1
EXHIBIT 1.1
DISCOVER CARD MASTER TRUST I
Credit Card Pass-Through Certificates
----------------------------------
Underwriting Agreement
----------------------
(Standard Terms)
January 29, 1999
XXXXXX XXXXXXX & CO. INCORPORATED
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Greenwood Trust Company ("Greenwood"), as originator of Discover Card
Master Trust I (the "Trust"), proposes, subject to the terms and conditions
stated herein, to cause to be issued and sold from time to time Credit Card
Pass-Through Certificates (the "Certificates") in one or more series (each, a
"Series"). The Certificates of each Series will consist of one or more Classes
(each, a "Class") of Certificates of such Series. Each Certificate will evidence
a fractional, undivided percentage interest or beneficial interest in the Trust.
The Certificates will be issued by the Trust pursuant to a Pooling and Servicing
Agreement, dated as of October 1, 1993, as amended, and as supplemented by a
Series Supplement relating to the specific Series of Certificates issued
thereunder (the Pooling and Servicing Agreement, as so supplemented, the
"Pooling and Servicing Agreement"), between Greenwood as Master Servicer,
13
2
Servicer and Seller and U.S. Bank National Association (formerly First Bank
National Association, successor trustee to Bank of America Illinois, formerly
Continental Bank, National Association), as trustee (the "Trustee"). To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Pooling and Servicing Agreement.
Each offering of each Class of each Series of Certificates to which
this Agreement applies (the "Securities") made pursuant to the Registration
Statement (as defined herein) will be made through you or through you and other
underwriters for whom you are acting as representatives or through an
underwriting syndicate managed by you. Whenever Greenwood determines to make
such an offering of Securities to which this Agreement shall apply, Greenwood
and one or more Underwriters (as defined herein) will enter into an agreement
(the "Terms Agreement") providing for the sale of the Securities to, and the
purchase and offering thereof by, (i) you, (ii) you and such other underwriters
who execute the Terms Agreement and agree thereby to become obligated to
purchase the Securities from Greenwood, or (iii) you and such other
underwriters, if any, selected by you as have authorized you to enter into such
Terms Agreement on their behalf (in each case, the "Underwriters"). Such Terms
Agreement shall specify the initial principal amount of the Securities to be
issued and their terms not otherwise specified in this Agreement, the price at
which such Securities
-2-
3
are to be purchased by the Underwriters from Greenwood, the aggregate amount of
Securities to be purchased by you and any other Underwriter that is a party to
such Terms Agreement and the initial public offering price or the method by
which the price at which such Securities are to be sold will be determined. The
Terms Agreement ("Terms Agreement"), which shall be substantially in the form
attached hereto, may take the form of an exchange of any standard form of
written communication between or among the Underwriters and Greenwood. Each such
offering of the Securities for which a Terms Agreement is entered into will be
governed by this Agreement, as supplemented by the applicable Terms Agreement,
and this Agreement and such Terms Agreement shall inure to the benefit of and be
binding upon the Underwriters participating in the offering of such Securities.
1. Greenwood represents and warrants to, and agrees with you, as of
the date hereof, and to each Underwriter named in the Terms Agreement as of the
date thereof, that:
(a) A registration statement on Form S-3 (Registration Statement
No. 333-62263) including a prospectus and such amendments thereto as may have
been required to the date hereof, relating to the Certificates and the offering
thereof from time to time in accordance with Rule 415 under the Securities Act
of 1933, as amended (the "Act"), in the form heretofore delivered to you has
been filed with the Securities and Exchange Commission (the "Commission") (which
may have
-3-
4
included one or more preliminary prospectuses and prospectus supplements (each,
a "Preliminary Prospectus") meeting the requirements of Rule 430 of the Act) and
such registration statement, as amended, has become effective; such registration
statement, as amended, and the prospectus and prospectus supplement relating to
the sale of the Securities offered thereby constituting a part thereof, as from
time to time amended or supplemented (including any prospectus and prospectus
supplement filed with the Commission pursuant to Rule 424(b) of the Act) are
respectively referred to herein as the "Registration Statement," the "Basic
Prospectus" and the "Prospectus Supplement" and the Basic Prospectus together
with the Prospectus Supplement relating to the Securities is hereinafter
referred to as the "Prospectus"; the conditions of Rule 415 under the Act have
been satisfied with respect to the Registration Statement; and no other
amendment to the Registration Statement will be filed which shall be reasonably
disapproved by you promptly after reasonable notice thereof.
(b) There is no request by the Commission for any further
amendment of the Registration Statement or the Prospectus or for any additional
information; the Commission has not issued any stop order suspending the
effectiveness of the Registration Statement and Greenwood is not aware of any
proceeding for that purpose having been instituted or threatened; and there has
been no notification with respect to the suspension of the
-4-
5
qualification for sale of the Certificates for sale in any jurisdiction or any
proceeding for such purpose having been instituted or threatened.
(c) As of the date of the Terms Agreement, when the Registration
Statement became effective, when the Prospectus Supplement is first filed
pursuant to Rule 424(b) under the Act, when any other amendment to the
Registration Statement becomes effective, and when any supplement to the
Prospectus Supplement is filed with the Commission, and at the Time of Delivery
(as defined in Section 4), the Registration Statement and the Prospectus (i)
conformed, and any amendments or supplements thereto will conform, in all
material respects to the requirements of the Act and the rules and regulations
of the Commission thereunder and (ii) will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
this representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in writing to
Greenwood by an Underwriter through you expressly for use therein.
(d) Upon payment therefor as provided herein and in the Terms
Agreement, the Securities will have been duly and validly authorized and
(assuming their due authentication by the Trustee) will have been duly and
validly issued and will conform
-5-
6
in all material respects to the description thereof in the Prospectus and will
be entitled to the benefits of the Pooling and Servicing Agreement.
(e) The issue and sale of the Securities and the compliance by
Greenwood with all of the provisions of the Securities, the Pooling and
Servicing Agreement, this Agreement and the Terms Agreement have been or will
have been duly authorized by Greenwood by all necessary corporate action; and
will not conflict with or result in any breach which would constitute a material
default under, or, except as contemplated by the Pooling and Servicing
Agreement, result in the creation or imposition of any lien, charge or
encumbrance upon any of the property or assets of Greenwood or NOVUS Credit
Services Inc. ("NOVUS"), material to Greenwood and NOVUS (whether or not
consolidated) considered as a whole, pursuant to the terms of, any indenture,
loan agreement or other agreement or instrument for borrowed money to which
Greenwood or NOVUS is a party or by which Greenwood or NOVUS may be bound or to
which any of the property or assets of Greenwood or NOVUS, material to Greenwood
and NOVUS (whether or not consolidated) considered as a whole, is subject, nor
will such action result in any material violation of the provisions of the
Certificate of Incorporation or By-Laws of Greenwood or, to the best of
Greenwood's knowledge, any statute or any order, rule or regulation applicable
to Greenwood of any court or any Federal, State or other regulatory authority or
other governmental body having jurisdiction over Greenwood, and
-6-
7
no consent, approval, authorization or other order of, or filing with, any court
or any such regulatory authority or other governmental body is required for the
issue and sale of the Securities except as may be required under the Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and securities
laws of the various states and other jurisdictions which are applicable to the
issue and sale of the Securities and except for the filing of any financing or
continuation statement required to perfect or continue the Trust's interest in
the Receivables.
(f) The Principal Receivables conveyed by Greenwood to the Trust
under the Pooling and Servicing Agreement had an aggregate outstanding balance
determined as of the date stated in the Terms Agreement of not less than the
amount set forth in the Terms Agreement; and
(g) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and the Trust is not required to be registered under the
Investment Company Act of 1940, as amended (the "Investment Company Act").
2. Subject to the terms and conditions herein set forth, Greenwood
agrees to cause to be issued and sold to each of the Underwriters, and each of
the Underwriters agrees, severally and not jointly, to purchase from Greenwood,
at the purchase
-7-
8
price specified in the Terms Agreement, the principal amount of Securities set
forth in the Terms Agreement.
3. (a) From time to time, after the Registration Statement becomes
effective, the several Underwriters propose to offer the Securities for sale
upon the terms and conditions set forth in the Prospectus.
(b) Each Underwriter severally represents and agrees that it will
not offer or sell or deliver any of the Securities in any jurisdiction except
under circumstances that will result in compliance with the applicable laws
thereof, and without limiting the foregoing, each Underwriter severally
represents and agrees that (i) it has complied and will comply with all
applicable provisions of the Financial Services Xxx 0000 and the Public Offers
of Securities Regulations 1995 with respect to anything done by it in relation
to the Securities in, from or otherwise involving the United Kingdom; (ii) it
has only issued or passed on and will only issue or pass on in the United
Kingdom any document received by it in connection with the issue of the
Securities to a person who is of a kind described in Article 11(3) of the
Financial Services Xxx 0000 (Investment Advertisements) (Exemptions) Order 1996
or who is a person to whom the document may otherwise lawfully be issued or
passed on; (iii) if it is an authorized person under Chapter III of Part I of
the Financial Services Xxx 0000, it has only promoted and will only promote (as
that term is defined in Regulation 1.02 of the
-8-
9
Financial Services (Promotion of Unregulated Schemes) Regulations 1991) to any
person in the United Kingdom the scheme described in the Prospectus Supplement
if that person is of a kind described either in Section 76(2) of the Financial
Services Xxx 0000 or in Regulation 1.04 of the Financial Services (Promotion of
Unregulated Schemes) Regulation 1991; and (iv) it is a person of a kind
described in Article 11(3) of the Financial Services Xxx 0000 (Investment
Advertisements) (Exemptions) Order 1996.
(c) Each Underwriter, severally, represents that it will not, at
any time that such Underwriter is acting as an "underwriter" (as defined in
Section 2(11) of the Act) with respect to the Securities, transfer, deposit or
otherwise convey any Securities into a trust or other type of special purpose
vehicle that issues securities or other instruments backed in whole or in part
by, or that represents interests in, such Securities without the prior written
consent of Greenwood.
4. Securities to be purchased by each Underwriter hereunder and under
the Terms Agreement shall be delivered by or on behalf of Greenwood to you for
the account of such Underwriter, against payment by such Underwriter or on its
behalf of the purchase price thereof in immediately available funds. Unless
otherwise specified in the Terms Agreement, such delivery shall occur at the
office of Xxxxxx & Xxxxxxx, Chicago, Illinois or such other place as you and
Greenwood may agree upon in writing. The time and date of such delivery shall be
set forth
-9-
10
in the Terms Agreement or at such other time and date as you and Greenwood may
agree upon in writing, such time and date being herein called the "Time of
Delivery." Unless otherwise specified in the Terms Agreement, the Securities
shall be represented by definitive certificates, registered in the name of Cede
& Co., as nominee for The Depository Trust Company. Such definitive certificates
will be made available for inspection at least twenty-four hours prior to the
Time of Delivery at the office of the Trustee, 000 Xxxx Xxxxxx Xxxxx, Xxxxxxx,
Xxxxxxxx 00000.
5. Greenwood agrees with each of the Underwriters:
(a) Immediately following the execution of each Terms Agreement,
Greenwood will prepare a Prospectus Supplement setting forth the amount of
Securities covered thereby and the terms thereof not otherwise specified in the
Basic Prospectus, the price at which such Securities are to be purchased by the
Underwriters from Greenwood, either the initial public offering price or the
method by which the price at which such Securities are to be sold will be
determined, the selling concessions and allowances, if any, and such other
information as Greenwood deems appropriate in connection with the offering of
such Securities, and Greenwood will not make any further amendment or any
supplement to the Registration Statement or Prospectus without first having
furnished you with a copy of the proposed form thereof and given you a
reasonable opportunity to review the same; to advise you promptly after it
receives notice of the time
-10-
11
when any amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus has been
filed and to furnish you with copies thereof; to advise you, promptly after it
receives notice thereof, of the issuance by the Commission of any stop order or
of any order preventing or suspending the use of the Prospectus, of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement or Prospectus or for additional information; and
in the event of the issuance of any such stop order or of any such order
preventing or suspending the use of such Prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its withdrawal;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Securities for offering and sale under the
securities laws of such jurisdictions as you may reasonably request and to
comply with such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions for as long as may be necessary to complete the
distribution of the Securities, provided that in connection therewith Greenwood
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction;
-11-
12
(c) To furnish the Underwriters with copies of the Prospectus in
such quantities as you may from time to time reasonably request, and if at any
time the delivery of a Prospectus is required by law in connection with the
offering or sale of the Securities, and if at such time any event shall have
occurred as a result of which the Prospectus would include an untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, or, if for any other reason it shall be necessary during
such same period to amend or supplement the Prospectus in order to comply with
the Act, to notify you and to prepare and furnish without charge to each
Underwriter and to any dealer in the Securities as many copies as you may from
time to time reasonably request of an amended Prospectus or a supplement to the
Prospectus which will correct such statement or omission or effect such
compliance and in case any Underwriter is required to deliver a Prospectus in
connection with sales of any Securities at any time nine months or more after
the effective date of the Registration Statement, upon your request but at the
expense of such Underwriter, to prepare and deliver to such Underwriter as many
copies as you may reasonably request of an amended or supplemented Prospectus
complying with Section 10(a)(3) of the Act;
-12-
13
(d) To cause the Trust to make generally available to holders of
the Securities, in accordance with Rule 158 under the Act or otherwise, as soon
as practicable, but in any event not later than forty-five days after the end of
the fourth full fiscal quarter (ninety days in the case of the last fiscal
quarter in any fiscal year) following the fiscal quarter ending after the
effective date of the Registration Statement, an earning statement of the Trust
(which need not be audited) complying with Section 11(a) of the Act and covering
a period of at least twelve consecutive months beginning after the effective
date of such Registration Statement;
(e) To pay or cause to be paid all expenses incident to the
performance of its obligations hereunder, including the cost of all
qualifications of the Securities under state securities laws (including
reasonable fees of counsel to the Underwriters in connection with such
qualifications and in connection with legal investment surveys) and the cost of
printing this Agreement and any blue sky and legal investment memoranda.
Greenwood agrees with each of the Underwriters during the period
beginning from the date of the Terms Agreement and continuing to and including
the earlier of (i) the termination of trading restrictions on the Securities, of
which termination you agree to give Greenwood prompt notice confirmed in
writing, and (ii) the Time of Delivery, not to offer, sell, contract to sell
-13-
14
or otherwise dispose of any securities of Greenwood or any other affiliate
thereof or any other trust for which Greenwood or any other affiliate thereof is
depositor, which represent participation interests in Discover Card receivables,
without your prior written consent, which consent shall not be unreasonably
withheld.
6. The obligations of the several Underwriters hereunder shall be
subject, in their discretion, to the condition that all representations and
warranties and other statements of Greenwood herein are, at and as of the Time
of Delivery, true and correct, the condition that Greenwood shall have performed
all of its obligations hereunder theretofore to be performed, and the following
additional conditions:
(a) All actions required to be taken and all filings required to
be made by Greenwood under the Act prior to the Time of Delivery for the
Securities shall have been duly taken or made; and prior to the applicable Time
of Delivery, no stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the Commission; and all
requests for additional information on the part of the Commission shall have
been complied with to the Commission's satisfaction.
(b) All corporate proceedings and related matters in connection
with the organization of Greenwood, the validity of
-14-
15
the Pooling and Servicing Agreement and the registration, authorization, issue,
sale and delivery of the Securities shall have been satisfactory to counsel to
the Underwriters, and such counsel shall have been furnished with such papers
and information as they may reasonably have requested to enable them to pass
upon the matters referred to in this subdivision (b).
(c) Counsel to Greenwood (which for purposes of the opinions
described in clauses (i)-(iii) and the opinions as to the due authorization,
execution and delivery of the Pooling and Servicing Agreement and the due
authorization, execution, issuance and delivery of the Securities in clause (iv)
may be in-house counsel to Greenwood) shall have furnished to you their written
opinion, dated the Time of Delivery, in form and substance satisfactory to you
in your reasonable judgment, to the effect that:
(i) Greenwood is validly existing as a banking corporation in
good standing under the laws of the State of Delaware;
(ii) This Agreement and the Terms Agreement have been duly
authorized, executed and delivered on the part of Greenwood;
(iii) The compliance by Greenwood with all of the provisions of
this Agreement, the Terms Agreement and the Pooling and Servicing Agreement will
not conflict with or result in any breach which would constitute a material
default under, or,
-15-
16
except to the extent contemplated in the Pooling and Servicing Agreement, result
in the creation or imposition of any lien, charge or encumbrance upon any of the
property or assets of Greenwood or NOVUS, material to Greenwood and NOVUS
(whether or not consolidated) considered as a whole, pursuant to the terms of,
any indenture, loan agreement or other agreement or instrument for borrowed
money known to such counsel to which Greenwood or NOVUS is a party or by which
Greenwood or NOVUS may be bound or to which any of the property or assets of
Greenwood or NOVUS, material to Greenwood and NOVUS (whether or not
consolidated) considered as a whole, is subject, nor will such action result in
any material violation of the provisions of the Certificate of Incorporation or
the By-Laws of Greenwood, or to the best knowledge of such counsel, any statute
or any order, rule or regulation applicable to Greenwood of any court or any
Federal, State or other regulatory authority or other governmental body having
jurisdiction over Greenwood other than the Act, the Exchange Act, the Trust
Indenture Act and the Investment Company Act and the rules and regulations under
each of such acts and other than the securities laws of the various states or
other jurisdictions which are applicable to the issue and sale of the Securities
and other state laws relating to the perfection of security interests; and, to
the best knowledge of such counsel, no consent, approval, authorization or
other order of, or filing with, any court or any such regulatory authority or
-16-
17
other governmental body is required for the issue and sale of the Securities
except as may be required under the Act, the Exchange Act, the Trust Indenture
Act and the Investment Company Act and securities laws of the various states or
other jurisdictions which are applicable to the issue and sale of the Securities
and except for the filing of any financing or continuation statement required to
perfect or continue the Trust's interest in the Receivables;
(iv) The Pooling and Servicing Agreement has been duly
authorized, executed and delivered on the part of Greenwood and as to Greenwood
is a valid and binding instrument enforceable in accordance with its terms
except as the foregoing may be limited by insolvency, bankruptcy,
reorganization, moratorium or other laws relating to or affecting the
enforcement of creditors' rights or by general equity principles; the Pooling
and Servicing Agreement is not required to be qualified under the Trust
Indenture Act; the Trust is not required to be registered under the Investment
Company Act; and the Securities have been duly authorized and (assuming their
due authentication by the Trustee) have been duly executed, issued and delivered
and constitute valid and binding obligations of the Trust in accordance with
their terms, entitled to the benefits of the Pooling and Servicing Agreement,
except as the foregoing may be limited by insolvency, bankruptcy, reorganization
or other laws relating to
-17-
18
or affecting the enforcement of creditors' rights or by general equity
principles; and
(v) The Registration Statement and the Prospectus and any further
amendments and supplements thereto made by Greenwood prior to the Time of
Delivery (other than financial, statistical and accounting data therein as to
which such counsel need express no opinion) comply as to form in all material
respects with the requirements of the Act and the rules and regulations
thereunder.
In rendering such opinion, counsel may rely to the extent they deem
appropriate upon certificates of officers or other executives of Greenwood and
their affiliates and of public officials as to factual matters and upon opinions
of other counsel. Such counsel shall also state that nothing has come to their
attention which has caused them to believe that the Registration Statement as of
its effective date or the Prospectus as of the date thereof and as of the
applicable Time of Delivery (other than financial, statistical and accounting
data therein, as to which such counsel need express no belief) contains an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading.
(d) At the Time of Delivery, Deloitte & Touche LLP shall have
furnished to you a letter or letters, dated the
-18-
19
respective date of delivery thereof, in form and substance satisfactory to you;
(e) (i) Greenwood and its affiliates (whether or not
consolidated) considered as a whole, shall not have sustained, since the date of
the latest audited financial statement previously delivered to you, any material
loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree and (ii) since the date of the
Terms Agreement there shall not have been any material change in the capital
stock accounts or long-term debt of Greenwood or any material adverse change in
the general affairs, financial position, shareholders' equity or results of
operations of Greenwood and its affiliates (whether or not consolidated)
considered as a whole, the effect of which in any such case described in clause
(i) or (ii), in your judgment renders it inadvisable to proceed with the public
offering or the delivery of the Securities on the terms and in the manner
contemplated in the Prospectus as amended or supplemented;
(f) Subsequent to the date of the Terms Agreement none of (i) the
United States shall have become engaged in the outbreak or escalation of
hostilities involving the United States or there has been a declaration by the
United States of a national emergency or a declaration of war, (ii) a banking
moratorium shall have been declared by either Federal or New York
-19-
20
State authorities, or (iii) trading in securities generally on the New York
Stock Exchange shall have been suspended or limited or minimum prices shall have
been established by such Exchange, any of which events, in your judgment,
renders it inadvisable to proceed with the public offering or the delivery of
the Securities;
(g) At or prior to the Time of Delivery, the Certificates shall
be assigned the ratings by Xxxxx'x Investors Service, Inc. ("Moody's") and by
Standard & Poor's Ratings Group, a division of The XxXxxx-Xxxx Companies Inc.
("Standard & Poor's") set forth in the Terms Agreement;
(h) Greenwood shall have furnished or caused to be furnished to
you at the Time of Delivery certificates satisfactory to you as to the accuracy
at and as of such Time of Delivery of the representations and warranties of
Greenwood herein and as to the performance by Greenwood of all its obligations
hereunder to be performed at or prior to the Time of Delivery and Greenwood
shall have also furnished you similar certificates satisfactory to you as to the
matters set forth in subdivision (a) of this Section 6.
(i) The Underwriters shall be entitled to rely on the opinions of
an outside counsel acceptable to the Underwriters as special counsel to
Greenwood as delivered to Moody's and Standard & Poor's in connection with the
rating of the Securities.
-20-
21
7. (a) Greenwood will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement, or the Prospectus, or any amendment or supplement thereto furnished
by Greenwood, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or (in the case
of the Registration Statement or the Prospectus, or any amendment or supplement
thereto) necessary to make the statements therein not misleading or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim; provided, however, that
Greenwood shall 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 an untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with
-21-
22
written information furnished to Greenwood by any Underwriter through you
expressly for use therein; and provided, further, that Greenwood shall not be
liable to any Underwriter or any person controlling such Underwriter under the
indemnity agreement in this subdivision (a) with respect to the Preliminary
Prospectus or the Prospectus, as the case may be, to the extent that any such
loss, claim, damage or liability of such Underwriter or controlling person
results solely from the fact that such Underwriter sold Securities to a person
to whom there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the Prospectus or of the Prospectus as then amended or
supplemented if Greenwood had previously furnished copies thereof to such
Underwriter.
(b) Each Underwriter will indemnify and hold harmless Greenwood
against any losses, claims, damages or liabilities to which Greenwood may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or (in the case of the Registration Statement or the Prospectus, or any
amendment or supplement
-22-
23
thereto) necessary to make the statements therein not misleading or necessary to
make the statements therein, in the light of the circumstances under which they
were made, 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 any Preliminary Prospectus, the Registration Statement, or
the Prospectus, or any such amendment or supplement in reliance upon and in
conformity with written information furnished to Greenwood by such Underwriter
through you expressly for use therein; and will reimburse Greenwood for any
legal or other expenses reasonably incurred by Greenwood in connection with
investigating or defending any such action or claim.
(c) Within a reasonable period after receipt by an indemnified
party under subdivision (a) or (b) above of notice of the commencement of any
action with respect to which indemnification is sought under such subdivision or
contribution may be sought under subdivision (d) below, such indemnified party
shall notify the indemnifying party in writing of the commencement thereof. In
case any such action shall be brought against any indemnified party, the
indemnifying party shall be entitled to participate therein, and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so
-23-
24
to assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under subdivision (a) or (b) above in
respect of any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) (i) in such
proportion as is appropriate to reflect the relative benefits received by
Greenwood on the one hand and the Underwriters on the other from the offering of
the Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of Greenwood on the one hand and the Underwriters on the other in
connection with the statements or omissions which 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
Greenwood on the one hand and such Underwriters on the other shall be deemed to
be in the same
-24-
25
proportion as the total net proceeds from the offering (before deducting
expenses) received by Greenwood bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth on the cover
page of the Prospectus Supplement. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by Greenwood on the one hand and the
Underwriters on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission of
Greenwood on the one hand and the Underwriters, directly or through you, on the
other hand. With respect to any Underwriter, such relative fault shall also be
determined by reference to the extent (if any) to which such losses, claims,
damages or liabilities (or actions in respect thereof) with respect to any
Preliminary Prospectus result from the fact that such Underwriter sold the
Securities to a person to whom there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the Prospectus or of the Prospectus
as then amended or supplemented if Greenwood had previously furnished copies
thereof to such Underwriter. Greenwood and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this subdivision (d) were
determined by per capita allocation among the indemnifying parties (even if the
-25-
26
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to above in this subdivision (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subdivision (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subdivision (d), no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The obligations of the Underwriters in this
subdivision (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of Greenwood under this Section 7 shall be in
addition to any liability which Greenwood
-26-
27
may otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Underwriter within the meaning of the Act; and
the obligations of the Underwriters under this Section 7 shall be in addition to
any liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of
Greenwood and to each person, if any, who controls Greenwood within the meaning
of the Act.
8. (a) If any Underwriter shall default in its obligation to purchase
the Securities which it has agreed to purchase hereunder and under the Terms
Agreement, you may in your discretion arrange for yourselves or another party or
other parties to purchase such Securities on the terms contained herein. If
within thirty-six hours after such default by any Underwriter you do not arrange
for the purchase of such Securities, then Greenwood shall be entitled to a
further period of thirty-six hours within which to procure another party or
other parties to purchase such Securities on such terms. In the event that,
within the respective prescribed periods, you notify Greenwood that you have so
arranged for the purchase of such Securities, or Greenwood notifies you that it
has so arranged for the purchase of such Securities, you or Greenwood shall have
the right to postpone the Time of Delivery for such Securities for a period of
not more than seven days, in order to effect whatever changes may thereby be
made necessary in the Registration
-27-
28
Statement or the Prospectus as amended or supplemented, or in any other
documents or arrangements, and Greenwood agrees to file promptly any amendments
or supplements to the Registration Statement or the Prospectus which may thereby
be made necessary. The term "Underwriter" as used in this Agreement shall
include any person substituted under this Section with like effect as if such
person had originally been a party to this Agreement with respect to such
Securities.
(b) If, after giving effect to any arrangements for the purchase
of the Securities of a defaulting Underwriter or Underwriters by you and
Greenwood as provided in subdivision (a) above, the aggregate principal amount
of such Securities which remains unpurchased does not exceed one-eleventh of the
aggregate principal amount of all the Securities, then Greenwood shall have the
right to require each non-defaulting Underwriter to purchase the principal
amount of Securities which such Underwriter agreed to purchase hereunder and
under the Terms Agreement and, in addition, to require each non-defaulting
Underwriter to purchase its pro rata share (based on the principal amount of the
Securities which such Underwriter agreed to purchase hereunder and under the
Terms Agreement) of the Securities of such defaulting Underwriter or
Underwriters for which such arrangements have not been made; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
-28-
29
(c) If, after giving effect to any arrangements for the purchase
of the Securities of a defaulting Underwriter or Underwriters by you and
Greenwood as provided in subdivision (a) above, the aggregate principal amount
of Securities which remains unpurchased exceeds one-eleventh of the aggregate
principal amount of all the Securities, as referred to in subdivision (b) above,
or if Greenwood shall not exercise the right described in subdivision (b) above
to require non-defaulting Underwriters to purchase Securities of a defaulting
Underwriter or Underwriters, then the Terms Agreement relating to the Securities
shall thereupon terminate, without liability on the part of any non-defaulting
Underwriter or Greenwood, except for the expenses to be borne by Greenwood as
provided in Section 5(e) hereof and the indemnity and contribution agreements in
Section 7 hereof; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
9. The respective indemnities, agreements, representations, warranties
and other statements of Greenwood and the several Underwriters, as set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or Greenwood or
any officer or director or controlling person of Greenwood, and shall survive
delivery of
-29-
30
and payment for the Securities. Anything herein to the contrary notwithstanding,
the indemnity agreement of Greenwood in subdivisions (a) and (e) of Section 7
hereof, the representations and warranties in subdivisions (b) and (c) of
Section 1 hereof and any representation or warranty as to the accuracy of the
Registration Statement or the Prospectus as amended or supplemented contained in
any certificate furnished by Greenwood pursuant to subdivision (i) of Section 6
hereof, insofar as they may constitute a basis for indemnification for
liabilities (other than payment by Greenwood of expenses incurred or paid in the
successful defense of any action, suit or proceeding) arising under the Act,
shall not extend to the extent of any interest therein of an Underwriter or a
controlling person of an Underwriter if a director, officer or controlling
person of Greenwood when the Registration Statement becomes effective or a
person who, with his consent, is named in the Registration Statement as being
about to become a director of Greenwood, is a controlling person of such
Underwriter, except in each case to the extent that an interest of such
character shall have been determined by a court of appropriate jurisdiction as
not against public policy as expressed in the Act. Unless in the opinion of
counsel for Greenwood the matter has been settled by controlling precedent,
Greenwood will, if a claim for such indemnification is asserted, submit to a
court of appropriate jurisdiction the question whether such interest is against
public policy as
-30-
31
expressed in the Act and will be governed by the final adjudication of such
issue.
10. If the Terms Agreement shall be terminated pursuant to Section 8
hereof, Greenwood shall not then be under any liability to any Underwriter with
respect to the Securities subject to such Terms Agreement except as provided in
Section 5(e) and Section 7 hereof; but, if for any other reason the Securities
are not delivered by or on behalf of Greenwood as provided herein, Greenwood
will reimburse the Underwriters through you for all out-of-pocket expenses
approved in writing by you, including fees and disbursements of counsel,
reasonably incurred by the Underwriters in making preparations for the purchase,
sale and delivery of the Securities, but Greenwood shall not then be under any
further liability to any Underwriter with respect to the Securities except as
provided in Section 5(e) and Section 7 hereof.
11. In all dealings hereunder, you shall act on behalf of each of the
Underwriters and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you, or by Xxxxxx Xxxxxxx & Co. Incorporated on behalf of you.
All statements, requests, notices and agreements hereunder shall be in
writing or by telegram if promptly confirmed in writing and if to the
Underwriters shall be sufficient in all respects, if delivered or sent by
registered
-31-
32
mail to you jointly in care of Xxxxxx Xxxxxxx & Co. Incorporated, 0000 Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Asset Finance Group and if to Greenwood
shall be sufficient in all respects if delivered or sent by registered mail to
Greenwood at 00 Xxxx'x Xxx, Xxx Xxxxxx, Xxxxxxxx 00000, Attention: President.
12. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, Greenwood and, to the extent provided in Section 7
and Section 9 hereof, the officers and directors of Greenwood and each person
who controls Greenwood or any Underwriter, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No purchaser of
any of the Securities from any Underwriter shall be deemed a successor or assign
by reason merely of such purchase.
13. Time shall be of the essence of this Agreement.
14. This Agreement shall be construed in accordance with the laws of
the State of New York. "Business day" as used herein shall mean any day when the
Commission's office in Washington, D.C. is normally open for business.
15. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one and
the same instrument.
-32-
33
If the foregoing is in accordance with your understanding, please
sign and return two counterparts hereof and upon the acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement between each of the Underwriters and
Greenwood.
Very truly yours,
GREENWOOD TRUST COMPANY
By: /s/ Xxxx X. Xxxxx
-----------------------------
Accepted as of the date hereof:
XXXXXX XXXXXXX & CO. INCORPORATED
By: /s/ J. Xxxxxxx Xxx Xxxx
--------------------------------
-33-
