aggregate, result
in a Material Adverse Effect, the Company is not aware of (i) any
violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any
judicial or administrative interpretation thereof, including any
judicial or administrative order, consent, decree or judgment, relating
to pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials (collectively, "Environmental
Laws"), or (ii) any pending or threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law, relating to any real property
providing direct or indirect security for the Company's investments.
(22) Forward Looking Statements. The information contained
in the Registration Statement, the Prospectus and the documents
incorporated by reference therein regarding the Company's expectations,
plans and intentions, and any other information that constitutes
"forward-looking" information within the meaning of the 1933 Act and
the 1934 Act were made by the Company on a reasonable basis and reflect
the Company's good faith belief and/or estimate of the matters
described therein.
(23) Internal Controls.
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(i) The Company maintains a system of internal
accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance
with management's general or specific authorization; (B)
transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted
accounting principles; and (C) the recorded assets are
compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(ii) Based on the evaluation of its disclosure
controls and procedures, the Company is not aware of (A) any
significant deficiency in the design or operation of internal
controls which could adversely affect the Company's ability to
record, process, summarize and report financial data or any
material weaknesses in internal controls; or (B) any fraud,
whether or not material, that involves management or other
employees who have a significant role in the Company's
internal controls.
(iii) Since the date of the most recent evaluation
of such disclosure controls and procedures, there have been no
significant changes in internal controls or in other factors
that could significantly affect internal controls, including
any corrective actions with regard to significant deficiencies
and material weaknesses.
(24) Insurance. The Company and each of the subsidiaries
carry, or are covered by, insurance in such amounts and covering such
risks as is adequate for the conduct of their respective businesses and
the value of their respective properties and as is customary for
companies engaged in similar industries. All material policies of
insurance insuring the Company or any subsidiary or any of their
respective businesses, assets, employees, officers and directors are in
full force and effect, and the Company and the subsidiaries are in
compliance with the terms of such policies in all material respects.
There are no material claims by the Company or any subsidiary under any
such policy or instrument as to which an insurance company is denying
liability or defending under a reservation of rights clause.
(25) Broker's Fees. Other than as contemplated by this
Agreement, the Company has not incurred any liability for any finder's
or broker's fee, or agent's commission in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(26) No Illegal Payments. No payments or inducements have
been made or given, directly or indirectly, to any federal, state or
local official or candidate for, any federal, state or local office in
the United States or foreign offices by the Company or any subsidiary,
by any of their officers, directors, employees or agents or, to the
knowledge of the Company, by any other person in connection with any
opportunity, contract, agreement, permit, certificate, consent, order,
approval, waiver or other authorization relating to the business of the
Company or any subsidiary, except for such payments or inducements as
were lawful under applicable laws, rules and regulations. Neither the
10
Company nor any subsidiary, nor, to the knowledge of the Company, any
director, officer, agent, employee or other person associated with or
acting on behalf of the Company or any subsidiary, (i) has used any
corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expense relating to political activity; (ii) made any
direct or indirect unlawful payment to any government official or
employee from corporate funds; (iii) violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977; or (iv) made
any bribe, unlawful rebate, payoff, influence payment, kickback or
other unlawful payment in connection with the business of the Company
or any subsidiary.
(27) Compliance with Xxxxxxxx-Xxxxx Act of 2002. No
relationship, direct or indirect, exists between or among any of the
Company or any affiliate of the Company, on the one hand, and any
director, officer, stockholder, customer or supplier of the Company or
any affiliate of the Company, on the other hand, which is required by
the 1933 Act or the 1933 Act Regulations to be described in the
Registration Statement and the Prospectus which is not so described or
is not described as required. There are no outstanding loans, advances
(except normal advances for business expenses in the ordinary course of
business) or guarantees of indebtedness by the Company to or for the
benefit of any of the officers or directors of the Company or its
Subsidiaries or any of their respective family members, except as
disclosed in the Registration Statement and the Prospectus. Neither the
Company nor any of its Subsidiaries has, in violation of the
Xxxxxxxx-Xxxxx Act of 2002, directly or indirectly, extended or
maintained credit, arranged for the extension of credit, or renewed an
extension of credit, in the form of a personal loan to or for any
director or executive officer of the Company or any of its
Subsidiaries.
(28) Sales Material. Any advertising, sales literature or
other promotional material or information (including "prospectus
wrappers," "broker kits," "road show slides" and "road show scripts")
authorized or prepared by, or with the approval of, the Company and
used (whether in person or electronically) in connection with the
public offering of the Securities (collectively, "Sales Material") does
not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances under which they were
made not misleading. Moreover, all Sales Material complied and will
comply in all material respects with the applicable requirements of the
1933 Act, the 1940 Act, the 1933 Act Rules and Regulations and the 1934
Act Regulations, as applicable, and the rules and interpretations of
the National Association of Securities Dealers, Inc.
(b) Certificates. The Company acknowledges and agrees that any
certificate signed by an officer of the Company delivered to the Underwriters or
counsel to the Underwriters shall be deemed a representation and warranty given
under Section 1(a) hereof.
2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each
11
Underwriter, severally and not jointly, and each Underwriter, severally and not
jointly, agrees to purchase from the Company, at the price per share set forth
in Schedule C, the number of Initial Securities set forth in Schedule A opposite
the name of such Underwriter, plus any additional number of Initial Securities
which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 9 hereof, bears to the total number of Initial Securities,
subject, in each case, to such adjustments among the Underwriters as the
Representatives in their sole discretion shall make to eliminate any sales or
purchases of fractional securities.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the Underwriters, severally
and not jointly, to purchase up to an additional 195,000 shares of Common Shares
at the price per share set forth in Schedule C, less an amount per share equal
to any dividends or distributions declared by the Company and payable on the
Initial Securities but not payable on the Option Securities. The option hereby
granted will expire at 4:30 P.M. on March 9, 2004 and may be exercised in whole
or in part from time to time only for the purpose of covering over-allotments
which may be made in connection with the offering and distribution of the
Initial Securities upon notice by the Underwriters to the Company (the "Option
Exercise Notice") setting forth the number of Option Securities as to which the
several Underwriters are then exercising the option and the time and date of
payment and delivery for such Option Securities. Any such time and date of
delivery (a "Date of Delivery") shall be determined by the Underwriters, but
shall not be later than three full business days after the exercise of said
option, nor in any event prior to the Closing Time, as hereinafter defined. If
the option is exercised as to all or any portion of the Option Securities, each
of the Underwriters, acting severally and not jointly, will purchase that
proportion of the total number of Option Securities then being purchased which
the number of Initial Securities set forth in Schedule A opposite the name of
such Underwriter bears to the total number of Initial Securities, subject in
each case to such adjustments as the Representatives in their discretion shall
make to eliminate any sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of, the
Initial Securities shall be made at the offices of Xxxxx Xxxxxxx LLP, 0000 Xxxxx
Xxxxxx, Xxxxxxxxx, XX 00000, or at such other place as shall be agreed upon by
the Underwriters and the Company, at 9:00 A.M. (Eastern time) on the third
(fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any given day)
business day after the date hereof (unless postponed in accordance with the
provisions of Section 9), or such other time not later than 2:30 P.M. on March
12, 2004 as shall be agreed upon by the Underwriters and the Company (such time
and date of payment and delivery being herein called "Closing Time"). In
addition, in the event that any or all of the Option Securities are purchased by
the Underwriters, payment of the purchase price for, and delivery of
certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Underwriters and
the Company, on each Date of Delivery as specified in the Option Exercise
Notice.
Payment shall be made to the Company by wire transfer of immediately
available funds to bank accounts designated by the Company against delivery to
each Underwriter of the Securities to be purchased by it.
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(d) Denominations; Registration. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such denominations and
registered in such names as the Underwriters may request in writing at least one
full business day before the Closing Time or the relevant Date of Delivery, as
the case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Underwriters in The City of New York not later than 10:00 A.M. (Eastern time) on
the business day prior to the Closing Time or the relevant Date of Delivery, as
the case may be.
3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b), will comply with the requirements of Rule 430A
or Rule 434, as applicable, and will notify the Underwriters immediately, and
confirm the notice in writing, (1) when any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (2) of the receipt
of any comments from the Commission, (3) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus or for additional information, and (4) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus, or of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes. The Company will promptly effect the
filings necessary pursuant to Rule 424(b) and will take such steps as it deems
necessary to ascertain promptly whether the form of prospectus transmitted for
filing under Rule 424(b) was received for filing by the Commission and, in the
event that it was not, it will promptly file such prospectus. The Company will
make every reasonable effort to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof at the earliest possible
moment.
(b) Filing of Amendments. The Company will give the Underwriters notice
of its intention to file or prepare any amendment to the Registration Statement
(including any filing under Rule 462(b)), any Term Sheet or any amendment,
supplement or revision to either the prospectus included in the Registration
Statement at the time it became effective or to the Prospectus, whether pursuant
to the 1933 Act, the 1934 Act or otherwise, will furnish the Underwriters with
copies of any such documents a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file or use any such document to
which the Underwriters or counsel for the Underwriters shall object.
(c) Delivery of Registration Statements. The Company has furnished or
will deliver to the Underwriters and counsel for the Underwriters, without
charge, signed copies of the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated or deemed to be incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver to the Underwriters, without charge, a conformed
copy of the Registration Statement as originally filed and of each amendment
thereto (without exhibits) for each of the Underwriters. The copies of the
Registration Statement and each amendment thereto furnished
13
to the Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to XXXXX, except to the extent
permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus, if
applicable, as such Underwriter reasonably requested, and the Company hereby
consents to the use of such copies for purposes permitted by the 1933 Act. The
Company will furnish to each Underwriter, without charge, during the period when
the Prospectus is required to be delivered under the 1933 Act or the 1934 Act,
such number of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
XXXXX, except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act
Regulations so as to permit the completion of the distribution of the Securities
as contemplated in this Agreement and in the Prospectus. If at any time when the
Prospectus is required by the 1933 Act to be delivered in connection with sales
of the Securities, any event shall occur or condition shall exist as a result of
which it is necessary, in the opinion of counsel for the Underwriters or for the
Company, to amend the Registration Statement or amend or supplement the
Prospectus in order that the Prospectus will not include any untrue statements
of a material fact or omit to state a material fact necessary in order to make
the statements therein not misleading in the light of the circumstances existing
at the time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of such counsel, at any such time to amend the Registration Statement or
amend or supplement the Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare and
file with the Commission, subject to Section 3(b), such amendment or supplement
as may be necessary to correct such statement or omission or to make the
Registration Statement or the Prospectus comply with such requirements, and the
Company will furnish to the Underwriters such number of copies of such amendment
or supplement as the Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities for offering and
sale under the applicable securities laws of such states and other jurisdictions
as the Underwriters may designate and to maintain such qualifications in effect
for a period of not less than one year from date of the Prospectus; provided,
however, that the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to subject
itself to taxation in respect of doing business in any jurisdiction in which it
is not otherwise so subject. In each jurisdiction in which the Securities have
been so qualified, the Company will file such statements and reports as may be
required by the laws of such jurisdiction to continue such qualification in
effect for a period of not less than one year from the effective date of the
Registration Statement.
(g) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an
14
earnings statement for the purposes of, and to provide the benefits contemplated
by, the last paragraph of Section 11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received by
it from the sale of the Securities in the manner specified in the Prospectus
under "Use of Proceeds".
(i) Listing. The Company will use its best efforts to effect the
listing of the Securities on the New York Stock Exchange.
(j) Restriction on Sale of Securities. During a period of 90 days from
the date of the Prospectus, the Company will not, without the prior written
consent of the Underwriters, (1) directly or indirectly, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of any share of Common Shares or any securities convertible
into or exercisable or exchangeable for Common Shares or file any registration
statement under the 1933 Act with respect to any of the foregoing or (2) enter
into any swap or any other agreement or any transaction that transfers, in whole
or in part, directly or indirectly, the economic consequence of ownership of the
Common Shares, whether any such swap or transaction described in clause (1) or
(2) above is to be settled by delivery of Common Shares or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to (i)
the Securities to be sold hereunder, (ii) any Common Shares issued by the
Company upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof and referred to in the Prospectus, (iii)
any Common Shares issued or options to purchase Common Shares granted pursuant
to existing employee benefit plans of the Company referred to in the Prospectus,
including but not limited to the 1996 Share Incentive Plan, the 1998 Share
Incentive Plan and the 2001 Share Incentive Plan or (iv) any Common Shares
issued pursuant to any non-employee director stock plan or dividend reinvestment
plan.
(k) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
(l) Payment of Expenses. The Company will pay or cause to be paid all
expenses incident to the performance of their obligations under this Agreement,
including (1) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, (2) the preparation, printing and delivery to the
Underwriters of this Agreement, an Agreement Among Underwriters, if any, and
such other documents as may be required in connection with the offering,
purchase, sale, issuance or delivery of the Securities, (3) the preparation,
issuance and delivery of the certificates for the Securities to the
Underwriters, including any stock or other transfer taxes and any stamp or other
duties payable upon the sale, issuance or delivery of the Securities to the
Underwriters, (4) the fees and disbursements of the Company's counsel,
accountants and other advisors, (5) the qualification of the Securities under
securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue
15
Sky Survey and any supplement thereto, (6) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, any Term Sheets and of
the Prospectus and any amendments or supplements thereto, (7) the preparation,
printing and delivery to the Underwriters of copies of the Blue Sky Survey and
any supplement thereto, (8) the fees and expenses of any transfer agent or
registrar for the Securities and (9) the fees and expenses incurred in
connection with the listing of the Securities on the New York Stock Exchange.
(m) Termination of Agreement. If this Agreement is terminated by the
Underwriters in accordance with the provisions of Section 4 or Section 8(a)(1)
or Section 10 hereof, the Company shall reimburse the Underwriters for all of
their out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
(n) No Stabilizing Activities. During a period of 90 days from the date
of the Prospectus, the Company will not take, directly or indirectly, any action
designed to cause or result in, or that has constituted or might reasonably be
expected to constitute, the stabilization or manipulation of the price of any
securities of the Company; provided, however, that notwithstanding the
foregoing, the Company shall be permitted to engage in its previously announced
share repurchase program in accordance with applicable law.
4. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any subsidiary of the Company
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:
(a) Effectiveness of Registration Statement. The Registration Statement
has become effective and at Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act or proceedings therefor initiated or threatened by the Commission, and
any request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the
Underwriters. A prospectus containing the Rule 430A Information shall have been
filed with the Commission in accordance with Rule 424(b) (or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A) or, if the Company
has elected to rely upon Rule 434, a Term Sheet shall have been filed with the
Commission in accordance with Rule 424(b).
(b) Opinion of Counsel for Company. At Closing Time, the Underwriters
shall have received the favorable opinion, dated as of Closing Time, of Xxxxxxxx
Chance US LLP and Xxxxxxxxx, Xxxxxxx & Xxxxx, LLP, counsel for the Company, in
form and substance satisfactory to counsel for the Underwriters, together with
signed or reproduced copies of such letter for the Underwriters to the effect
set forth in Exhibits A-1 and A-2 hereto, respectively, and to such further
effect as counsel to the Underwriters may reasonably request. In giving such
opinion Xxxxxxxxx, Xxxxxxx & Xxxxx, LLP, may rely, as to all matters governed by
the laws of jurisdictions other than the law of the State of Maryland, upon the
opinion of Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx LLP. Such counsel may also state
that, insofar as such opinion involves
16
factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and its subsidiaries and certificates of
public officials.
(c) Opinion of Counsel for Underwriters. At Closing Time, the
Underwriters shall have received the favorable opinion, dated as of Closing
Time, of Xxxxx Xxxxxxx LLP, counsel for the Underwriters with respect to the
matters set forth in clauses (1), (2), (4), (5) (solely as to preemptive or
other similar rights arising by operation of law or under the charter or by-laws
of the Company), (6), (7), (10), (11), (13) (solely as to the information in the
Prospectus under "Description of Common Shares") and the last two paragraphs of
Exhibit A-1 hereto. In giving such opinion such counsel may rely, as to all
matters governed by the laws of jurisdictions other than the law of the State of
New York and the federal law of the United States and the General Corporation
Law of the State of Delaware, upon the opinions of counsel satisfactory to the
Underwriters and with the consent of counsel issuing such opinions. Such counsel
may also state that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of the
Company and its subsidiaries and certificates of public officials.
(d) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Underwriters shall have
received a certificate of the President or a Executive Vice President of the
Company and of the chief financial or chief accounting officer of the Company,
dated as of Closing Time, to the effect that (1) there has been no such material
adverse change, (2) the representations and warranties in Section 1(a) hereof
are true and correct with the same force and effect as though expressly made at
and as of Closing Time, (3) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or prior to
Closing Time, and (4) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are pending or, to the knowledge of such officers, are
contemplated by the Commission.
(e) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Underwriters shall have received from PricewaterhouseCoopers LLP
a letter dated such date, in form and substance satisfactory to the Underwriters
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in or incorporated by
reference into the Registration Statement and the Prospectus.
(f) Bring-down Comfort Letter. At Closing Time, the Underwriters shall
have received from PricewaterhouseCoopers LLP a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (f) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.
17
(g) Approval of Listing. At Closing Time, the Securities shall have
been approved for listing on the New York Stock Exchange, subject only to
official notice of issuance.
(h) Lock-up Agreements. At the date of this Agreement, the Underwriters
shall have received an agreement substantially in the form of Exhibit B hereto
signed by the persons listed on Schedule D hereto.
(i) Conditions to Purchase of Option Securities. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Securities, the representations and warranties
of the Company contained herein and the statements in any certificates furnished
by the Company, any subsidiary of the Company hereunder shall be true and
correct as of each Date of Delivery and, at the relevant Date of Delivery, the
Underwriters shall have received:
(1) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Executive Vice President of the Company
and of the chief financial or chief accounting officer of the Company
confirming that the certificate delivered at the Closing Time pursuant
to Section 4(d) hereof remains true and correct as of such Date of
Delivery.
(2) Opinion of Counsel for Company. The favorable opinion of
Xxxxxxxx Chance US LLP and Xxxxxxxxx Xxxxxxx & Xxxxx, LLP, counsel for
the Company, in form and substance satisfactory to counsel for the
Underwriters, dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise to
the same effect as the opinion required by Section 4(b) hereof.
(3) Opinion of Counsel for Underwriters. The favorable opinion
of Xxxxx Xxxxxxx LLP, counsel for the Underwriters, dated such Date of
Delivery, relating to the Option Securities to be purchased on such
Date of Delivery and otherwise to the same effect as the opinion
required by Section 4(c) hereof.
(4) Bring-down Comfort Letter. A letter from
PricewaterhouseCoopers LLP, in form and substance satisfactory to the
Underwriters and dated such Date of Delivery, substantially in the same
form and substance as the letter furnished to the Underwriters pursuant
to Sections 4(e) and (f) hereof, except that the "specified date" in
the letter furnished pursuant to this paragraph shall be a date not
more than five days prior to such Date of Delivery.
(j) Additional Documents. At Closing Time and at each Date of Delivery
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be satisfactory in form and substance to the
Underwriters and counsel for the Underwriters.
18
(k) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option Securities
on a Date of Delivery which is after the Closing Time, the obligations of the
several Underwriters to purchase the relevant Option Securities, may be
terminated by the Underwriters by notice to the Company at any time at or prior
to Closing Time or such Date of Delivery, as the case may be, and such
termination shall be without liability of any party to any other party except as
provided in Section 3 and except that Sections 1, 3(l) and (m), 5, 6 and 7 shall
survive any such termination and remain in full force and effect.
5. Indemnification.
(a) Indemnification of Underwriters. The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls either
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(1) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(2) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided
that (subject to Section 5(d) below) any such settlement is effected
with the written consent of the Company;
(3) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any alleged act or
failure to act by either 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, liability,
claim, damage or action arising out of or based upon matters covered by
clause (1) or (2) above (provided, however, that the Company shall not
be liable under this clause (3) to the extent that it is determined in
a final judgment by a court of competent jurisdiction that such loss,
liability, claim, damage or action resulted directly from any such acts
or failures to act undertaken or omitted to be taken by such
Underwriter through its gross negligence or willful misconduct);
(4) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material
19
fact contained in the Sales Material, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading; and
(5) against any and all expense whatsoever, as incurred
(including the reasonable fees and disbursements of any one counsel
chosen by the Underwriters), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under (1), (2), (3) or (4)
above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by
either Underwriter expressly for use in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) as described in Section 17 below.
(b) Indemnification of Company, Directors and Officers. Each
Underwriter agrees to indemnify and hold harmless the Company, 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 1933 Act
or Section 20 of the 1934 Act, against any and all loss, liability, claim,
damage, and expense described in the indemnity contained in subsection (1) of
this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
expressly for use in the Registration Statement (or any amendment thereto) or
such preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) as described in Section 17 below.
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 5(a) above,
counsel to the indemnified parties shall be selected by the Underwriters, and,
in the case of parties indemnified pursuant to Section 5(b) above, counsel to
the indemnified parties shall be selected by the Company. An indemnifying party
may participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the
20
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 5 or Section 6 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 5(a)(2) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and shall not have objected thereto and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
6. Contribution. If the indemnification provided for in Section 5
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (a) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other hand from the offering of the Securities
pursuant to this Agreement or (b) if the allocation provided by clause (a) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (a) above but also the
relative fault of the Company on the one hand and of the Underwriters on the
other hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, 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 hand in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company
and the total underwriting discount received by the Underwriters, in each case
as set forth on the cover of the Prospectus, or, if Rule 434 is used, the
corresponding location on the Term Sheet bear to the aggregate initial public
offering price of the Securities as set forth on such cover.
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The relative fault of the Company on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 6 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 6. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 6 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 6, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 6, each person, if any, who controls
either Underwriter within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 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 within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as the Company. The
Underwriters' respective obligations to contribute pursuant to this Section 6
are several in proportion to the number of Initial Securities set forth opposite
their respective names in Schedule A hereto and not joint.
7. Representations, Warranties and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of either Underwriter or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Securities to the Underwriters.
8. Termination of Agreement.
22
(a) Termination; General. The Underwriters may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (1)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus (exclusive
of any supplement or amendment pursuant to Section 3(e) of this Agreement), any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (2) if there has occurred any material adverse
change in the financial markets in the United States, any outbreak of
hostilities or escalation thereof, declaration of war or national emergency, or
other calamity or crisis or any change or development involving a prospective
change in national or international political, financial or economic conditions,
in each case the effect of which is such as to make it, in the judgment of the
Underwriters, impracticable or inadvisable to market the Securities or to
enforce contracts for the sale of the Securities, or (3) if trading in any
securities of the Company has been suspended or materially limited by the
Commission or the New York Stock Exchange, or if trading generally on the
American Stock Exchange or the New York Stock Exchange or in the Nasdaq National
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices have been required, by
any of said exchanges or by such system or by order of the Commission, the
National Association of Securities Dealers, Inc. or any other governmental
authority, or a material disruption has occurred in commercial banking or
securities settlement or clearance services in the United States, or (4) if a
banking moratorium has been declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided, further that
Sections 1, 6, 7 and 8 shall survive such termination and remain in full force
and effect.
9. Default by One or More of the Underwriters. If either Underwriter
(the "Defaulting Underwriter," and the other Underwriter, if not also so failing
to purchase, the "Non-Defaulting Underwriter") shall fail at Closing Time or a
Date of Delivery to purchase the Securities which it is obligated to purchase
under this Agreement (the "Defaulted Securities"), then:
(a) if the number of Defaulted Securities does not exceed 10% of the
number of Securities to be purchased on such date, the Non-Defaulting
Underwriter shall be obligated to purchase the full amount thereof, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
Securities to be purchased on such date, this Agreement or, with respect to any
Date of Delivery which occurs after the Closing Time, the obligation of the
Underwriters to purchase and of the Company to sell the Option Securities to be
purchased and sold on such Date of Delivery shall terminate without liability on
the part of the Non-Defaulting Underwriter.
No action taken pursuant to this Section shall relieve the Defaulting
Underwriter from liability in respect of its default.
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In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Company to sell the relevant Option Securities,
as the case may be, either (i) the Non-Defaulting Underwriter or (ii) the
Company shall have the right to postpone Closing Time or the relevant Date of
Delivery, as the case may be, for a period not to extend beyond March 12, 2004
in order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements. As used herein, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 9.
10. Default by the Company. If the Company shall fail at the Closing
Time or at the Date of Delivery to sell the number of Securities that it is
obligated to sell hereunder, then this Agreement shall terminate without any
liability on the part of any nondefaulting party; provided, however, that the
provisions of Sections 1, 3, 5, 6, 7 and 10 shall remain in full force and
effect. No action taken pursuant to this Section shall relieve the Company from
liability, if any, in respect of such default.
11. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication. Notices to the Underwriters shall be
directed to RBC Capital Markets Corporation, 0 Xxxxxxx Xxxxx, 000 Xxxxxxxx, Xxx
Xxxx, XX 00000-0000, attention of Xxx Xxxxx, Head of US Equity Syndicate, and to
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated, 000 Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000,
attention of: Xxxxxxx X. Xxxx, Vice President, with a copy to Xxxxx Xxxxxxx LLP,
0000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, attention of X. X. Xxxxx, Xx.;
notices to the Company shall be directed to it at 000 Xxxxx Xxxxxxx Xxxxxx,
Xxxxx 000, Xxxxxxxxx, XX 00000, attention of Xxxxxxx X. Xxxxxxxx, Chief
Financial Officer, with a copy to Xxxxxxxx Chance US, LLP, 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, attention of Xxxxx X. Xxxxxx.
12. Parties. This Agreement shall each inure to the benefit of and be
binding upon the Underwriters, the Company and their respective successors.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other than the Underwriters,
the Company and their respective successors and the controlling persons and
officers and directors referred to in Sections 5 and 6 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Underwriters, the Company and their respective
successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Securities from either Underwriter shall be deemed
to be a successor by reason merely of such purchase.
13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED TIMES
OF DAY REFER TO NEW YORK CITY TIME.
24
14. Effect of Headings. The Article and Section headings herein and the
Table of Contents are for convenience only and shall not affect the construction
hereof.
15. Amendments and Waivers. This Agreement may only be amended or
modified in writing, signed by all of the parties hereto, and no condition
herein (express or implied) may be waived unless waived in writing by each party
whom the condition is meant to benefit.
16. Entire Agreement. 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.
17. Information Provided by Underwriters. The Company and the
Underwriters acknowledge and agree that the only information furnished or to be
furnished by either Underwriter to the Company for inclusion in any Prospectus,
preliminary prospectus or the Registration Statement consists of the information
contained in the "Underwriting" section of the Prospectus (a) under the first
paragraph under the heading "Commissions and Discounts," and (b) under the
heading "Price Stabilization and Short Positions."
18. Tax Matters. Notwithstanding any other provision of this Agreement,
from the commencement of discussions with respect to the transactions
contemplated hereby, the Company (and each employee, representative or other
agent of the Company) may disclose to any and all persons, without limitation of
any kind, the tax treatment and tax structure (as such terms are used in
Sections 6011, 6111 and 6112 of the U.S. Code and the Treasury Regulations
promulgated thereunder) of the transactions contemplated by this Agreement and
all materials of any kind (including opinions or other tax analyses) that are
provided relating to such tax treatment and tax structure.
25
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the Underwriters and the Company in accordance with its terms.
Very truly yours,
MUNICIPAL MORTGAGE & EQUITY, LLC
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice
President and Chief
Financial Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
RBC CAPITAL MARKETS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
XXXX XXXXX XXXX XXXXXX, INCORPORATED
By: /s/ Xxxxx X. Xxxxxxx, Xx.
------------------------------------
Name: Xxxxx X. Xxxxxxx, Xx.
Title: Managing Director
26
