EXHIBIT 1.1
WILSHIRE FINANCIAL SERVICES GROUP INC.
3,500,000 Shares/1/
Common Stock
UNDERWRITING AGREEMENT
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February ___, 1998
PRUDENTIAL SECURITIES INCORPORATED
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
BLACK & COMPANY, INC.
As Representatives of the several Underwriters
c/o Prudential Securities Incorporated
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Each of the Selling Securityholders (as defined below) and Wilshire
Financial Services Group Inc., a Delaware corporation (the "Company"), hereby
confirms its agreement with the several underwriters named in Schedule 1 hereto
(the "Underwriters"), for whom you have been duly authorized to act as
representatives (in such capacities, the "Representatives"), as set forth below.
If you are the only Underwriters, all references herein to the Representatives
shall be deemed to be to the Underwriters.
1. Securities. Subject to the terms and conditions herein contained, the
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Company proposes to issue and sell to the several Underwriters an aggregate of
Three Million Five Hundred Thousand (3,500,000) shares (the "Firm Securities")
of the Company's Common Stock, par value $ .01 per share ("Common Stock"). In
addition, certain selling stockholders, Xxxxxx X. Xxxxxxxxxx ("Wiederhorn"),
Xxxxxxxx X. Xxxxxxxxxx ("Xxxxxxxxxx") TTMM, L.P., a California limited
partnership, and Xxxxxxxxxx Family Limited Partnership, a Delaware limited
partnership, (unless otherwise described herein, individually, a "Selling
Securityholder" and collectively, the "Selling Securityholders") propose to sell
to the several Underwriters not more
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/1/ Plus an option to purchase from certain selling stockholders, Xxxxxx X.
Xxxxxxxxxx ("Xxxxxxxxxx"), TTMM, L.P., a California limited partnership,
Xxxxxxxx X. Xxxxxxxxxx ("Xxxxxxxxxx") and Xxxxxxxxxx Family Limited
Partnership, a Delaware limited partnership, up to 525,000 additional
shares to cover over-allotments.
than Five Hundred Twenty Five Thousand (525,000) additional shares of Common
Stock, if requested by the Representatives, as provided in Section 4 of this
Agreement. Any and all shares of Common Stock to be purchased by the
Underwriters pursuant to such option are referred to herein as the "Option
Securities", and the Firm Securities and any Option Securities are collectively
referred to herein as the "Securities." Wiederhorn and Xxxxxxxxxx are referred
to herein collectively as the "Principal Stockholders."
2. Representations and Warranties of the Company and the Principal
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Stockholders. The Company, Wiederhorn and Xxxxxxxxxx jointly and severally
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represent and warrant to, and agree with, each of the several Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-42779) with respect
to the Securities, including a prospectus subject to completion, has been filed
by the Company with the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Act"), and one or more
amendments to such registration statement may have been so filed. After the
execution of this Agreement, the Company will file with the Commission either
(i) if such registration statement, as it may have been amended, has been
declared by the Commission to be effective under the Act, either (A) if the
Company relies on Rule 434 under the Act, a Term Sheet (as hereinafter defined)
relating to the Securities, that shall identify the Preliminary Prospectus (as
hereinafter defined) that it supplements containing such information as is
required or permitted by Rules 434, 430A and 424(b) under the Act or (B) if the
Company does not rely on Rule 434 under the Act, a prospectus in the form most
recently included in an amendment to such registration statement (or, if no such
amendment shall have been filed, in such registration statement), with such
changes or insertions as are required by Rule 430A under the Act or permitted by
Rule 424(b) under the Act, and in the case of either clause (i)(A) or (i)(B) of
this sentence as have been provided to and approved by the Representatives prior
to the execution of this Agreement, or (ii) if such registration statement, as
it may have been amended, has not been declared by the Commission to be
effective under the Act, an amendment to such registration statement, including
a form of prospectus, a copy of which amendment has been furnished to and
approved by the Representatives prior to the execution of this Agreement. The
Company may also file a related registration statement with the Commission
pursuant to Rule 462(b) under the Act for the purpose of registering certain
additional Securities, which registration shall be effective upon filing with
the Commission. As used in this Agreement, the term "Original Registration
Statement" means the registration statement initially filed relating to the
Securities, as amended at the time when it was or is declared 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 "Rule 462(b) Registration
Statement" means any registration statement filed with the Commission pursuant
to Rule 462(b) under the Act (including the Registration Statement and any
Preliminary Prospectus or Prospectus incorporated therein at the time such
Registration Statement becomes effective); the term "Registration Statement"
includes both the Original Registration Statement and any Rule 462(b)
Registration Statement; 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:
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(A) if the Company relies on Rule 434 under the Act, the Term Sheet
relating to the Securities that is first filed pursuant to Rule 424(b)(7)
under the Act, together with the Preliminary Prospectus identified therein
that such Term Sheet supplements;
(B) if the Company does not rely on Rule 434 under the Act, the
prospectus first filed with the Commission pursuant to Rule 424(b) under
the Act; or
(C) if the Company does not rely on Rule 434 under the Act and if no
prospectus is required to be filed pursuant to Rule 424(b) under the Act,
the prospectus included in the Registration Statement;
and the term "Term Sheet" means any term sheet that satisfies the requirements
of Rule 434 under the Act. Any reference herein to the "date" of a Prospectus
that includes a Term Sheet shall mean the date of such Term Sheet.
(b) The Commission has not issued any order preventing or suspending use
of any Preliminary Prospectus. When any Preliminary Prospectus was filed with
the Commission it (i) contained all statements required to be stated therein in
accordance with, and complied in all material respects with the requirements of,
the Act and the rules and regulations of the Commission thereunder (other than
Rule 430A information) and (ii) did 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; provided, however, this representation and warranty with
respect to the Preliminary Prospectus shall not inure to the benefit of any
Underwriter (or to the benefit of any person controlling such Underwriter) to
the extent that any omission or alleged untrue statement was corrected in the
Prospectus. When the Registration Statement or any amendment thereto was or is
declared effective, it (i) contained or will contain all statements required to
be stated therein in accordance with, and complied or will comply in all
material respects with the requirements of, the Act and the rules and
regulations of the Commission thereunder and (ii) 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 Term Sheet that is a part thereof or any amendment or supplement to the
Prospectus is filed with the Commission pursuant to Rule 424(b) (or, if the
Prospectus or 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
on the Firm Closing Date and any Option Closing Date (both as hereinafter
defined), the Prospectus, as amended or supplemented at any such time, (i)
contained or will contain all statements required to be stated therein in
accordance with, and complied or will comply in all material respects with the
requirements of, the Act and the rules and regulations of the Commission
thereunder and (ii) 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 (b) 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
Representatives specifically for use therein.
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(c) If the Company has elected to rely on Rule 462(b) and the Rule 462(b)
Registration Statement has not been declared effective (i) the Company has filed
a Rule 462(b) Registration Statement in compliance with, and that is effective
upon filing pursuant to, Rule 462(b) and has received confirmation of its
receipt and (ii) the Company has given irrevocable instructions for transmission
of the applicable filing fee in connection with the filing of the Rule 462(b)
Registration Statement, in compliance with Rule 111 promulgated under the Act or
the Commission has received payment of such filing fee.
(d) The Company and each of its direct and indirect subsidiaries as
described in Exhibit 21.1 to the Registration Statement (individually, a
"Subsidiary" and collectively, the "Subsidiaries") other than its saving bank
subsidiary First Bank of Xxxxxxx Hills, (the "Savings Bank"), 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 requires
such qualification, except where the failure to be so qualified does not amount
to a material liability or disability to the Company and its subsidiaries, taken
as a whole.
(e) The Savings Bank has been chartered as a federal savings bank under
the laws of the United States of America, and its charter is in full force and
effect; the Savings Bank has full corporate power and corporate authority to own
its properties and conduct its business as described in the Prospectus or, if
the Prospectus is not in existence, the most recent Preliminary Prospectus. The
Savings Bank is a member of the Federal Home Loan Bank System; and the savings
accounts of depositors in the Savings Bank are insured by the Savings
Association Insurance Fund (the "SAIF") of the Federal Deposit Insurance
Corporation (the "FDIC") to the fullest extent permitted by law and the rules
and regulations of the FDIC, and no proceedings for the termination of such
insurance are pending, or to the best of the Company's knowledge, threatened.
(f) The Company and the Subsidiaries (other than the Savings Bank) have
full power (corporate and other) to own or lease their respective properties and
conduct their respective businesses as described in the Registration Statement
and the Prospectus or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus; and the Company has full power (corporate and other) to
enter into this Agreement and to carry out all the terms and provisions hereof
to be carried out by it.
(g) The execution and delivery of this Agreement have been duly authorized
by the Company and this Agreement has been duly executed and delivered by the
Company, and is the valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms except as may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
similar laws affecting creditor's rights generally, and by general principals of
equity. No action by the stockholders of the Company (other than the action of
the Selling Securityholders) is required by any corporate law or any rule of the
National Associations of Securities Dealers, Inc. (the "NASD") to authorize the
execution, delivery and performance of this Agreement by the Company in
accordance with its terms nor is any such action necessary to
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perform the transactions as described in the section entitled "Use of Proceeds"
in the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(h) The issuance, offering and sale of the Securities to the Underwriters
by the Company pursuant to this Agreement, the compliance by the Company with
the other provisions of this Agreement and the consummation of the other
transactions herein contemplated do not (A) require the consent, approval,
authorization, registration or qualification of or with any governmental
authority, except such as have been obtained, such as may be required under
state securities or blue sky laws and, if the registration statement filed with
respect to the Securities (as amended) is not effective under the Act as of the
time of execution hereof, such as may be required (and shall be obtained as
provided in this Agreement) under the Act, or (B) conflict with or result in a
material breach or violation of any of the terms and provisions of, or
constitute a material default under, any material license, indenture, mortgage,
deed of trust, lease or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries or any of their respective properties are bound, including but not
limited to the Indenture for the 13% Notes Due 2004, dated as of December 24,
1996 between the Company and Bankers Trust Company, as Trustee, or the Indenture
for the 13% Series A Notes Due 2004 dated as of August 15, 1997 between the
Company and Bankers Trust Company, as Trustee, or the charter documents or by-
laws of the Company or any of its subsidiaries, or any statute or any judgment,
decree, order, rule or regulation of any court or other governmental authority
or any arbitrator applicable to the Company or any of its subsidiaries.
(i) The Company has an authorized, issued and outstanding capitalization
as set forth in the Prospectus or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus. All of the issued shares of capital stock of
the Company have been duly authorized and validly issued and are fully paid and
nonassessable. The Firm Securities and the Option Securities have been duly
authorized and at the Firm Closing Date or the related Option Closing Date (as
the case may be), after payment therefor in accordance herewith, will be validly
issued, fully paid and nonassessable. No holders of outstanding shares of
capital stock of the Company are entitled as such to any preemptive or other
rights to subscribe for any of the Securities, and no holder of securities of
the Company has any right which has not been fully exercised or waived to
require the Company to register the offer or sale of any securities owned by
such holder under the Act in the public offering contemplated by this Agreement.
(j) The issued shares of capital stock of each of the Subsidiaries have
been duly authorized and validly issued, are fully paid and nonassessable and
are owned beneficially by the Company, or one of the Subsidiaries, free and
clear of any security interests, liens, encumbrances, equities or claims,
excluding the pledge of the stock of one of the Company's European subsidiaries
in connection with an affiliate of Xxxxxxx Xxxxx making an equity investment in
one of the European portfolios.
(k) The capital 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.
(l) Except for the shares of capital stock of the Subsidiaries owned by
the Company and such Subsidiaries, neither the Company nor any such Subsidiary
owns any shares of stock or
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any other equity securities of any corporation or has any equity interest in any
firm, partnership, association or other entity, except for equity investments
which are not material to the Company and its subsidiaries taken as a whole and
which have been disclosed in writing to the Representatives and as described in
or contemplated by the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus).
(m) 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 any of its 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.
(n) The Company and the Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective businesses except
where the failure to possess such certificates, authorizations or permits would
not have a material adverse effect on the condition (financial or otherwise),
business prospects, net worth or results of operations of the Company and its
subsidiaries, taken as a whole ("Material Adverse Effect") and neither the
Company nor any 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 subject of an unfavorable decision, ruling
or finding, would result in a material adverse change in the condition
(financial or otherwise), business prospects, net worth or results of operations
of the Company and its subsidiaries, taken as a whole ("Material Adverse
Change"), except as described in or contemplated by the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus).
(o) The consolidated financial statements and schedules of the Company and
its consolidated subsidiaries 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
its consolidated subsidiaries and the results of operations and changes in
financial condition, as of the dates and 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).
(p) Xxxxxx Xxxxxxxx LLP and Deloitte & Touche LLP, who have certified
certain financial statements of the Company and its consolidated subsidiaries
and delivered their report 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.
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(q) The Company and its subsidiaries are in compliance in all material
respects with all applicable laws, rules, regulations, orders, decrees and
judgments, including those relating to transactions with affiliates.
(r) Neither the Company nor any of its subsidiaries is party to or
otherwise the subject of any consent decree, memorandum of understanding,
written agreement or similar supervisory or enforcement agreement or
understanding with the OTS, the FDIC or any other government authority or agency
responsible for the supervision, regulation or insurance of depository
institutions or their holding companies, other than the amended Cease and Desist
Orders issued to the Savings Bank by the Office of Thrift Supervision (the
"OTS") on October 28, 1997 (the "Cease and Desist Orders"); the Savings Bank is
in compliance in all material respects with the provisions of the Cease and
Desist Orders in effect as of the date hereof; and, to the best of the Company's
knowledge, no further or additional bank regulatory action against the Savings
Bank and/or its directors is threatened.
(s) The Company is not, and upon the sale of the securities as herein
contemplated will not be, an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act").
(t) 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 best of the Company's knowledge, no such proceedings have been
threatened against the Company or any of its Subsidiaries or with respect to any
of their respective properties; and 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.
(u) The Company and its Subsidiaries own or possess, or can acquire on
reasonable terms, all material patents, patent applications, 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 decision, ruling or finding, would have a Material
Adverse Effect.
(v) No breach or default exists, and no event has occurred which, with
notice or lapse of time or both, would constitute a breach or default in the due
performance and observance by the Company or any of the Subsidiaries of any
material term, covenant or condition of any license, 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 any of the
Subsidiaries or any of their respective properties is bound or may be affected
in any material adverse respect with regard to the property, business or
operations of the Company and the Subsidiaries, except for breaches
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or defaults which would not have a Material Adverse Effect, or under the charter
documents or by-laws of the Company or any of its Subsidiaries.
(w) The Company and each of the Subsidiaries have good and marketable
title in fee simple to all items of real property and marketable title to all
personal property owned by each of them, in each case free and clear of any
security interests, liens, encumbrances, equities, claims and other defects,
except such as do not materially and adversely affect 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) and except for deficiencies which singly
or in the aggregate would not have a Material Adverse Effect.
(x) No labor dispute with the employees of the Company or any of its
Subsidiaries exists or is threatened or imminent that could result in a Material
Adverse Change, 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 against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; 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) No Subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such Subsidiary's capital stock, from repaying to the Company
any loans or advances to such Subsidiary from the Company or from transferring
any of such Subsidiary's property or assets to the Company or any other
subsidiary of the Company, except (i) the Savings Bank, pursuant to regulatory
restrictions, and (ii) securitization vehicles of the Company, financing
vehicles of the Company and certain European subsidiaries in connection with the
sale of a 50% equity interest in a European portfolio of Xxxxxxx Xxxxx.
(aa) The Company has filed all foreign, federal, state and local tax
returns that are required to be filed or has requested extensions thereof
(except in any case in which the failure so to file would not have a Material
Adverse Effect) 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).
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(bb) Neither the Company nor any of the Subsidiaries is in violation of
any federal or state law or regulation relating to occupational safety and
health or to the storage, handling or transportation of hazardous or toxic
materials and the Company and its subsidiaries have received all permits,
licenses or other approvals required of them under applicable federal and state
occupational safety and health and environmental laws and regulations to conduct
their respective businesses, and the Company and each such subsidiary is in
compliance with all terms and conditions of any such permit, license or
approval, except any such violation of law or regulation, failure to receive
required permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals which would not,
singly or in the aggregate, result in a Material Adverse Change.
(cc) The Company and each of the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (1)
transactions are executed in accordance with management's general or specific
authorizations; (2) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (3) access to assets is
permitted only in accordance with management's general or specific
authorization; and (4) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(dd) 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 the Subsidiaries has sustained any 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 which could result in a Material Adverse Change
and there has not been any Material Adverse Change.
(ee) The Company has not, directly or indirectly, (i) taken 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) since the filing of the Registration Statement (A) sold, bid
for, purchased, or paid anyone any compensation for soliciting purchases of, the
Securities or (B) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company (except for
the sale of Securities by the Selling Securityholders under this Agreement).
(ff) Neither the Company nor any of its affiliates directly, or indirectly
through one or more intermediaries, controls or has any other association with
(within the meaning of Article 1 of the By-laws of the NASD) any member firm of
the NASD, other than Wilshire Securities Corporation.
(gg) The Preliminary Prospectus and the Prospectus delivered to the
Underwriters for use in connection with this offering was identical to the
versions of the Preliminary Prospectus and Prospectus created to be transmitted
to the Commission for filing via the Electronic Data
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Gathering Analysis and Retrieval System ("XXXXX"), except to the extent
permitted by Regulation S-T.
(hh) 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), (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; (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; other than the repurchase of 5,000 shares of Common
Stock on December 17, 1997 and (3) there has not been any material change in the
capital stock, short-term debt or long-term debt of the Company and its
consolidated subsidiaries, 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).
(ii) Each certificate signed by any officer of the Company and delivered
to the Representatives or counsel for the Underwriters pursuant to this
Agreement shall be deemed to be a representation and warranty by the Company to
each Underwriter as to the matters covered thereby.
3. Additional Representations and Warranties of the Principal
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Stockholders; Certain Agreements of Selling Securityholders. Each Principal
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Stockholder severally and not jointly represents and warrants to, and agrees
with, each of the several Underwriters that:
(a) Each Selling Securityholder has full power to enter into this
Agreement and to sell, assign, transfer and deliver to the Underwriters the
Securities to be sold by such Selling Securityholder hereunder in accordance
with the terms of this Agreement and this Agreement has been duly executed and
delivered by such Selling Securityholder.
(b) Each Selling Securityholder has duly executed and delivered a custody
agreement (with respect to such Selling Securityholder, the "Custody
Agreement"), in the form heretofore delivered to the Representatives, appointing
[insert name of Custodian], as custodian thereunder (the "Custodian").
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Certificates in negotiable form, endorsed in blank or accompanied by blank stock
powers duly executed, with signatures appropriately guaranteed, representing the
Securities to be sold by such Selling Securityholder hereunder have been
deposited with the Custodian pursuant to the Custody Agreement for the purpose
of delivery pursuant to this Agreement. Such Selling Securityholder has full
power to enter into the Custody Agreement and to perform its obligations under
the Custody Agreement. The execution and delivery of the Custody Agreement have
been duly authorized by all necessary action corporate or otherwise of such
Selling Securityholder; and, assuming due authorization, execution and delivery
by the Custodian, is the legal, valid, binding and enforceable instrument of
such Selling Securityholder except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws affecting
creditor's rights generally, and by general principals of equity. Such Selling
Securityholder agrees that each of the Securities represented by the
certificates on deposit with the Custodian is subject to the interests of the
Underwriters hereunder, that the arrangements made for such custody, are to that
extent irrevocable and that the obligations of such Selling
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Securityholder hereunder shall not be terminated, except as provided in this
Agreement or the Custody Agreement, by any act of such Selling Securityholder,
by operation of law or otherwise, whether in the case of any individual Selling
Securityholder by the death or incapacity of such Selling Securityholder, in the
case of a trust or estate by the death of the trustee or trustees or the
executor or executors or the termination of such trust or estate, or in the case
of a corporate or partnership Selling Securityholder by its liquidation or
dissolution or by the occurrence of any other event. If any individual Selling
Securityholder, trustee or executor should die or become incapacitated or any
such trust should be terminated, or if any corporate or partnership Selling
Securityholder shall liquidate or dissolve, or if any other event should occur,
before the delivery of such Securities hereunder, the certificates for such
Securities deposited with the Custodian shall be delivered by the Custodian in
accordance with the respective terms and conditions of this Agreement as if such
death, incapacity, termination, liquidation or dissolution or other event had
not occurred, regardless of whether or not the Custodian shall have received
notice thereof.
(c) Each Selling Securityholder is the lawful owner of the Securities to
be sold by such Selling Securityholder hereunder and upon sale and delivery of,
and payment for, such Securities, as provided herein, such Selling
Securityholder will convey good and marketable title to such Securities, free
and clear of any security interests, liens, encumbrances, equities, claims or
other defects.
(d) Each Selling Securityholder has not, directly or indirectly, (i) taken
any action designed to cause or 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) since the filing of the Registration Statement (A) sold
(which shall not include gifts by the Principal Stockholders to other Selling
Securityholders), bid for, purchased, or paid anyone any compensation for
soliciting purchases of, the Securities or (B) paid or agreed to pay to any
person any compensation for soliciting another to purchase any other securities
of the Company (except for the sale of Securities by the Selling Securityholders
under this Agreement.
(e) To the extent that any statements or omissions are made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by such Selling Securityholder specifically
for use therein, such Preliminary Prospectus did, and the Registration Statement
and the Prospectus and any amendment or supplements thereto, when they become
effective or are filed with the Commission, as the case may be, will conform in
all material respect to the requirements of the Act and the respective rules and
regulations of the Commission thereunder and will not 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, in the light of the
circumstances under which they are made, not misleading. Such Selling
Securityholder and such Principal Stockholder has reviewed the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary Prospectus)
and the Registration Statement, and the information regarding such Selling
Securityholder and such Principal Stockholder set forth therein under the
caption "Principal and Selling Shareholders" is complete and accurate.
11
(f) The sale by each Selling Securityholder of Option Securities pursuant
hereto is not prompted by any adverse information concerning the Company that is
not set forth in the Registration Statement or the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus).
(g) The sale of the Option Securities to the Underwriters by each Selling
Securityholder pursuant to this Agreement, the compliance by such Selling
Securityholder with the other provisions of this Agreement, the Custody
Agreement and the consummation of the other transactions herein contemplated do
not (i) require the consent, approval, authorization, registration or
qualification of or with any governmental authority, except such as have been
obtained, such as may be required under state securities or blue sky laws and,
if the registration statement filed with respect to the Securities (as amended)
is not effective under the Act as of the time of execution hereof, such as may
be required (and shall be obtained as provided in this Agreement) under the Act
and the Exchange Act, or (ii) conflict with or result in a material breach or
violation of any of the terms and provisions of, or constitute a material
default under any material indenture, mortgage, deed of trust, lease or other
agreement or instrument to which such Selling Securityholder is a party or by
which such Selling Securityholder or any of such Selling Securityholder's
properties are bound, or any statute or any judgment, decree, order, rule or
regulation of any court or other governmental authority or any arbitrator
applicable to such Selling Securityholder.
Each Selling Securityholder agrees to be bound by the agreements contained
in the last two sentences of Section 3(b) with respect to the Option Securities
sold by such Selling Securityholder.
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
issue and sell to each of the Underwriters, and each of the Underwriters,
severally and not jointly, agrees to purchase from the Company, at a purchase
price of $_________ per or share, the number of Firm Securities set forth
opposite the name of such Underwriter in Schedule 1 hereto. One or more
certificates in definitive form for the Firm Securities that the several
Underwriters have agreed to purchase hereunder, and in such denomination or
denominations and registered in such name or names as the Representatives
request 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 Representatives
for the respective accounts of the Underwriters, against payment by or on behalf
of the Underwriters of the purchase price therefor by wire transfer in same-day
funds (the "Wired Funds") to the account of the Company. Such delivery of and
payment for the Firm Securities shall be made at the offices of Xxxxxx, Xxxx &
Xxxxxxxx, 000 Xxxx Xxxxxx, Xxx Xxxx Xxx Xxxx 00000-0000 at 9:30 A.M., New York
time, on February , 1998 or at such other place, time or date as the
Representatives and the Company may agree upon or as the Representatives 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 Representatives at the offices in New York, New
York of the Company's transfer agent or registrar or of Prudential Securities
Incorporated at least 24 hours prior to the Firm Closing Date.
12
(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,
the Selling Securityholders hereby grant to the several Underwriters an option
to purchase, severally and not jointly, 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 4. The option granted hereby may be exercised as to all or any
part of the Option Securities from time to time within thirty (30) 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 Representatives may from time to time exercise the option
granted hereby by giving notice in writing or by telephone (confirmed in
writing) to the Selling Securityholders and the Custodian setting forth the
aggregate number of Option Securities as to which the several Underwriters are
then exercising the option and the date and time for delivery of and payment for
such Option Securities. Any such date of delivery and payment shall be
determined by the Representatives 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
Representatives and the Selling Securityholders may agree upon or as the
Representatives may determine pursuant to Section 11 hereof, is herein called
the "Option Closing Date" with respect to such Option Securities. Upon exercise
of the option as provided herein, the Selling Securityholders shall become
obligated to sell to each of the several Underwriters, and, subject to the terms
and conditions herein set forth, each of the Underwriters (severally and not
jointly) shall become obligated to purchase from the Selling Securityholders,
the same percentage of the total number of the Option Securities as to which the
several Underwriters are then exercising the option as such Underwriter is
obligated to purchase of the aggregate number of Firm Securities, as adjusted by
the Representatives in such manner as they deem advisable to avoid fractional
shares. 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 4, except that reference therein to the payment of
Wired Funds to the Company shall be deemed, for purposes of this paragraph (b)
to refer to payment of Wired Funds to the Selling Securityholders, and except
that the Firm Securities and the Firm Closing Date shall be deemed, for purposes
of this paragraph (b), to refer to such Option Securities and Option Closing
Date, respectively.
(c) The Company and the Selling Securityholders hereby acknowledge that the
wire transfer by or on behalf of the Underwriters of the purchase price for any
Shares does not constitute closing of a purchase and sale of the Shares. Only
execution and delivery of a receipt for Shares by the Representatives on behalf
of the Underwriters indicates completion of the closing of a purchase of the
Shares from the Company or Selling Securityholders. Furthermore,
in the event that the Underwriters wire funds to the Company or to the Selling
Securityholders, as the case may be, prior to the completion of the closing of a
purchase of Shares, the Company and the Selling Securityholders hereby
acknowledge that until the Underwriters execute and deliver a receipt for the
Shares, by facsimile or otherwise, neither the Company nor the Selling
13
Securityholders will be entitled to the wired funds and shall return the wired
funds to the Underwriters as soon as practicable (by wire transfer of same-day
funds) upon demand. In the event that the closing of a purchase of Shares is
not completed and the wire funds are not returned by the Company or the Selling
Securityholders, as the case may be, to the Underwriters on the same day the
wired funds were received by the Company or the Selling Securityholders, the
Company and if applicable, the Selling Securityholders, agree to pay to the
Underwriters in respect of each day the wire funds are not returned by it, in
same-day funds, interest on the amount of such wire funds in an amount
representing the Underwriters' cost of financing as reasonably determined by
Prudential Securities Incorporated.
(d) It is understood that any of you, individually and not as one of the
Representatives, 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.
5. Offering by the Underwriters. Upon your authorization of the release
----------------------------
of the Firm Securities, the several Underwriters propose to offer the Firm
Securities for sale to the public upon the terms set forth in the Prospectus.
6. Covenants of the Company. The Company covenants and agrees with each
------------------------
of the Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement, if not effective at the time of execution of this Agreement, and any
amendments thereto to become effective as promptly as possible. If required,
the Company will file the Prospectus or any Term Sheet that constitutes a part
thereof and any amendment or supplement thereto with the Commission in the
manner and within the time period required by Rules 434 and 424(b) under the
Act. During any time when a prospectus relating to the Securities is required
to be delivered under the Act, the Company (i) will comply with all requirements
imposed upon it by the Act and the rules and regulations of the Commission
thereunder to the extent necessary to permit the continuance of sales of or
dealings in the Securities in accordance with the provisions hereof and of the
Prospectus, as then amended or supplemented, and (ii) will not file with the
Commission the prospectus, Term Sheet or the amendment referred to in the second
sentence of Section 2(a) hereof, any amendment or supplement to such Prospectus,
Term Sheet or any amendment to the Registration Statement or any Rule 462(b)
Registration Statement of which the Representatives previously have been advised
and furnished with a copy for a reasonable period of time prior to the proposed
filing and as to which filing the Representatives shall not have given their
consent (which consent shall not be unreasonably withheld). The Company will
prepare and file with the Commission, in accordance with the rules and
regulations of the Commission, promptly upon request by the Representatives or
counsel for the Underwriters, any amendments to the Registration Statement or
amendments or supplements to the Prospectus that may be necessary or
advisable in connection with the distribution of the Securities by the several
Underwriters, and will use its best efforts to cause any such amendment to the
Registration Statement to be declared effective by the Commission as promptly as
possible. The Company will advise the Representatives, promptly after receiving
notice thereof, of the time when the Registration Statement or any amendment
thereto has been filed or declared effective or the Prospectus or any
14
amendment or supplement thereto has been filed and will provide evidence
satisfactory to the Representatives of each such filing or effectiveness.
(b) The Company will advise the Representatives, promptly after receiving
notice or obtaining knowledge thereof, of (i) the issuance by the Commission of
any stop order suspending the effectiveness of the Original Registration
Statement or any Rule 462(b) Registration Statement or any amendment thereto or
any order preventing or suspending the use of any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, (ii) the suspension of the
qualification of the Securities for offering or sale in any jurisdiction, (iii)
the institution, threatening or contemplation of any proceeding for any such
purpose or (iv) any request made by the Commission for amending the Original
Registration Statement or any Rule 462(b) Registration Statement, for amending
or supplementing the Prospectus or for additional information. The Company will
use its best efforts to prevent the issuance of any such stop order and, if any
such stop order is issued, to obtain the withdrawal thereof as promptly as
possible.
(c) The Company will arrange for the qualification of the Securities for
offering and sale under the securities or blue sky laws of such jurisdictions as
the Representatives may designate and will continue such qualifications in
effect for as long as may be necessary to complete the distribution of the
Securities, provided, however, that in connection therewith the Company shall
-----------------
not be required to qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction.
(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 or
regulations of the Commission thereunder, the Company will promptly notify the
Representatives 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 to the Prospectus that
corrects such statement or omission or effects such compliance.
(e) The Company will, without charge, provide (i) to the Representatives
and to counsel for the Underwriters a signed copy of the registration statement
originally filed with respect to the Securities and each amendment thereto (in
each case including exhibits thereto) (ii) to each other Underwriter, a
conformed copy of such registration statement or any Rule 462(b) Registration
Statement and each amendment thereto (in each case without exhibits thereto) and
(iii) so long as a prospectus relating to the Securities is required to be
delivered under the Act, as many copies of each Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto as the Representatives may
reasonably request; without limiting the application of clause (iii) of this
sentence, the Company, not later than (A) 6:00 PM, New York City time, on the
date of determination of the public offering price, if such determination
occurred at or prior to 10:00 A.M., New York City time, on such date or (B) 2:00
PM, New York City time, on the business day following the date of determination
of the public offering
15
price, if such determination occurred after 10:00 A.M., New York City time, on
such date, will deliver to the Underwriters, without charge, as many copies of
the Prospectus and any amendment or supplement thereto as the Representatives
may reasonably request for purposes of confirming orders that are expected to
settle on the Firm Closing Date.
(f) The Company will apply the net proceeds from the sale of the Securities
as set forth under "Use of Proceeds" in the Prospectus and any amendment or
supplement thereto.
(g) The Company will not, directly or indirectly, without the prior written
consent of Prudential Securities Incorporated, on behalf of the Underwriters,
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 pursuant to
Company stock option plans described in the Prospectus.
(h) 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
person any compensation for soliciting another to purchase any other securities
of the Company for thirty (30) days after the date of this Agreement (except for
the sale of Securities by the Selling Securityholders under this Agreement).
(i) 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 your reasonable 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 you advising the
Company to the effect set forth above, forthwith prepare, consult with you
concerning the substance of, and disseminate a press release or other public
statement, reasonably satisfactory to you, responding to or commenting on such
rumor, publication or event.
(j) If the Company elects to rely on Rule 462(b), the Company shall both
file a Rule 462(b) Registration Statement with the Commission in compliance with
Rule 462(b) and pay the applicable fees in accordance with Rule 111 promulgated
under the Act by the earlier of (i) 10:00 P.M. Eastern time on the date of this
Agreement and (ii) the time confirmations are sent or given, as specified by
Rule 462(b)(2).
(k) The Company will cause the Securities to be included for quotation on
the Nasdaq Stock Market's National Market (the "Nasdaq National Market") prior
to the Firm Closing Date. The Company will use its best efforts to cause the
Securities to remain included for quotation on
16
the Nasdaq National Market or another nationally recognized exchange or
quotation system following the Firm Closing Date.
7. Covenants of the Selling Securityholders. Each of the Selling
----------------------------------------
Securityholders covenant and agree with each of the Underwriters that:
(a) Each Selling Securityholder will not, directly or indirectly, without
the prior written consent of Prudential Securities Incorporated, on behalf of
the Underwriters, 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 Securities legally or beneficially owned by
such Selling Securityholder or any securities convertible into, or exchangeable
or exercisable for, Securities for a period of 180 days after the date hereof
except as provided in this Agreement.
(b) Each Selling Securityholder will not, directly or indirectly, (i) take
any action designed to cause or 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
person any compensation for soliciting another to purchase any other securities
of the Company (except for the sale of Securities by the Selling Securityholders
under this Agreement).
(c) Each Selling Securityholder will use its best efforts to cause and the
Principal Stockholders will cause the Company to comply with and perform all
covenants of the Company provided for in Section 6 of this Agreement.
(d) Each Selling Securityholder acknowledges the receipt of valuable
consideration under this Agreement in connection with the sale of the Securities
hereunder and agrees to be bound by all terms of this Agreement applicable to
such Selling Securityholder.
8. Expenses.
--------
(a) The Company will pay all costs and expenses incident to the performance
of its obligations under this Agreement, whether or not the transactions
contemplated herein are consummated or this Agreement is terminated pursuant to
Section 11 hereof, including all costs and expenses incident to (i) the printing
or other production of documents with respect to the transactions, including any
costs of printing the registration statement originally filed with respect to
the Securities and any amendment thereto, any Rule 462(b) Registration
Statement, 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 Underwriters of copies of the
foregoing documents, (iii) the fees and disbursements of the counsel, the
accountants and any other experts or advisors retained by the Company,
(iv) preparation, issuance and delivery to the underwriters of any certificates
evidencing the Securities, including transfer agent's and registrar's fees, (v)
the qualification of the Securities under state securities and blue sky laws,
including filing fees and fees and disbursements of counsel for the Underwriters
relating thereto (not to exceed $4,000), (vi) the filing fees of the
17
Commission and the National Association of Securities Dealers, Inc. relating to
the Securities, (vii) any quotation of the Securities on the Nasdaq National
Market and (viii) any meetings with prospective investors in the Securities
(other than as shall have been specifically approved by the Representatives to
be paid for by the Underwriters), (ix) advertising requested by the Company
relating to the offering of the Securities (other than as shall have been
specifically approved by the Representatives to be paid for by the
Underwriters). If the sale of the Securities provided for herein is not
consummated because any condition to the obligations of the Underwriters set
forth in Section 9 hereof is not satisfied, because this Agreement is terminated
pursuant to Section 11 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 any of the Underwriters, the Company will reimburse the Underwriters
severally upon demand for all out of-pocket expenses (including counsel fees and
disbursements) that shall have been incurred by them in connection with the
proposed purchase and sale of the Securities. The Company shall not in any event
be liable to any of the Underwriters for the loss of anticipated profits from
the transactions covered by this Agreement.
(b) In addition to discounts and commissions received in connection with
the purchase of the Securities, the Company agrees to reimburse the Underwriters
for their reasonable and documented out-of-pocket expenses in connection with
the performance of its activities under this Agreement, whether or not the
transactions contemplated hereunder are consummated or this Agreement is
terminated other than by reason of a default by any of the Underwriters,
including, but not limited to, costs such as printing, facsimile, courier
service, direct computer expenses, accommodations, travel and the fees and
expenses of the Underwriters' outside legal counsel and any other advisors,
accountants, appraisers, etc., and costs in connection with making road show
presentations with respect to the offering of the Securities.
9. Conditions of the Underwriters' Obligations. The obligations of the
-------------------------------------------
several Underwriters to purchase and pay for the Firm Securities shall be
subject, in the Representatives' sole discretion, to the accuracy of the
representations and warranties of the Company contained herein as of 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) If the Original Registration Statement or any amendment thereto filed
prior to the Firm Closing Date has not been declared effective as of the time of
execution hereof, the Original Registration Statement or such amendment and, if
the Company has elected to rely upon Rule 462(b), the Rule 462(b) Registration
Statement shall have been declared effective not later than the earlier of (A)
11:00 A.M., New York time, on the date on which the amendment to the
registration statement originally filed with respect to the Securities or to the
Registration Statement, as the case may be, containing information regarding the
initial public offering price of the Securities has been filed with the
Commission and (B) the time confirmations are sent or given as specified by Rule
462(b)(2), or with respect to the Original Registration Statement, or such later
time and date as shall have been consented to by the Representatives; if
required, the Prospectus or any Term Sheet that constitutes a part thereof and
any amendment or supplement thereto shall have been filed with the Commission in
the manner and within the time period
18
required by Rules 434 and 424(b) under the Act; no stop order suspending the
effectiveness of the Registration Statement or any amendment thereto shall have
been issued, and no proceedings for that purpose shall have been instituted or,
to the knowledge of the Company, threatened or, to the knowledge of the Company
or the Representatives, shall be contemplated by the Commission; and the Company
shall have complied with any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise).
(b) The Representatives shall have received an opinion, dated the Firm
Closing Date, of Proskauer, Rose LLP or other counsel satisfactory to the
Representatives and, as to certain paragraphs set forth in this Section 9(b) and
as described below, Stoel Rives LLP or other counsel satisfactory to the
Representatives, in a form satisfactory to the Representatives, to the effect
that:
(i) the Company and each of the Subsidiaries (other than the
Savings Bank) 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 such
other jurisdictions as counsel to the Underwriters shall reasonably
request, except where the failure to be so qualified does not amount to a
material liability or disability to the Company and its subsidiaries, taken
as a whole;
(ii) the Company and each of the Subsidiaries (other than the
Savings Bank) have full power (corporate and other) to own or lease their
respective properties and conduct their respective businesses, and the
Company has corporate power to enter into this Agreement and to carry out
all the terms and provisions hereof to be carried out by it;
(iii) the execution and delivery of this Agreement have been duly
authorized by all necessary corporate action of the Company and this
Agreement has been duly executed and delivered by the Company. No action
by the stockholders of the Company is required by the NASD to authorize the
execution, delivery and performance of this Agreement by the Company in
accordance with its terms;
(iv) The issuance, offering and sale of the Firm Securities to the
Underwriters by the Company pursuant to this Agreement, the compliance by
the Company with the other provisions of this Agreement and the
consummation of the other transactions herein contemplated do not (A)
require the consent, approval, authorization, registration or qualification
of or with any governmental authority, except such as have been obtained
and such as may be required under state securities or blue sky laws or
regulations of federal authorities having jurisdiction over the Savings
Bank, as to which such counsel need express no opinion or any approval of
the underwriting terms and arrangements by the National Association of
Securities Dealers, Inc., or (B) conflict with or result in a material
breach or violation of any of the terms and provisions of, or constitute a
default under, any material license, indenture, mortgage, deed of trust,
lease or other agreement or instrument, known to such counsel, to which the
Company or any of the Subsidiaries (other than the Savings Bank) is a party
or by which the Company or any of the Subsidiaries (other than the Savings
Bank) or any of their respective properties are bound and identified as a
material agreement or instrument in a Company certificate attached to
19
such opinion, including but not limited to the Indenture for the 13% Notes
Due 2004, dated as of December 24, 1996 between the Company and Bankers
Trust Company, as Trustee, or the Indenture for the 13% Series A Notes Due
2004 dated as of August 15, 1997 between the Company and Bankers Trust
Company, as Trustee, or the charter documents or by-laws of the Company or
any of its Subsidiaries (other than the Savings Bank), or any statute or
any judgment, decree, order, rule or regulation of any court or other
governmental authority or any arbitrator known to such counsel and
applicable to the Company or the Subsidiaries (other than the Savings
Bank), except in the case of clause (B) for such conflicts, breaches or
defaults which would not have a Material Adverse Effect;
(v) the Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus; all of the issued shares of
capital stock of the Company have been duly authorized and validly issued
and are fully paid and nonassessable, have been issued in compliance with
all applicable federal and state securities laws and, to the best knowledge
of such counsel, were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase shares of
capital stock under any agreement known to such counsel to which the
Company is a party and identified in a certificate of the Company delivered
to such counsel; the Firm Securities have been duly authorized by all
necessary corporate action of the Company and, when issued and delivered to
and paid for by the Underwriters pursuant to this Agreement, will be
validly issued, fully paid and nonassessable; the Securities have been duly
included for trading on the Nasdaq National Market; no holders of
outstanding shares of capital stock of the Company are entitled as such to
any preemptive or other rights to subscribe for any of the Securities
arising by operation of law, under the articles of incorporation or by-laws
of the Company, under any agreement known to such counsel to which the
Company or any of its Subsidiaries is a party or, to such counsel's
knowledge, otherwise; and, to the best knowledge of such counsel, no
holders of securities of the Company are entitled to have such securities
registered under the Registration Statement under any agreement known to
such counsel to which the Company is a party party and identified in a
certificate of the Company delivered to such counsel;
(vi) the issued and outstanding shares of capital stock of each of
the Subsidiaries (other than the Savings Bank) have been duly authorized
and validly issued, are fully paid and nonassessable and are owned directly
or indirectly of record and beneficially by the Company free and clear of
any perfected security interests or, to the best knowledge of such counsel,
any other security interests, liens, encumbrances, equities or claims,
excluding the pledge of the stock of one of the Company's European
subsidiaries in connection with an affiliate of Xxxxxxx Xxxxx making an
equity investment in one of the European portfolios;
(vii) the statements set forth under the heading "Description of
Capital Stock" in the Prospectus, insofar as such statements constitute a
summary of the legal matters referred to therein, constitute accurate
summaries thereof in all material respects;
20
(viii) to the best knowledge of such counsel, neither the Company nor
any of its Subsidiaries (other than the Savings Bank) is in breach of, or
in default under (nor has any event occurred which with notice, lapse of
time or both would constitute a breach of, or default under) any law,
regulation or rule or any decree, judgment or order applicable to the
Company party and identified in a certificate of the Company delivered to
such counsel, except such breaches or defaults which would not have a
Material Adverse Effect;
(ix) the Company is not, and upon the sale of the Securities as
herein contemplated will not be, an "investment company" as such term is
defined in the Investment Company Act;
(x) (A) no legal or governmental proceedings are pending to which
the Company or any of the Subsidiaries (other than the Savings Bank) is a
party or to which the property of the Company or any of the Subsidiaries
(other than the Savings Bank) is subject that are required to be described
in the Registration Statement or the Prospectus and are not described
therein, and, to the best knowledge of such counsel, no such proceedings
have been threatened against the Company or any of the Subsidiaries (other
than the Savings Bank) or with respect to any of their respective
properties and (B) to the best knowledge of such counsel, no contract or
other document known to such counsel to which the Company is a party and
referred to in a certificate of the Company attached thereto 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 filed as required;
(xi) to the best knowledge of such counsel, no breach or default
exists, and no event has occurred which, with notice or lapse of time or
both, would constitute a breach or default in the due performance and
observance of any term, covenant or condition of any license, indenture,
mortgage, deed of trust, lease or other agreement or instrument known to us
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or any of their respective properties is
bound or may be affected and identified as a material agreement or
instrument of the Company or a Subsidiary, except such breaches or defaults
which would not have a Material Adverse Effect;
(xii) the statements in the Prospectus under the caption "Taxation,"
insofar as they purport to describe federal laws or regulations of the
United States, fairly present, in all material respects, the information
set forth therein;
(xiii) the Registration Statement is effective under the Act; any
required filing of the Prospectus, or any Term Sheet that constitutes a
part thereof, pursuant to Rules 434 and 424(b) has been made in the manner
and within the time period required by Rules 434 and 424(b); and no stop
order suspending the effectiveness of the Registration Statement or any
amendment thereto has been issued, and, to the best knowledge of such
counsel, no proceedings for that purpose have been instituted or threatened
or are contemplated by the Commission;
21
(xiv) as of the effective date of the Registration Statement, the
Registration Statement and the Prospectus (in each case, other than the
financial statements and other financial information contained therein, as
to which such counsel need express no opinion) complied as to form in all
material respects with the applicable requirements of the Act and the rules
and regulations of the Commission thereunder; and
(xv) if the Company elects to rely on Rule 434, the Prospectus is
not "materially different," as such term is 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 430A).
In addition to giving the opinions set forth in this Section 9(b), such
counsel shall state that they have participated in conferences with officers and
other representatives of the Company, independent public accountants of the
Company and Underwriters at which the contents of the Registration Statement,
the Preliminary Prospectus and the Prospectus were discussed and, although such
counsel is not passing upon and does not assume responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or Prospectus (except as and to the extent stated in subparagraphs
(vii), (xii) and (xiv) above), on the basis of the foregoing, they have no
reason to believe that the Registration Statement, as of its effective date,
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus, as of its date or the date of
such opinion, included or includes any untrue statement of a material fact or
omitted or omits 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.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials. The Underwriters acknowledge that
the opinions set forth above in this Section 9(b) in paragraphs (iv), and (xi)
will be rendered by both Stoel Rives LLP, local counsel to the Company in Oregon
("Oregon Counsel"), and Proskauer Rose LLP ("Proskauer"), and that the opinions
set forth in all other paragraphs of this Section 9(b) will be rendered by
Proskauer.
References to the Registration Statement and the Prospectus in this
Subsection (b) shall include any amendment or supplement thereto at the date of
such opinion.
The opinions of Proskauer and Oregon Counsel described in this Subsection
(b) shall state that each is being rendered to the Underwriters at the request
of the Company.
(c) The Representatives shall have received an opinion, dated the Firm
Closing Date, of Heller, Ehrman, White & XxXxxxxxx counsel for the Company, in a
form reasonably satisfactory to the Representatives, to the effect that:
(i) the Savings Bank has been chartered as a federal savings bank
under the laws of the United States of America, and its charter is in full
force and effect; the Savings
22
Bank has full corporate power and corporate authority to own its properties
and conduct its business as described in the Registration Statement and the
Prospectus; the Savings Bank is a member of the Federal Home Loan Bank
System; and the savings accounts of depositors in the Savings Bank are
insured by the Savings Association Insurance Fund (the "SAIF") of the
Federal Deposit Insurance Corporation (the "FDIC") to the fullest extent
permitted by law and the rules and regulations of the FDIC, and no
proceedings for the termination of such insurance are pending, or to the
best of the Company's knowledge, threatened;
(ii) other than the Cease and Desist Orders, to such counsel's
knowledge, neither the Company nor the Savings Bank is a party to or
otherwise the subject of any consent decree, memorandum of understanding,
written agreement or similar supervisory or enforcement agreement or
understanding with the OTS, the FDIC or any other government authority or
agency responsible for the supervision, regulation or insurance of
depository institutions or their holding companies; and, to such counsel's
knowledge, no further or additional bank regulatory action against the
Company, the Savings Bank or their directors is threatened;
(iii) the statements set forth in the heading "Regulation" in the
Prospectus, insofar as they constitute a summary of the legal matters
referred to therein, constitute fair summaries thereof and are accurate in
all material respects;
(iv) The issuance, offering and sale of the Firm Securities to the
Underwriters by the Company pursuant to this Agreement, the compliance by
the Company with the other provisions of this Agreement and the
consummation of the other transactions herein contemplated do not (A)
require the consent, approval, authorization, registration or qualification
of or with any governmental authority having jurisdiction over the Savings
Bank, or (B) conflict with or result in a material breach or violation of
any of the terms and provisions of, or constitute a default under, any
material license, indenture, mortgage, deed of trust, lease or other
agreement or instrument, known to such counsel, to which the Savings Bank
is a party or by which the Savings Bank or any of its properties are bound
and identified as a material agreement or instrument in a Company
certificate attached to such opinion, or the charter documents or by-laws
of the Savings Bank, or any statute or any judgment, decree, order, rule or
regulation of any court or other governmental authority or any arbitrator
known to such counsel and applicable to the Savings Bank, except in the
case of clause (B) for such conflicts, breaches or defaults which would not
have a Material Adverse Effect;
(v) no legal or governmental proceedings are pending to which the
Savings Bank is a party or to which the property of the Savings Bank is
subject that are required to be described in the Registration Statement or
the Prospectus and are not described therein, and, to the best knowledge of
such counsel, no such proceedings have been threatened against the Savings
Bank or with respect to any of its properties.
For purposes of rendering the foregoing opinions, such counsel may as to
factual matters rely upon statements, certificates and other assurances of
public officials and upon certificates of
23
officers of the Company, which certificates of officers of the Company will be
furnished to the Representatives together with such counsel's opinion.
References to the Prospectus in this Subsection (c) shall include any
amendment or supplement thereto prepared in accordance with the provisions of
this Agreement at the Closing Date.
The opinion of Heller, Ehrman, White & XxXxxxxxx described in this
Subsection (c) shall state that it is being rendered to the Representatives at
the request of the Company.
(d) The Selling Securityholders shall have furnished to the
Representatives the opinion of Proskauer, Rose LLP counsel for the Selling
Securityholders, or other counsel satisfactory to the Representatives, dated the
Closing Date, in a form satisfactory to the Representatives to the effect that:
(i) such Selling Securityholder has full power to enter into this
Agreement and the Custody Agreement and to sell, transfer and deliver the
Option Securities being sold by such Selling Securityholder hereunder in
the manner provided in this Agreement and to perform its obligations under
the Custody Agreement; the execution and delivery of this Agreement and the
Custody Agreement have been duly authorized by all necessary organizational
action of each Selling Securityholder; this Agreement and the Custody
Agreement have been duly executed and delivered by each Selling
Securityholder; assuming due authorization, execution and delivery by the
Custodian, the Custody Agreement is the legal, valid, binding and
enforceable instruments of such Selling Securityholder, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors'
rights generally and subject, as to enforceability, to general principles
of equity (regardless of whether enforcement is sought in a proceeding in
equity or at law);
(ii) the delivery by each Selling Securityholder to the several
Underwriters of certificates for the Option Securities being sold hereunder
by such Selling Securityholder against payment therefor as provided herein,
will convey good and marketable title to such Securities to the several
Underwriters, free and clear of all security interests, liens,
encumbrances, equities, claims or other defects;
(iii) the sale of the Option Securities to the Underwriters by such
Selling Securityholder pursuant to this Agreement, the compliance by such
Selling Securityholder with the other provisions of this Agreement, the
Custody Agreement and the consummation of the other transactions herein
contemplated do not (A) require the consent, approval, authorization,
registration or qualification of or with any governmental authority, except
such as have been obtained and such as may be required under state
securities or blue sky laws, or (B) conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a default
under any indenture, mortgage, deed of trust, lease or other agreement or
instrument to which such Selling Securityholder is a party or by which such
Selling Securityholder or any of such Selling Securityholder's properties
are bound, or any statute or any judgment, decree, order, rule or
regulation of
24
any court or other governmental authority or any arbitrator applicable to
such Selling Securityholder.
In rendering such opinion, such counsel may rely, as to matters of fact, to
the extent such counsel deems proper, on certificates of responsible officers of
the Company and public officials.
References to the Registration Statement and the Prospectus in this
paragraph (c) shall include any amendment or supplement thereto at the date of
such opinion.
(e) The Representatives shall have received an opinion, dated the Firm
Closing Date, of Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel for the Underwriters, with
respect to the issuance and sale of the Firm Securities, the Registration
Statement and the Prospectus, and such other related matters as the
Representatives may reasonably require, and the Company shall have furnished to
such counsel such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters.
(f) The Representatives shall have received from each of Deloitte & Touche
LLP and Xxxxxx Xxxxxxxx LLP a letter, or letters, dated the date hereof and the
Firm Closing Date, in form and substance satisfactory to the Representatives, to
the effect that:
(i) they are independent accountants with respect to the Company
and its consolidated subsidiaries within the meaning of the Act and the
applicable rules and regulations thereunder;
(ii) in their opinion, the audited consolidated financial statements
and schedules 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 related published
rules and regulations;
(iii) 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 consolidated subsidiaries and are included in the
Original Registration Statement and the Prospectus under the captions
"Summary Historical Consolidated Financial Information", "Selected
Historical Financial Information", and in Exhibit 11 to the Registration
Statement, and have compared such amounts, percentages and financial
information with such records and schedules of the Company and its
consolidated subsidiaries and with information derived from such records
and schedules and have found them to be in agreement, excluding any
questions of legal interpretation; and.
In the event that the letters referred to above set forth any such changes,
decreases or increases, it shall be a further condition to the obligations of
the Underwriters that (i) such letters shall be accompanied by a written
explanation of the Company as to the significance thereof, unless the
Representatives deem such explanation unnecessary, and (ii) such changes,
decreases or increases do not, in the sole judgment of the Representatives, make
it impractical or inadvisable to
25
proceed with the purchase and delivery of the Securities as contemplated by the
Registration Statement, as amended as of the date hereof.
References to the Registration Statement and the Prospectus in this
paragraph (g) with respect to either letter referred to above shall include any
amendment or supplement thereto at the date of such letter.
(g) The Representatives shall have received a certificate, dated the Firm
Closing Date, of the principal executive officer and the principal financial or
accounting officer of the Company to the effect that;
(i) the representations and warranties of the Company in this
Agreement are true and correct as if made on and as of the Firm Closing
Date; the Registration Statement, as amended as of the Firm Closing Date,
does not include any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not misleading,
and the Prospectus, as amended or supplemented as of the Firm Closing Date,
does 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; and
the Company has performed all covenants and agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the Firm
Closing Date:
(ii) no stop order suspending the effectiveness of the Registration
Statement or any amendment thereto has been issued, and no proceedings for
that purpose have been instituted , to the best of the Company's knowledge,
are threatened or contemplated by the Commission; and
(iii) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, neither the Company
nor any of the Subsidiaries has sustained any 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, which could
result in a Material Adverse Change and there has not been any Material
Adverse Change, except in each case as described in or contemplated by the
Prospectus (exclusive of any amendment or supplement thereto).
(h) The Representatives shall have received a certificate from each
Selling Securityholder, dated the Closing Date, to the effect that:
(i) the representations and warranties of such Selling
Securityholder (including where applicable representations and warranties
as a Principal Stockholder), if any, in this Agreement are true and correct
as if made on and as of the Closing Date;
(ii) [as to the Principal Stockholders only]the representations and
warranties of the Company in this Agreement are true and correct as if made
on and as of the Firm Closing Date; the Registration Statement, as amended
as of the Firm Closing Date, does
26
not include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading, and
the Prospectus, as amended or supplemented as of the Firm Closing Date,
does 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; and
the Company has performed all covenants and agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the Firm
Closing Date; and
(iii) such Selling Securityholder has performed all covenants and
agreements on its part to be performed or satisfied at or prior to the
Closing Date.
(i) On or before the Firm Closing Date, the Representatives and counsel
for the Underwriters shall have received such further certificates, documents or
other information as they may have reasonably requested from the Company.
(j) Prior to the commencement of the offering of the Securities, the
Securities shall have been included for trading on the Nasdaq National Market.
(k) The Representatives shall have received a copy of the audited
September 30, 1997 financial statements of Wilshire Credit Corporation and its
affiliates ("WCC"), accompanied by an unqualified opinion of Xxxxxx Xxxxxxxx
LLP.
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representatives and
counsel for the Underwriters. The Company shall furnish to the Representatives
such conformed copies of such opinions, certificates, letters and documents in
such quantities as the Representatives and counsel for the Underwriters shall
reasonably request.
The respective obligations of the several Underwriters to purchase and pay
for any Option Securities shall be subject, in their discretion, to each of the
foregoing conditions to purchase the Firm Securities, except that all references
to the Firm Securities and the Firm Closing Date shall be deemed to refer to
such Option Securities and the related Option Closing Date, respectively.
10. Indemnification and Contribution.
--------------------------------
(a) The Company, Wiederhorn and Xxxxxxxxxx jointly and severally agree to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any 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, the Exchange 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, Wiederhorn or Xxxxxxxxxx in Section 2 of this Agreement,
27
(ii) any untrue statement or alleged untrue statement of any material
fact contained in (A) the Registration Statement or any amendment thereto
or 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 amendment or supplement thereto, or any Application a
material fact required to be stated therein or necessary to make the
statements therein not misleading or
(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 and furnished by the Company, including without
limitation, slides, videos, films, tape recordings,
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating, defending against
or appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, (i) that the Company and such
-----------------
Principal Stockholder 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
or 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 any Underwriter through the Representatives specifically for use
therein and (ii) the Company will not be liable to any Underwriter or any person
controlling such 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 such Underwriter but was
not sent or give a copy of the Prospectus (as amended or supplemented) at or
prior to the written confirmation or the sale of such Securities to such person
in any case where such delivery of the Prospectus (as amended and supplemented)
is required by the Act, unless such failure to deliver to the Prospectus (as
amended and supplemented) was a result of noncompliance by the Company with
Section 5(d) and (e) of this Agreement. This indemnity agreement will be in
addition to any liability which the Company, Wiederhorn and Xxxxxxxxxx may
otherwise have.
(b) Wiederhorn for himself and TTMP, L.P. as Selling Securityholders and
Xxxxxxxxxx for himself and Xxxxxxxxxx Family Limited Partnership as Selling
Securityholders severally agree to indemnify and hold harmless each Underwriter
and each person, if any, who controls any 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
28
Underwriter or such controlling person may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based:
(i) any untrue statement or alleged untrue statement made by such
Selling Securityholders or Principal Stockholders in Section 3 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
or any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto based upon written information furnished by or on behalf
of such Selling Securityholders, or
(iii) the omission or alleged omission to state in the Registration
Statement or any amendment thereto, any Preliminary Prospectus or the Prospectus
or any amendment or supplement thereto, a material fact required to be stated
therein or necessary to make the statements therein relating to such Selling
Securityholders not misleading.
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating, defending against
or appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that (i) the Selling
-----------------
Securityholders 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
or the Prospectus or any amendment or supplement thereto, or any such
Application in reliance upon and in conformity with written information
furnished to the Selling Securityholder by any Underwriter through the
Representatives specifically for use therein and (ii) the Company will not be
liable to any Underwriter or any person controlling such 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 such Underwriter but was not sent or give a copy of
the Prospectus (as amended or supplemented) at or prior to the written
confirmation or the sale of such Securities to such person in any case where
such delivery of the Prospectus (as amended and supplemented) is required by the
Act, unless such failure to deliver to the Prospectus (as amended and
supplemented) was a result of noncompliance by the Company with Section 5(d) and
(e) of this Agreement. This indemnity agreement will be in addition to any
liability which the Selling Securityholders may otherwise have.
(c) Neither the Company nor any Selling Securityholder will, without the
prior written consent of the Underwriter or Underwriters purchasing, in the
aggregate, more than fifty percent (50%) of the Securities, 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 such Underwriter or any person who controls any
such 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
29
includes an unconditional release of all of the Underwriters and such
controlling persons from all liability arising out of such claim, action, suit
or proceeding.
(d) 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, each Selling Securityholder and each person, if any, who
controls the Company or such Selling Securityholder 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, any such director or
officer of the Company, such Selling Securityholder, or any such controlling
person of the Company or such Selling Securityholder may become subject under
the Act, the Exchange 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 any Underwriter through the Representatives
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, any such director, officer or
controlling person or such Selling Securityholder 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.
(e) Promptly after receipt by an indemnified party under this Section 10 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 10, 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 10. 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 reasonably 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 notice from the indemnifying
party to such indemnified party of its election so to assume the defense thereof
and approval by such indemnified party of counsel appointed to defend such
action such approval not to be unreasonably withheld, the indemnifying party
will not be liable to such indemnified party
30
under this Section 10 for any legal or other 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 Representatives in
the case of paragraphs (a) and (b) of this Section 10, representing the
indemnified parties under such paragraphs (a) and/or (b) 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.
(f) In circumstances in which the indemnity agreement provided for in the
preceding paragraphs of this Section 10 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 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 and the Selling Securityholders 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 of the Firm Securities (before deducting
expenses) (the "Firm Securities Offering Proceeds") received by the Company and
the total proceeds from the offering of the Option Securities (before deducting
expenses) (the "Option Securities Offering Proceeds") received by the Selling
Securityholders bear to the total underwriting discounts and commissions
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, the Selling
Securityholders or the Underwriters, the parties' relative intents, 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, the Selling Securityholders and the Underwriters
agree that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
that does not take into account the equitable considerations referred to above
in this paragraph (f). Notwithstanding any other
31
provision of this paragraph (f), 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 contributions among Underwriters shall be
governed by the provisions of the Prudential Securities Incorporated Master
Agreement Among Underwriters. For purposes of this paragraph (e), 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 any Selling Securityholder 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 or such Selling Securityholder or Principal
Stockholder, as the case may be.
(g) The liability of the Company under this Section 10 shall not exceed an
----------
amount equal to the Firm Securities Offering Proceeds. The liability of
Wiederhorn and Xxxxxxxxxx under this Agreement shall not exceed an amount equal
to the Option Securities Offering Proceeds received by Wiederhorn and TTMM, L.P.
in the case of Wiederhorn and Xxxxxxxxxx and the Xxxxxxxxxx Family Limited
Partnership in the case of Xxxxxxxxxx.
11. 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, the other Underwriters may make
arrangements satisfactory to the Representatives for the purchase of such
Securities by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives), 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 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 if arrangements satisfactory to
the Representatives are not made within 36 hours after such default for the
purchase by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives) 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 other than as provided
in Section 12 hereof. In the event of any default by one or more Underwriters as
described in this Section 11, the Representatives shall have the right to
postpone the Firm Closing Date or the Option Closing Date, as the case may be,
established as provided in Section 4 hereof for not more than seven business
days in order that any necessary changes may be made in the arrangements or
32
documents for the purchase and delivery of the Firm Securities or Option
Securities, as the case may be. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 11. Nothing herein shall relieve any defaulting Underwriter from
liability for its default.
12. 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 (i) any investigation made by or on behalf of the Company,
any of its officers or directors, any Underwriter or any controlling person
referred to in Section 11 hereof and (ii) delivery of and payment for the
Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 8 and 10 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
13. Termination. (a) This Agreement may be terminated with respect to the
-----------
Firm Securities or any Option Securities in the sole discretion of the
Representatives 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 its 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 any of its subsidiaries shall have, in the sole
judgment of the Representatives, sustained any 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 that could result
in a Material Adverse Change or there shall have been any Material Adverse
Change (including without limitation a change in management or control of
the Company), except in each case as described in or contemplated by the
Prospectus (exclusive of any amendment or supplement thereto);
(ii) 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 for market system;
(iii) a banking moratorium shall have been declared by New York or
United States authorities; or
(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 Representatives, 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.
33
(b) Termination of this Agreement pursuant to this Section 13 shall be
without liability of any party to any other party except as provided in Section
12 hereof.
14. Information Supplied by Underwriters. The statements set forth in the
------------------------------------
last paragraph on the front cover page and under the heading "Underwriting" in
any Preliminary Prospectus or the Prospectus (to the extent such statements
relate to the Underwriters) constitute the only information furnished by any
Underwriter through the Representatives to the Company for the purposes of
Sections 2(b) and 10 hereof. The Underwriters confirm that such statements (to
such extent) are correct.
15. Notices. All communications hereunder shall be in writing and, if
-------
sent to any of the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission and confirmed in writing to Prudential Securities
Incorporated, Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Equity
Transactions Group; and if sent to the Company or the Selling Securityholders,
shall be delivered or sent by mail, telex or facsimile transmission and
confirmed in writing to the Company or such Selling Securityholder, as the case
may be, at 0000 XX Xxxxxxx Xxxxxx, Xxxxxxxx, XX 00000.
16. Successors. This Agreement shall inure to the benefit of and shall be
----------
binding upon the several Underwriters, the Company and the Selling
Securityholders 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 of the Company contained in
Section 10 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 10 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.
17. 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 State of New York, without giving
effect to any provisions relating to conflicts of laws.
18. 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 State of New York, and
by execution and delivery of this Agreement, each Selling Securityholder 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 agrees to be bound by any judgment rendered
thereby in connection with this Agreement. The Selling Securityholders
designate and appoint ___________________, and such other persons as may
hereafter be selected by the Selling
34
Securityholders irrevocably agreeing in writing to so serve, as their agent to
receive on its behalf service of all process in any such proceedings in any such
court, such service being hereby acknowledged by the Selling Securityholders to
be effective and binding service in every respect. A copy of any such process so
served shall be mailed by registered mail to each Selling Securityholder at its
address provided in Section 15 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 Selling
Securityholders refuses to accept service, the Selling Securityholders hereby
agree that service of process sufficient for personal jurisdiction in any action
against the Selling Securityholders in the State of New York may be made by
registered or certified mail, return receipt requested, to the Selling
Securityholders at their address provided in Section 15 hereof, and the Selling
Securityholders hereby acknowledge 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 Selling Securityholders in the courts of any
other jurisdiction.
19. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[remainder of page intentionally left blank.]
35
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 each of the
several Underwriters.
Very truly yours,
WILSHIRE FINANCIAL SERVICES GROUP INC., a Delaware
corporation
By:
--------------------------------------------
Xxxxxx X. Xxxxxxxxxx,
Chief Executive Officer
XXXXXXXXXX FAMILY LIMITED
PARTNERSHIP, a Delaware limited partnership
By:
--------------------------------------------
Xxxxxxxx X. Xxxxxxxxxx,
General Partner
TTMM, L.P., a California limited
partnership
By: Ivy Capital Partners, L.P., a California
limited partnership, Its General Partner
By: Wiederhorn Family Limited Partnership,
a California limited partnership
By:
--------------------------------------
Xxxxxx X. Xxxxxxxxxx,
General Partner
-----------------------------------------------
Xxxxxx X. Xxxxxxxxxx
-----------------------------------------------
Xxxxxxxx X. Xxxxxxxxxx
36
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
PRUDENTIAL SECURITIES INCORPORATED
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
BLACK & COMPANY, INC.
By: PRUDENTIAL SECURITIES INCORPORATED
By:
------------------------------------
Xxxx-Xxxxxx Canfin
Managing Director
For itself and on behalf of the Representatives
37
SCHEDULE 1
UNDERWRITERS
Number of Firm
Securities to
Underwriter be Purchased
----------- ------------
Prudential Securities Incorporated..........
Xxxxxxxx, Xxxxxxxx & Co., Inc...............
Black & Company, Inc........................
[Other Underwriters]
-----------------------
Total.........
