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EXHIBIT 1.1
4,100,000 SHARES(1)
TELEBANC FINANCIAL CORPORATION
COMMON STOCK
UNDERWRITING AGREEMENT
JULY ____, 1998
BANCAMERICA XXXXXXXXX XXXXXXXX
CIBC XXXXXXXXXXX CORP.
XXXX XXXXX XXXX XXXXXX, INCORPORATED
As Representatives of the several Underwriters
c/o BancAmerica Xxxxxxxxx Xxxxxxxx
000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
TELEBANC FINANCIAL CORPORATION, a Delaware corporation (the
"Company"), addresses you as the Representatives of each of the persons, firms
and corporations listed in Schedule A hereto (herein collectively called the
"Underwriters" and each an "Underwriter") and hereby confirms its agreement with
the several Underwriters as follows:
1. Description of Shares. The Company proposes to issue and sell 4,100,000
shares of its authorized and unissued common stock, par value $0.01 per share,
to the several Underwriters (the "Firm Shares"). The Company also proposes to
grant to the Underwriters an option to purchase up to 615,000 additional shares
of the Company's common stock, par value $0.01 per share (the "Option Shares"),
as provided in Section 7 hereof. As used in this Agreement, the term "Shares"
shall include the Firm Shares and the Option Shares. All common stock, par
value $0.01 per share,
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of the Company to be outstanding after giving effect to the sales contemplated
hereby, including the Shares, is hereinafter referred to as "Common Stock."
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(1) Plus an option to purchase up to 615,000 additional shares from the
Company to cover over-allotments, if any.
2. Representations, Warranties and Agreements of the Company. The Company
represents and warrants to and agrees with each Underwriter that:
(a) A registration statement on Form S-2 (File No. 333-52871) with respect to
the Shares, including a prospectus subject to completion, has been prepared by
the Company in conformity with the requirements of the Securities Act of 1933,
as amended (the "Act"), and the applicable rules and regulations (the "Rules
and Regulations") of the Securities and Exchange Commission (the "Commission")
under the Act and has been filed with the Commission; such amendments to such
registration statement, such amended prospectuses subject to completion and
such abbreviated registration statements pursuant to Rule 462(b) of the Rules
and Regulations as may have been required prior to the date hereof have been
similarly prepared and filed with the Commission; and the Company will file
such additional amendments to such registration statement, such amended
prospectuses subject to completion and such abbreviated registration statements
as may hereafter be required. Copies of such registration statement and
amendments, of each related prospectus subject to completion (the "Preliminary
Prospectuses"), including all documents incorporated by reference therein, and
of any abbreviated registration statement pursuant to Rule 462(b) of the Rules
and Regulations have been delivered to you.
If the registration statement relating to the Shares has been declared
effective under the Act by the Commission, the Company will prepare and
promptly file with the Commission the information omitted from the registration
statement pursuant to Rule 430A(a) or, if BancAmerica Xxxxxxxxx Xxxxxxxx, on
behalf of the several Underwriters, shall agree to the utilization of Rule 434
of the Rules and Regulations, the information required to be included in any
term sheet filed pursuant to Rule 434(b) or (c), as applicable, of the Rules
and Regulations, pursuant to subparagraph (1), (3), (4) or (7) of Rule 424(b)
of the Rules and Regulations or as part of a post-effective amendment to the
registration statement (including a final form of prospectus). If the
registration statement relating to the Shares has not been declared effective
under the Act by the Commission, the Company will prepare and promptly file an
amendment to the registration statement, including a final form of prospectus,
or, if BancAmerica Xxxxxxxxx Xxxxxxxx, on behalf of the several Underwriters,
shall agree to the utilization of Rule 434 of the Rules and Regulations, the
information required to be included in any term sheet filed pursuant to Rule
434(b) or (c), as applicable, of the Rules and Regulations. The term
"Registration Statement" as used in this Agreement shall mean such registration
statement, including financial statements, schedules and exhibits, in the form
in which it became or becomes, as the case may be, effective (including, if the
Company omitted information from the registration statement pursuant to Rule
430A(a) or files a term sheet pursuant to Rule 434
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of the Rules and Regulations, the information deemed to be a part of the
registration statement at the time it became effective pursuant to Rule 430A(b)
or Rule 434(d) of the Rules and Regulations) and, in the event of any amendment
thereto or the filing of any abbreviated registration statement pursuant to
Rule 462(b) of the Rules and Regulations relating thereto after the effective
date of such registration statement, shall also mean (from and after the
effectiveness of such amendment or the filing of such abbreviated registration
statement) such registration statement as so amended, together with any such
abbreviated registration statement. The term "Prospectus" as used in this
Agreement shall mean the prospectus relating to the Shares as included in such
Registration Statement at the time it becomes effective (including, if the
Company omitted information from the Registration Statement pursuant to Rule
430A(a) of the Rules and Regulations, the information deemed to be a part of
the Registration Statement at the time it became effective pursuant to Rule
430A(b) of the Rules and Regulations); provided, however, that if in reliance
on Rule 434 of the Rules and Regulations and with the consent of BancAmerica
Xxxxxxxxx Xxxxxxxx, on behalf of the several Underwriters, the Company shall
have provided to the Underwriters a term sheet pursuant to Rule 434(b) or (c),
as applicable, prior to the time that a confirmation is sent or given for
purposes of Section 2(10)(a) of the Act, the term "Prospectus" shall mean the
"prospectus subject to completion" (as defined in Rule 434(g) of the Rules and
Regulations) last provided to the Underwriters by the Company and circulated by
the Underwriters to all prospective purchasers of the Shares (including the
information deemed to be a part of the Registration Statement at the time it
became effective pursuant to Rule 434(d) of the Rules and Regulations).
Notwithstanding the foregoing, if any revised prospectus shall be provided to
the Underwriters by the Company for use in connection with the offering of the
Shares that differs from the prospectus referred to in the immediately
preceding sentence (whether or not such revised prospectus is required to be
filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations), the term "Prospectus" shall refer to such revised prospectus from
and after the time it is first provided to the Underwriters for such use. If in
reliance on Rule 434 of the Rules and Regulations and with the consent of
BancAmerica Xxxxxxxxx Xxxxxxxx, on behalf of the several Underwriters, the
Company shall have provided to the Underwriters a term sheet pursuant to Rule
434(b) or (c), as applicable, prior to the time that a confirmation is sent or
given for purposes of Section 2(10)(a) of the Act, the Prospectus and the term
sheet, together, will not be materially different from the prospectus in the
Registration Statement.
(b) To the Company's knowledge, the Commission has not issued any order
preventing or suspending the effectiveness of the Registration Statement or
instituted proceedings for that purpose. As of its date, each such Preliminary
Prospectus has conformed in all material respects to the requirements of the
Act and the Rules and Regulations and has not included any untrue statement of
a material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and at the time the Registration Statement became or
becomes, as the case may be, effective and at all times subsequent thereto up
to and on the Closing Date (hereinafter defined) and on any later date on which
Option Shares are to be purchased, (i) the Registration Statement and the
Prospectus, and any amendments or supplements thereto, contained and will
contain all material information required to be included therein by the Act and
the Rules and Regulations and will in all material respects conform to the
requirements of the Act and the Rules and Regulations, (ii) the Registration
Statement, and any
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amendments or supplements thereto, did not and will not include any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (iii) the
Prospectus, and any amendments or supplements thereto, did not and will not
include any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that none of the representations and warranties contained in this subparagraph
(b) shall apply to information contained in or omitted from the Registration
Statement or the Prospectus, or any amendment or supplement thereto, in
reliance upon, and in conformity with, written information relating to any
Underwriter furnished to the Company by any Underwriter specifically for use in
the preparation thereof.
(c) (i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware with all
requisite corporate power and authority to own, lease and operate its
properties and conduct its business as described in the Prospectus; the Company
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the ownership or leasing of its
properties or the conduct of its business requires such qualification, except
where the failure to be so qualified or be in good standing would not have a
material adverse effect on the financial condition, earnings, operations,
assets or business of the Company and its Subsidiaries (as defined below) taken
as a whole (a "Material Adverse Effect"); to the Company's knowledge no
proceeding has been instituted in any such jurisdiction, revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and authority or
qualification; the Company and each Subsidiary is in possession of and
operating in compliance with all authorizations, licenses, certificates,
consents, orders and permits from state, federal and other regulatory
authorities, all of which are valid and in full force and effect, except where
such failure to possess, operate in compliance with, or maintain such
authorizations, licenses, certificates, consents, orders and permits would not
have a Material Adverse Effect; neither the Company nor any Subsidiary is in
violation of its charter or bylaws or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in any
bond, debenture, note or other evidence of indebtedness, or in any lease,
contract, indenture, mortgage, deed of trust, loan agreement, joint venture or
other agreement or instrument to which the Company or the Subsidiary is a party
or by which it or its respective properties may be bound, except where the
failure to so comply would not have a Material Adverse Effect; and neither the
Company nor any Subsidiary is in violation of any law, order, rule, regulation,
writ, injunction, judgment or decree of any court, government or governmental
agency or body, domestic or foreign, having jurisdiction over the Company or
the Subsidiary or over their respective properties which violation could be
reasonably expected to have a Material Adverse Effect. The Company does not own
or control, directly or indirectly, any corporation, association or other
entity other than TeleBank, a federally chartered savings bank ("TeleBank"),
TeleBanc Capital Trust I, TeleBanc Capital Trust II, TeleBanc Capital Markets,
Inc., TeleBanc Insurance Services, Inc., TeleBanc Servicing Corporation, TBK
Acquisition Corp. ("Acquisition Corp."), AGT Mortgage Services, LLC (which is
inactive), AG Arbor Management, L.L.C., and AGT PRA LLC (the entities referred
to in this Section 2(c)(i) may each be referred to hereinafter individually as
a "Subsidiary" and collectively as "Subsidiaries").
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Notwithstanding the fact that AGT Mortgage Services, LLC, AG Arbor Management,
LLC and AGT PRA LLC (collectively, the "Excepted Entities") are included within
the definition of "Subsidiaries" hereunder, the Underwriters hereby acknowledge
the assertion of the Company that, because it does not, directly or indirectly,
beneficially own more than 50% of the outstanding membership or other interests
of any of such Excepted Entities, the Company does not control the Excepted
Entities.
(ii) The Company is a registered savings and loan holding company under the
Home Owners' Loan Act ("HOLA").
(iii) Each Subsidiary has been duly incorporated or formed, as applicable, and
is validly existing as a corporation, limited liability company or business
trust, as applicable, in good standing under the laws of the State of Delaware,
has full corporate power and authority to own, lease and operate its properties
and conduct its business as described in the Prospectus (or, if not so
described, as currently conducted), except to the extent that AGT Mortgage
Services, LLC has adopted a unanimous written consent to cease operations in
July 1997, and is duly qualified as a foreign corporation, limited liability
company or business trust, as applicable, to transact business and is in good
standing in each jurisdiction where such qualification or good standing is
necessary or to the extent not so qualified or not in good standing, where the
failure to obtain such qualification or to be in good standing would not have a
Material Adverse Effect; to the Company's knowledge, no proceeding has been
instituted in any such jurisdiction, revoking, limiting or curtailing, or
seeking to revoke, limit or curtail, such power and authority or qualification,
except to the extent that AGT Mortgage Services, LLC has adopted a unanimous
written consent to cease operations in July 1997; the activities of the
Subsidiaries of TeleBank are permitted to subsidiaries of a federally chartered
savings bank under applicable law, including the rules and regulations of the
Office of Thrift Supervision set forth in Chapter V of Title 12 of the Code of
Federal Regulations; all of the issued and outstanding capital stock of each
Subsidiary that is a corporation has been duly authorized and validly issued
and is fully paid and nonassessable and is owned, directly or through other
Subsidiaries, by the Company; all of the common interests of each Subsidiary
that is a business trust have been duly authorized and validly issued, and are
fully paid and nonassessable and are owned by the Company; all of the
outstanding membership or other interests of each Subsidiary that is a limited
liability company have been duly authorized and validly issued and are fully
paid and nonassessable, and the Company, through other Subsidiaries, owns 50%
of the outstanding membership or other interests of each Subsidiary that is a
limited liability company; all of the issued and outstanding capital stock or
membership or other interests, as the case may be, of each Subsidiary owned by
the Company, directly or through other Subsidiaries, is or are free and clear
of any and all pledges, liens, security interests, encumbrances, claims and
equitable interests (collectively, "Liens"); other than the Company's ownership
interests in the Subsidiaries, any Subsidiary's ownership of another
Subsidiary, and the Company's indirect ownership of membership interests in
Portfolio Recovery Associates, L.L.C., a Delaware limited liability company,
the Company does not own, directly or through Subsidiaries, more than one-half
of 1% of the outstanding capital, membership or other interests of any
corporation, limited liability company, trust, limited partnership, association
or other organization; and neither the Company nor any Subsidiary is a partner
in any general partnership, a party to any joint venture or a general partner
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in any limited partnership.
(d) The Company has all requisite right, power and authority to enter into this
Agreement and perform the transactions contemplated hereby. This Agreement has
been duly authorized, executed and delivered by the Company and is a valid and
binding agreement on the part of the Company, enforceable in accordance with
its terms, except as rights to indemnification hereunder may be limited by
applicable law and except as the enforcement hereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles; the performance of this Agreement and the consummation of
the transactions herein contemplated by the Company will not result in a breach
or violation of any of the terms and provisions of, or constitute a default
under, (i) any bond, debenture, note or other evidence of indebtedness, or
under any lease, contract, indenture, mortgage, deed of trust, loan agreement,
joint venture or other agreement or instrument to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary or their
respective properties may be bound, (ii) the charter, including certificates of
designations, or bylaws of the Company or of any Subsidiary, or (iii) any law,
order, rule, regulation, writ, injunction, judgment or decree of any court,
government or governmental agency or body, domestic or foreign, having
jurisdiction over the Company or any Subsidiary or over its properties if any
such breach or violation would result in a Material Adverse Effect. No consent,
approval, authorization or order of or qualification with any court, government
or governmental agency or body, domestic or foreign, having jurisdiction over
the Company or any Subsidiary or over its properties is required for the
execution and delivery of this Agreement and the consummation by the Company of
the transactions herein contemplated, except such as may be required under the
Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
all of which requirements have been satisfied in all material respects, or
under state or other securities laws.
(e) There is not any pending or, to the best of the Company's knowledge,
threatened action, suit, claim or proceeding against the Company or any
Subsidiary, or any of their respective directors, officers or properties,
assets or rights before any court, government or governmental agency or body,
domestic or foreign, having jurisdiction over the Company or any Subsidiary or
over their respective directors, officers or properties or otherwise which, if
adversely determined, (i) would or would be reasonably likely to result in a
Material Adverse Effect, (ii) would or would be reasonably likely to prevent
consummation of the transactions contemplated hereby or (iii) is required to be
disclosed in the Registration Statement or the Prospectus and is not so
disclosed; and there are no agreements, contracts, leases or documents of the
Company or any Subsidiary required to be described or referred to in the
Registration Statement or Prospectus or to be filed as an exhibit to the
Registration Statement by the Act or the Rules and Regulations which have not
been accurately described in all material respects in the Registration
Statement or Prospectus or filed as exhibits to the Registration Statement.
(f) All outstanding capital stock of the Company has been duly authorized and
validly issued and is fully paid and nonassessable, has been issued in
compliance with all federal and state securities laws, was not issued in
violation of or subject to any preemptive rights or other rights to subscribe
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for or purchase securities, and the Company's authorized and outstanding
capital stock is as set forth in the Prospectus under the caption
"Capitalization" (except for subsequent issuances, if any, pursuant to this
Agreement, reservations, agreements or employee benefit plans referred to in
the Prospectus, and the exercise of convertible securities, warrants and
options referred to in the Prospectus) and conforms in all material respects to
the statements relating thereto contained in the Registration Statement and the
Prospectus (and such statements fairly reflect in all material respects state
the substance of the instruments defining the capitalization of the Company);
the Firm Shares and the Option Shares have been duly authorized for issuance
and sale to the Underwriters pursuant to this Agreement and, when issued and
delivered by the Company against payment therefor in accordance with the terms
of this Agreement, will be duly and validly issued and fully paid and
nonassessable, and will be sold free and clear of any Liens and no preemptive
right, co-sale right, registration right, right of first refusal or other
similar right of stockholders exists with respect to any of the Firm Shares or
Option Shares or the issuance and sale thereof other than those that have been
expressly waived prior to the date hereof. No further approval or authorization
of any stockholder, the Company's Board of Directors or others is required for
the issuance and sale or transfer of the Shares except as may be required under
state or other securities laws. Except as disclosed in the Prospectus and the
Company's financial statements, and the related notes thereto, included in the
Prospectus, the Company does not have outstanding any options or warrants to
purchase, or any preemptive rights or other rights to subscribe for or to
purchase, any securities or obligations convertible into, or any contracts or
commitments to issue or sell, its capital stock or any such options, warrants,
rights, convertible securities or obligations. The description of the Company's
stock option and other stock plans or arrangements, and the options or other
rights granted and exercised thereunder, set forth in the Prospectus fairly
presents in all material respects the information required to be shown with
respect to such plans, arrangements, options and rights.
(g) (i) The Company is a party to an Agreement and Plan of Merger dated as of
January 14, 1998, as amended on May 29, 1998, with Direct Financial
Corporation, a New Jersey corporation ("Direct"), and Acquisition Corp., which
provides for, among other things, the Company's acquisition of Direct through
(a) the merger of Acquisition Corp. with and into Direct, with Direct being the
surviving corporation, and (b) immediately upon consummation of such merger,
the merger of Direct's wholly owned subsidiary Premium Bank, F.S.B.
("Premium"), with and into TeleBank, with TeleBank being the surviving bank
(the "Merger Agreement").
(ii) The Merger Agreement is in full force and effect, and neither the Company,
Acquisition Corp., nor, to the Company's knowledge, Direct is in breach of any
representation, warranty, covenant, agreement, obligation or condition therein
or in any agreement or other document ancillary thereto, and no waiver has been
granted in respect of any of such above-mentioned representations, warranties,
covenants, agreements, obligations and conditions;
(iii) None of the conditions precedent to the obligations of the Company or
Direct to effect the merger of Direct into the Company and of Premium into
TeleBanc under the Merger Agreement, including those set forth in Article V of
the Merger Agreement, have been waived by either the Company or Direct, and
currently the Company has no expectation or reasonable basis to expect that
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any such waiver will be necessary to effect such mergers, as contemplated by
the Merger Agreement.
(h) Xxxxxx Xxxxxxxx LLP, which has examined the consolidated financial
statements of the Company, together with the related schedules and notes, as of
December 31, 1996 and 1997 and for each of the three years ended December 31,
1997 and the supplemental financial statements of the Company, together with
the related schedules and notes, as of December 31, 1996 and 1997 and each of
the three years ended December 31, 1997, which have been delivered to the
Underwriters, and in the case of such statements relating to the Company which
have been filed with the Commission as a part of the Registration Statement,
and which are included in the Prospectus, are independent public accountants
within the meaning of the Act and the Rules and Regulations; the audited
consolidated financial statements of the Company together with the related
schedules and notes, and the unaudited consolidated financial information
regarding the Company, delivered to the Underwriters, and in the case of the
audited and unaudited financial statements and related schedules and notes
relating to the Company forming part of the Registration Statement, and the
Prospectus, fairly present in all material respects the consolidated financial
position and the results of operations of the Company at the respective dates
and for the respective periods to which they apply; and all audited
consolidated financial statements of the Company, together with the related
schedules and notes, and the unaudited consolidated financial information
regarding the Company, filed with the Commission as part of the Registration
Statement, have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved except as may
be otherwise stated therein. (For purposes of this subparagraph (h), all
references to the Company shall be deemed to include the Subsidiaries.) The
selected and summary financial and statistical data included in the
Registration Statement present fairly in all material respects the information
shown therein and have been compiled on a basis consistent with the audited
financial statements presented therein. No other financial statements or
schedules are required to be included in the Registration Statement pursuant to
the Act and the Rules and Regulations.
(i) Since March 31, 1998, or such later dates as of which information is given
in the Registration Statement and the Prospectus, except as otherwise disclosed
in the Prospectus, there has not been (i) any material adverse change in the
financial condition, earnings, operations or business of the Company, (ii) any
transaction in respect of the Company or any Subsidiary that is material to the
Company except transactions entered into in the ordinary course of business and
the obligations associated with the Company's issuance of TCT II Junior
Subordinated Debentures (as defined in the Registration Statement and
Prospectus), as disclosed in the registration statement on Form S-2 (File No.
333-53689) as filed with the Commission to register capital securities, Series
A, to be issued by TeleBanc Capital Trust II, (iii) any obligation, direct or
contingent, that is material to the Company incurred by the Company or any
Subsidiary except obligations incurred in the ordinary course of business, (iv)
any change in the capital stock or outstanding indebtedness of the Company or
any Subsidiary that is material to the Company, (v) any dividend or
distribution of any kind declared, paid or made on the capital stock of the
Company, other than the 100% stock dividend paid on June 22, 1998 to holders of
record as of June 11, 1998 of Common Stock or the special dividend paid or
payable in Common Stock to the holders of preferred stock of the Company
immediately prior to the public offering of the Firm Shares, or, (vi) any loss
or damage (whether or not insured)
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to the property of the Company or any Subsidiary which has had or is reasonably
likely to have a Material Adverse Effect.
(j) Except as set forth in the Registration Statement and the Prospectus (i)
the Company and each of the Subsidiaries has good and marketable title to all
properties and assets described in the Registration Statement and the
Prospectus as owned by it, free and clear of any Lien other than capital lease
obligations, purchase money security interests and other Liens that would not
have a Material Adverse Effect, (ii) the agreements to which the Company, or a
Subsidiary, is a party described in the Registration Statement and the
Prospectus are valid agreements, enforceable by the Company, or a Subsidiary,
as the case may be, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles and, to the Company's knowledge, the other contracting
party or parties thereto are not in breach or default under any of such
agreements to the extent such breach or default would entitle the Company to
terminate any of the agreements, and (iii) the Company and the Subsidiaries
have valid and enforceable leases for all properties described in the
Registration Statement and the Prospectus as leased by them, except as the
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles. Except as set
forth in the Registration Statement and the Prospectus, the Company and the
Subsidiaries own or lease all such properties as are necessary to their
operations as currently conducted.
(k) The Company and the Subsidiaries have timely filed all necessary federal,
state and foreign income and franchise tax returns and have paid all taxes
shown thereon as due, except where the failure to file or failure to pay would
not have a Material Adverse Effect, and there is no tax deficiency that has
been or, to the best of the Company's knowledge, is reasonably likely to be
asserted against the Company or any Subsidiary that would have or would be
reasonably likely to have a Material Adverse Effect, and all known tax
liabilities are adequately provided for on the Company's books in accordance
with generally accepted accounting principles.
(l) Each of the Company and the Subsidiaries maintains insurance of the types,
coverage and in the amounts generally maintained by similar companies in
similar businesses, including insurance covering real and personal property
owned or leased by the Company or a Subsidiary against theft, damage,
destruction, acts of vandalism and all other risks customarily insured against,
all of which insurance is in full force and effect except where the failure to
maintain such insurance would not have a Material Adverse Effect.
(m) To the Company's knowledge, no labor disturbance by the employees of the
Company or any Subsidiary exists or is imminent. No collective bargaining
agreement exists with any of the employees of the Company or any Subsidiary
and, to the Company's knowledge, no such agreement is imminent.
(n) Except as disclosed in the Prospectus, the Company and each Subsidiary owns
or possesses
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adequate rights to use all patents, patent rights, inventions, trade secrets,
know-how, trademarks, service marks, trade names and copyrights which are
necessary to conduct its business as described in the Registration Statement
and the Prospectus; the expiration of any patents, patent rights, trade
secrets, trademarks, service marks, trade names or copyrights would not have a
Material Adverse Effect; and, except as described in the Prospectus, neither
the Company nor any Subsidiary has received any notice of, and has no knowledge
of, any infringement of or conflict with asserted rights of others with respect
to any patent, patent rights, inventions, trade secrets, know-how, trademarks,
service marks, trade names or copyrights which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would have a
Material Adverse Effect.
(o) Upon the effectiveness of the Company's registration statement on Form 8-A
(File No. 000-24569) under the Exchange Act, the Common Stock (i) will be
registered pursuant to Section 12(g) of the Exchange Act, and (ii) upon
completion of the public offering of the Firm Shares and the Option Shares, as
the case may be, will be listed on the Nasdaq National Market, and the Company
has taken no action designed to, or likely to have the effect of, terminating
the registration of the Common Stock under the Exchange Act or which would
prevent the Common Stock from becoming listed, or cause a delisting of the
Common Stock from the Nasdaq National Market, and has Company has not received
any notification that the Commission or the National Association of Securities
Dealers, Inc. ("NASD") is contemplating terminating such registration or
authorization to list.
(p) The Company has in the past conducted, and intends in the future to
conduct, its affairs in such a manner as to ensure that it will not become an
"investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended (the "1940
Act"), and the rules and regulations thereunder.
(q) The Company has not distributed and will not distribute prior to the later
of (i) the Closing Date or any date on which Option Shares are to be purchased,
as the case may be, and (ii) completion of the distribution of the Shares, any
offering material in connection with the offering and sale of the Shares other
than any Preliminary Prospectuses, the Prospectus, the Registration Statement
and other materials, if any, permitted by the Act and the Rules and
Regulations.
(r) To the Company's knowledge, neither the Company nor any Subsidiary has (i)
made any unlawful contribution to any candidate for foreign office or failed to
disclose fully any contribution in violation of law, or (ii) made any payment
to any federal or state governmental officer or official, or other person
charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any jurisdiction
thereof.
(s) The Company has not taken and will not take, directly or indirectly, prior
to the termination of the underwriting syndicate contemplated by this Agreement
any action designed to or that might reasonably be expected to cause or result
in stabilization or manipulation of the price of the Common Stock to facilitate
the sale or resale of the Shares.
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(t) The Company, each director and executive officer of the Company and
stockholders listed on Exhibit 2(t) hereto have agreed in writing that such
person will not, for a period ending 180 days from the date of the Prospectus
(the "Lock-up Period"), offer to sell, contract to sell, or otherwise sell,
dispose of, loan, pledge or grant any rights with respect to (collectively, a
"Disposition") any Common Stock, any options or warrants to purchase any Common
Stock or any securities convertible into or exchangeable for Common Stock
(collectively, "Securities") now owned or hereafter acquired directly by such
person or with respect to which such person has or hereafter acquires the power
of disposition, otherwise than (i) as a bona fide gift or gifts, provided the
donee or donees thereof agree in writing to be bound by this restriction, (ii)
as a distribution to partners or stockholders of such person, provided that the
distributees thereof agree in writing to be bound by the terms of this
restriction, or (iii) with the prior written consent of BancAmerica Xxxxxxxxx
Xxxxxxxx. The foregoing restriction has been expressly agreed to preclude the
holder of the Securities from engaging in any hedging or other transaction
which is designed to or reasonably expected to lead to or result in a
Disposition of Securities during the Lock-up Period, even if such Securities
would be disposed of by someone other than such holder. Such prohibited hedging
or other transactions would include any short sale (whether or not against the
box) or any purchase, sale or grant of any right (including any put or call
option) with respect to any Securities or with respect to any security (other
than a broad-based market basket or index) that includes, relates to or derives
any significant part of its value from Securities. Furthermore, such person
has also agreed and consented to the entry of stop transfer instructions with
the Company's transfer agent against the transfer of the Securities held by
such person except in compliance with this restriction. The Company has
provided to counsel for the Underwriters ("Underwriters' Counsel") true,
accurate and complete copies of all of the agreements pursuant to which its
directors, officers and stockholders have agreed to such or similar
restrictions (the "Lock-up Agreements") currently in effect or effected hereby.
The Company hereby represents and warrants that it will not release any of its
directors, officers or other stockholders from any Lock-up Agreements currently
existing or hereafter effected without the prior written consent of BancAmerica
Xxxxxxxxx Xxxxxxxx.
(u) Except as set forth in the Registration Statement and Prospectus, (i) the
Company and each Subsidiary is in compliance, except as would not result in a
Material Adverse Effect, with all rules, laws and regulations relating to the
use, treatment, storage and disposal of toxic substances and protection of
health or the environment ("Environmental Laws") which are applicable to its
business, (ii) neither the Company nor any Subsidiary has received notice from
any governmental authority or other third party of an asserted claim under
Environmental Laws, which claim is required to be disclosed in the Registration
Statement and the Prospectus and is not disclosed therein, (iii) to the
Company's knowledge, there are no events or circumstances that might reasonably
be expected to form the basis of an order to clean-up or remediation, or any
action, suit or proceeding by any private party or governmental body or agency,
against or affecting the Company or any Subsidiary relating to any
Environmental Laws, and (iv) to the Company's knowledge, no property which is
leased or occupied by the Company or any Subsidiary has been designated as a
Superfund site pursuant to the Comprehensive Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. Section 9601, et seq.), or
otherwise designated as a contaminated site under applicable state or local
law.
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(v) The Company and the Subsidiaries, except to the extent that AGT Mortgage
Services, LLC has ceased doing business, maintain, in all material respects,
systems of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(w) There are no outstanding loans, advances (except normal advances for
business expenses in the ordinary course of business) or guarantees of
indebtedness by the Company or any Subsidiary to or for the benefit of any of
the director or executive officer of the Company or any Subsidiary or any of
the members of the families of any of them, except as disclosed in the
Registration Statement and the Prospectus.
3. Purchase, Sale and Delivery of Shares. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein contained, the Company agrees to sell to the
Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Company, at a purchase price of $[ ] per share, that number
of Firm Shares which is set forth opposite such Underwriter's name in Schedule
A hereto (subject to adjustment as provided in Section 10).
Delivery of definitive certificates for the Firm Shares to be purchased by the
Underwriters pursuant to this Section 3 shall be made against payment of the
purchase price therefor by the several Underwriters by wire transfer of
immediately available funds to the account specified by the Company, at the
offices of Arent, Fox, Kintner, Xxxxxxx & Xxxx, PLLC, 0000 Xxxxxxxxxxx Xxxxxx,
X.X., Xxxxxxxxxx, XX 00000-0000 (or at such other place as may be agreed upon
among the Representatives and the Company), at 7:00 A.M., Pacific time, (a) on
the third full business day following the first day that Shares are traded, (b)
if this Agreement is executed and delivered after 1:30 P.M., Pacific time, the
fourth full business day following the day that this Agreement is executed and
delivered or (c) at such other time and date not later than seven full business
days following the first day that Shares are traded as the Representatives and
the Company may determine (or at such time and date to which payment and
delivery shall have been postponed pursuant to Section 10 hereof), such time
and date of payment and delivery being herein called the "Closing Date;"
provided, however, that if the Company has not made available to the
Representatives copies of the Prospectus within the time provided in Section
4(d) hereof, the Representatives may, in their sole discretion, postpone the
Closing Date until no later than two full business days following delivery of
copies of the Prospectus to the Representatives. The certificates for the Firm
Shares to be so delivered will be made available to you at such office or such
other location, including in New York City, as you may reasonably request for
checking at least one full business day prior to the Closing Date and will be
in such names and denominations as you may request, such request to be made at
least two full business days prior to the Closing Date. If the Representatives
so elect,
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delivery of the Firm Shares may be made by credit through full fast transfer to
the accounts at The Depository Trust Company designated by the Representatives.
It is understood that you, individually, and not as the Representatives of the
several Underwriters, may (but shall not be obligated to) make payment of the
purchase price on behalf of any Underwriter or Underwriters whose funds shall
not have been received by you prior to the Closing Date for the Firm Shares to
be purchased by such Underwriter or Underwriters. Any such payment by you shall
not relieve any such Underwriter or Underwriters of any of its or their
obligations hereunder.
After the Registration Statement becomes effective, the several Underwriters
intend to make a public offering (as such term is described in Section 11
hereof) of the Firm Shares at a public offering price of $[ ] per share. After
such public offering, the several Underwriters may, in their discretion, vary
the public offering price.
On the basis of the representations, warranties and agreements of the Company
contained in, and subject to the terms and conditions of this Agreement, the
policies of the NASD, and pursuant to directions from the Company, the
Underwriters will offer to sell to each of the persons listed on Exhibit 3 (who
may purchase alone or with family members to the extent permitted by the
Free-Riding and Withholding Interpretation (the "Interpretation") under the
Rules of Fair Practice of the NASD) the number of Shares set forth opposite
their respective names on Exhibit 3, all at the above-mentioned public offering
price. Notwithstanding anything herein to the contrary, up to a maximum of
205,000 Shares will be sold under this paragraph. The Company and the
Underwriters agree that the securities purchased and sold under this paragraph
shall constitute "issuer directed securities" sold to the Company's employees or
directors or other persons under the Interpretation.
The information set forth in the last paragraph on the front cover page
(insofar as such information relates to the Underwriters), on the inside front
cover concerning stabilization and over-allotment by the Underwriters, and
under the section captioned "Underwriting" in any Preliminary Prospectus, in
the Prospectus and in the Registration Statement constitutes the only
information furnished by the Underwriters to the Company for inclusion in any
Preliminary Prospectus, the Prospectus or the Registration Statement, and you,
on behalf of the respective Underwriters, represent and warrant to the Company
that the statements made therein do not include any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
The Company hereby confirms its engagement of BancAmerica Xxxxxxxxx Xxxxxxxx
as, and BancAmerica Xxxxxxxxx Xxxxxxxx hereby confirms its agreement with the
Company to render services as, a "qualified independent underwriter," within
the meaning of Section (b)(15) of Rule 2720 of the Conduct Rules of the NASD
with respect to the offering and sale of the Shares. BancAmerica Xxxxxxxxx
Xxxxxxxx solely in its capacity as qualified independent underwriter and not
otherwise, is referred to herein as the "QIU." The price at which the shares
will be sold to the public shall not be higher than the maximum price
recommended by BancAmerica Xxxxxxxxx Xxxxxxxx acting as QIU.
4. Further Agreements of the Company. The Company agrees with the several
Underwriters that:
(a) The Company will use its best efforts to cause the Registration Statement
and any amendment thereof, if not effective at the time and date that this
Agreement is executed and delivered by the parties hereto, to become effective
as promptly as possible; the Company will use its best efforts to cause any
abbreviated registration statement pursuant to Rule 462(b) of the Rules and
Regulations as may be required subsequent to the date the Registration
Statement becomes effective as promptly as possible; the Company will notify
you, promptly after it shall receive notice thereof, of the time when the
Registration Statement, any subsequent amendment to the Registration Statement
or any abbreviated registration statement has become effective or any
supplement to the Prospectus has
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been filed; if the Company omitted information from the Registration Statement
at the time it was originally declared effective in reliance upon Rule 430A(a)
of the Rules and Regulations, the Company will provide evidence satisfactory to
you that the Prospectus contains such information and has been filed, within
the time period prescribed, with the Commission pursuant to subparagraph (1) or
(4) of Rule 424(b), as applicable, of the Rules and Regulations or as part of a
post-effective amendment to such Registration Statement as originally declared
effective which is declared effective by the Commission; if the Company files a
term sheet pursuant to Rule 434 of the Rules and Regulations, the Company will
provide evidence satisfactory to you that the Prospectus and term sheet meeting
the requirements of Rule 434(b) or (c), as applicable, of the Rules and
Regulations, have been filed, within the time period prescribed, with the
Commission pursuant to subparagraph (7) of Rule 424(b) of the Rules and
Regulations; if for any reason the filing of the final form of Prospectus is
required under Rule 424(b)(3) of the Rules and Regulations, the Company will
provide evidence satisfactory to you that the Prospectus contains such
information and has been filed with the Commission within the time period
prescribed; the Company will notify you promptly of any request by the
Commission for the amending or supplementing of the Registration Statement or
the Prospectus or for additional information; promptly upon your request, the
Company will prepare and file with the Commission any amendments or supplements
to the Registration Statement or Prospectus which, in the opinion of
Underwriters' Counsel, may be necessary or advisable in connection with the
distribution of the Shares by the Underwriters; the Company will promptly
prepare and file with the Commission, and promptly notify you of the filing of,
any amendments or supplements to the Registration Statement or Prospectus which
may be necessary, or deemed to be necessary by Xxxx Xxxxxxx Xxxxx & Xxxxxxxxxx,
counsel to the Company or by Underwriter's Counsel to correct any statements or
omissions, if, at any time when a prospectus relating to the Shares is required
to be delivered under the Act, any event shall have occurred as a result of
which the Prospectus or any other prospectus relating to the Shares as then in
effect would include any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; in case any
Underwriter is required to deliver a prospectus nine months or more after the
effective date of the Registration Statement in connection with the sale of the
Shares, the Company will prepare promptly upon request, but at the expense of
such Underwriter, such amendment or amendments to the Registration Statement
and such prospectus or prospectuses as may be necessary to permit compliance
with the requirements of Section 10(a)(3) of the Act; and the Company will file
no amendment or supplement to the Registration Statement or Prospectus which
shall not previously have been submitted to you a reasonable time prior to the
proposed filing thereof or to which you shall reasonably object in writing,
subject, however, to compliance with the Act and the Rules and Regulations, the
Exchange Act and the rules and regulations of the Commission thereunder and the
provisions of this Agreement.
(b) The Company will advise you, promptly after it shall receive notice or
obtain knowledge, of the issuance of any stop order by the Commission
suspending the effectiveness of the Registration Statement or of the initiation
or threat of any proceeding for that purpose; and the Company will promptly use
every reasonable effort to prevent the issuance of any stop order or to obtain
its withdrawal at the earliest possible time if such stop order should be
issued.
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(c) The Company will use every reasonable effort, in cooperation with the
Underwriters, to qualify the Shares for offering and sale under the securities
laws of such jurisdictions as you may designate and to continue such
qualifications in effect for so long as may be required for purposes of the
distribution of the Shares, except that the Company shall not be required in
connection therewith or as a condition thereof to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction in which it is not otherwise required to be so qualified or to so
execute a general consent to service of process. In each jurisdiction in which
the Shares shall have been qualified as above provided, the Company will make
and file such statements and reports in each year as are or may be required by
the laws of such jurisdiction.
(d) The Company will furnish to you, as soon as available, and, in the case of
the Prospectus and any term sheet or abbreviated term sheet under Rule 434, in
no event later than the first full business day following the first day that
Shares are traded, copies of the Registration Statement (three of which will be
signed and which will include all exhibits), each Preliminary Prospectus, the
Prospectus and any amendments or supplements to such documents, including any
prospectus prepared to permit compliance with Section 10(a)(3) of the Act, all
in such quantities as you may from time to time reasonably request.
Notwithstanding the foregoing, if BancAmerica Xxxxxxxxx Xxxxxxxx, on behalf of
the several Underwriters, shall agree to the utilization of Rule 434 of the
Rules and Regulations, the Company shall provide to you copies of a Preliminary
Prospectus updated in all respects through the date specified by you in such
quantities as you may from time to time reasonably request.
(e) The Company will make generally available to its securityholders as soon as
practicable, but in any event not later than the forty-fifth day following the
end of the fiscal quarter first occurring after the first anniversary of the
effective date of the Registration Statement, an earnings statement (which will
be in reasonable detail but need not be audited) complying with the provisions
of Section 11(a) of the Act and covering a twelve-month period beginning after
the effective date of the Registration Statement.
(f) During a period of five years after the date hereof, as long as the Company
is subject to the information requirements of the Exchange Act, the Company
will file with the Commission and make available to stockholders within the
time periods required under the Exchange Act and the rules and regulations
promulgated thereunder, annual reports (including financial statements audited
by independent certified public accountants) and unaudited quarterly reports,
including unaudited interim financial statements, for each of the first three
quarters of the fiscal year, and will furnish to you and the other several
Underwriters hereunder, upon request (i) concurrently with furnishing to the
Company's stockholders (which shall be within 120 days after the end of the
respective fiscal year), such annual reports, including a balance sheet of the
Company as of the end of such fiscal year, together with statements of
operations, of stockholders' equity and of cash flows of the Company for such
fiscal year, accompanied by a copy of the certificate or report thereon of
independent certified public accountants, (ii) within 55 days after the end of
each of the first three quarters of each fiscal year, such quarterly reports,
including statements of operations of the Company, (iii) concurrently with
furnishing to its stockholders, copies of all other reports (financial or
other) mailed to stockholders, (iv) within 10 business days of such furnishing
or filing, copies of
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all other reports and financial statements furnished to or filed with the
Commission, any securities exchange or the NASD, (v) every material press
release and every material news item or article in respect of the Company or
its affairs which was generally released to stockholders or prepared by the
Company or any of its Subsidiaries, and (vi) within 10 business days of the
particular request, any additional information of a public nature concerning
the Company or its Subsidiaries or its business which you may reasonably
request. During such above-mentioned five-year period, the foregoing financial
statements shall be on a consolidated basis to the extent that the accounts of
the Company and its subsidiaries are consolidated, and shall be accompanied by
similar financial statements for any significant subsidiary (as defined in Rule
1-02 of Regulation S-X of the Commission) which is not so consolidated.
(g) The Company will apply the net proceeds from the sale of the Shares being
sold by it in the manner set forth under the caption "Use of Proceeds" in the
Prospectus.
(h) From the Closing Date, and until three years from the date that the
Registration Statement became effective, the Company will maintain a transfer
agent and, if necessary under the jurisdiction of incorporation of the Company,
a registrar (which may be the same entity as the transfer agent) for its Common
Stock.
(i) If the transactions contemplated hereby are not consummated by reason of
any failure, refusal or inability on the part of the Company to perform any
agreement to be performed hereunder or to fulfill any condition of the
Underwriters' obligations hereunder, or if the Company shall terminate this
Agreement pursuant to Section 11(a) hereof, or if the Underwriters shall
terminate this Agreement pursuant to Section 11(b)(i), the Company will
reimburse the several Underwriters for all out-of-pocket expenses (including
reasonable fees and disbursements of Underwriters' Counsel) incurred by the
Underwriters in investigating or preparing to market or marketing the Shares.
(j) If at any time during the ninety-day period after the Registration
Statement becomes effective, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your opinion the
market price of the Common Stock has been or is reasonably 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 the Company and you, responding to or commenting on such rumor, publication
or event.
(k) During the Lock-up Period, the Company will not, without the prior written
consent of BancAmerica Xxxxxxxxx Xxxxxxxx, effect the Disposition of, directly
or indirectly, any Securities other than the sale of the Firm Shares and the
Option Shares hereunder, the Company's issuance of options or Common Stock
under the Company's currently authorized 1998 Stock Incentive Plan, 1997 Stock
Option Plan, 1994 Stock Option Plan and Employee Stock Ownership Plan
(collectively, the "Equity Plans"), the Company's issuance of Common Stock
pursuant to exercise of the 1997 Warrants, 1994 Warrants and Contingent
Warrants (each as defined in the Registration Statement
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and Prospectus), and the Company's issuance of the TCT II Junior Subordinated
Debentures.
5. Expenses.
(a) The Company agrees with each Underwriter that:
(i) The Company will pay and bear all costs and expenses in connection
with the preparation, printing and filing of the Registration Statement
(including financial statements, schedules and exhibits), Preliminary
Prospectuses and the Prospectus and any amendments or supplements thereto; the
printing of this Agreement, the Agreement Among Underwriters, the Selected
Dealer Agreement, the Preliminary Blue Sky Survey and any Supplemental Blue Sky
Survey, the Underwriters' Questionnaire and Power of Attorney, and any
instruments related to any of the foregoing; the issuance and delivery of the
Shares hereunder to the several Underwriters, including transfer taxes, if any,
and the cost of all certificates representing the Shares and transfer agent's
and registrar's fees; the fees and disbursements of counsel for the Company;
all fees and other charges of the Company's independent certified public
accountants; the cost of furnishing to the several Underwriters copies of the
Registration Statement (including appropriate exhibits), Preliminary Prospectus
and the Prospectus, and any amendments or supplements to any of the foregoing;
NASD filing fees and the cost of qualifying the Shares under the laws of such
jurisdictions as you may designate (including filing fees and reasonable fees
and disbursements of Underwriters' Counsel in connection with such NASD filings
and state securities law qualifications); and all other expenses directly
incurred by the Company in connection with the performance of its obligations
hereunder.
(ii) In addition to its other obligations under Section 8(a) hereof,
the Company agrees that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding described in Section 8(a)
hereof, it will reimburse the Underwriters on a monthly basis for all reasonable
legal or other expenses incurred in connection with investigating or defending
any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Company's obligation to reimburse the Underwriters for
such expenses and the possibility that such payments might later be held to have
been improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, the Underwriters
shall promptly return such payment to the Company together with interest,
compounded daily, determined on the basis of the prime rate (or other commercial
lending rate for borrowers of the highest credit standing) listed from time to
time in The Wall Street Journal which represents the base rate on corporate
loans posted by a substantial majority of the nation's thirty largest banks (the
"Prime Rate"). Any such interim reimbursement payments which are not made to the
Underwriters within 30 days of a request for reimbursement shall bear interest
at the Prime Rate from the date of such request.
(b) In addition to their other obligations under Section 8(c) hereof, the
Underwriters severally and not jointly agree that, as an interim measure during
the pendency of any claim, action, investigation, inquiry or other proceeding
described in Section 8(c) hereof, they will reimburse the Company on a monthly
basis for all reasonable legal or other expenses incurred in connection with
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investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Underwriters' obligation to reimburse
the Company for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction. To
the extent that any such interim reimbursement payment is so held to have been
improper, the Company shall promptly return such payment to the Underwriters
together with interest, compounded daily, determined on the basis of the Prime
Rate. Any such interim reimbursement payments which are not made to the Company
within thirty days of a request for reimbursement shall bear interest at the
Prime Rate from the date of such request.
(c) It is agreed that any controversy arising out of the operation of the
interim reimbursement arrangements set forth in Sections 5(a)(ii) and 5(b)
hereof, including the amounts of any requested reimbursement payments, the
method of determining such amounts and the basis on which such amounts shall be
apportioned among the reimbursing parties, shall be settled by arbitration
conducted under the provisions of the Code of Arbitration Procedure of the NASD.
Any such arbitration must be commenced by service of a written demand for
arbitration or a written notice of intention to arbitrate, therein electing the
arbitration tribunal. If the party demanding arbitration does not make such
designation of an arbitration tribunal in such demand or notice, then the party
responding to said demand or notice is authorized to do so. Any such arbitration
will be limited to the operation of the interim reimbursement provisions
contained in Sections 5(a)(ii) and 5(b) hereof and will not resolve the ultimate
propriety or enforceability of the obligation to indemnify for expenses which is
created by the provisions of Sections 8(a), 8(b) and 8(c) hereof or the
obligation to contribute to expenses which is created by the provisions of
Section 8(d) hereof.
6. Conditions of Underwriters' Obligations. The obligations of the several
Underwriters to purchase and pay for the Shares as provided herein shall be
subject to the accuracy, as of the date hereof and the Closing Date and any
later date on which Option Shares are to be purchased, as the case may be, of
the representations and warranties of the Company herein, to the performance by
the Company of its obligations hereunder and to the following additional
conditions:
(a) The Registration Statement shall have become effective not later than
2:00 P.M., Pacific time, on the date following the date of this Agreement, or
such later date as shall be consented to in writing by you; and no stop order
suspending the effectiveness thereof shall have been issued and no proceedings
for that purpose shall have been initiated or, to the knowledge of the Company
or any Underwriter, threatened by the Commission, and any request of the
Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with to the
reasonable satisfaction of Underwriters' Counsel.
(b) All corporate proceedings and other legal matters in connection with
this Agreement, the form of Registration Statement and the Prospectus, and the
registration, authorization, issue, sale and delivery of the Shares, shall have
been reasonably satisfactory to Underwriters' Counsel, 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 Section 6.
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(c) Subsequent to the execution and delivery of this Agreement and prior to
the Closing Date, or any later date on which Option Shares are to be purchased,
as the case may be, there shall not have been any change, or development
involving a prospective change, which in your sole judgment could be reasonably
expected to have a Material Adverse Effect, not set forth in the Registration
Statement or Prospectus and that makes it, in your sole judgment, impracticable
or inadvisable to proceed with the public offering of the Shares as contemplated
by the Prospectus; and
(d) You shall have received on the Closing Date and on any later date on
which Option Shares are to be purchased, as the case may be, the following
opinion of counsel for the Company dated the Closing Date or such later date on
which Option Shares are to be purchased addressed to the Underwriters and with
reproduced copies or signed counterparts thereof for each of the Underwriters,
to the effect that:
(i) The Company and each Subsidiary (other than the Excepted Entities)
are each validly existing as a corporation, limited liability company or
business trust, as applicable, in good standing under the laws of the
jurisdiction of their respective incorporation or formation;
(ii) The Company and each Subsidiary (other than the Excepted
Entities) each have the corporate power and authority to own, lease and operate
their respective properties and to conduct their respective businesses as
described in the Prospectus;
(iii) The Company and each Subsidiary (other than the Excepted
Entities) are each duly qualified to do business as a foreign corporation and
are good standing in each jurisdiction, if any, in which 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 or be in good standing would not have a Material Adverse Effect. To
the knowledge of Xxxx Xxxxxxx Xxxxx & Xxxxxxxxxx, neither the Company nor any
Subsidiary owns or controls, directly or indirectly, any corporation,
association or other entity except the Subsidiaries;
(iv) The Company's authorized, issued and outstanding capital stock is
as set forth in the Prospectus under the caption "Capitalization" as of the
dates stated therein; the Company's issued and outstanding capital stock has
been duly and validly issued and is fully paid and nonassessable; and, to the
knowledge of Xxxx Xxxxxxx Xxxxx & Xxxxxxxxxx, will not have been issued in
violation of or subject to any preemptive right, co-sale right, registration
right, right of first refusal or other similar right;
(v) All issued and outstanding capital stock of each Subsidiary (other
than the Excepted Entities) has been duly authorized and validly issued and is
fully paid and nonassessable, and, to such counsel's knowledge, has not been
issued in violation of or subject to any preemptive right, co-sale right,
registration right, right of first refusal or other similar right and, based on
such counsel's review of the records of the Subsidiaries and of the Company, is
owned by the Company free and clear of any Liens;
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(vi) The Firm Shares or the Option Shares, as the case may be, to be
issued by the Company pursuant to the terms of this Agreement have been duly
authorized and, upon issuance and delivery against payment therefor in
accordance with the terms hereof, will be duly and validly issued and fully paid
and nonassessable, and, to such counsel's knowledge, will not have been issued
in violation of or subject to any preemptive right, co-sale right, registration
right, right of first refusal or other similar right.
(vii) The Company has the corporate power and authority to enter into
this Agreement and to issue, sell and deliver to the Underwriters the Shares to
be issued and sold by the Company hereunder;
(viii) This Agreement has been duly authorized by all necessary
corporate action on the part of the Company and has been duly executed and
delivered by the Company and, assuming due authorization, execution and delivery
by you, is a valid and binding agreement of the Company, enforceable in
accordance with its terms, except insofar as indemnification provisions may be
limited by applicable law and except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or affecting creditors' rights generally or by general equitable principles;
(ix) The Registration Statement has become effective under the Act
and, to such counsel's knowledge, no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that purpose
have been instituted or are pending or threatened under the Act;
(x) The Registration Statement and the Prospectus, and each amendment
or supplement thereto (other than the financial statements (including supporting
schedules) and financial data derived therefrom as to which such counsel need
express no opinion), as of the effective date of the Registration Statement,
complied as to form in all material respects with the requirements of the Act
and the applicable Rules and Regulations;
(xi) The information in the Prospectus under the captions "Business --
Government Regulation" and "Description of Securities," to the extent that it
constitutes matters of law or legal conclusions, has been reviewed by such
counsel and is accurate in all material respects; and the form of certificate
evidencing the Common Stock and filed as an exhibit to the Registration
Statement complies with Delaware law in all material respects;
(xii) The description in the Registration Statement and the Prospectus
of the Company's amended and restated certificate of incorporation, including
certificates of designations, and bylaws is accurate in all material respects
and fairly presents the information required to be presented by the Act and the
applicable Rules and Regulations and the description in the Registration
Statement and the Prospectus of statutes fairly presents in all material
respects the information required to be presented by the Act and the applicable
Rules and Regulations;
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(xiii) To such counsel's knowledge, there are no agreements,
contracts, leases or documents to which the Company or any Subsidiary is a party
required to be described or referred to in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement pursuant
to the Act or the Rules and Regulations which are not described or referred to
therein or filed as required;
(xiv) The performance of this Agreement and the consummation of the
transactions herein contemplated (other than performance of the Company's
indemnification obligations hereunder, concerning which no opinion need be
expressed) will not (a) result in any violation of the Company's amended and
restated certificate of incorporation, including certificates of designations,
or bylaws or (b) to such counsel's knowledge, result in a breach or violation of
any of the terms and provisions of, or constitute a default under, any bond,
debenture, note or other evidence of indebtedness, or any lease, contract,
indenture, mortgage, deed of trust, loan agreement, joint venture or other
agreement or instrument known to such counsel to which the Company or any
Subsidiary is a party or by which its respective properties are bound, or any
applicable statute, rule or regulation known to such counsel or, to such
counsel's knowledge, any order, writ or decree of any court, government or
governmental agency or body having jurisdiction over the Company or any
Subsidiary, or over any of its properties or operations where such breach or
violation would have or be reasonably likely to have a Material Adverse Effect;
(xv) No consent, approval, authorization or order of or qualification
with any court, government or governmental agency or body having jurisdiction
over the Company or its Subsidiaries, or over any of their properties or
operations is necessary in connection with the consummation by the Company of
the transactions herein contemplated, except such as have been obtained under
the Act or the Exchange Act or such as may be required under state or other
securities laws in connection with the purchase and the distribution of the
Shares by the Underwriters (as to which such counsel need not express an
opinion);
(xvi) To such counsel's knowledge, there are no legal or governmental
proceedings pending or threatened against the Company or any Subsidiary of a
character required to be disclosed in the Registration Statement or the
Prospectus by the Act or the Rules and Regulations, other than those described
therein;
(xvii) To such counsel's knowledge, neither the Company nor any
Subsidiary (other than the Excepted Entities) is currently (a) in violation of
its respective certificate of incorporation or other charter documents,
including certificates of designations, or bylaws, or (b) in breach of any
applicable statute, rule or regulation known to such counsel or, to such
counsel's knowledge, any order, writ or decree of any court or governmental
agency or body having jurisdiction over the Company or any Subsidiary, or over
any of its respective properties or operations, except where such breach or
violation would not have or not be reasonably likely to have a Material Adverse
Effect; and
(xviii) To such counsel's knowledge, except as set forth in the
Registration Statement and the
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Prospectus, no holders of Common Stock or other securities of the Company have
registration rights with respect to securities of the Company and, except as
set forth in the Registration Statement and the Prospectus, all holders of
securities of the Company having rights known to such counsel to registration
of such shares of Common Stock or other securities, because of the filing of
the Registration Statement by the Company have, with respect to the offering
contemplated thereby, waived such rights.
In addition, such counsel shall state that such counsel has
participated in preparation of the Registration Statement and Prospectus and
although they have not verified the accuracy or completeness of the statements
contained in the Registration Statement or the Prospectus, nothing has come to
the attention of such counsel which leads them to believe that, at the time the
Registration Statement became effective and at all times subsequent thereto up
to and on the Closing Date and on any later date on which Option Shares are to
be purchased, the Registration Statement and any post-effective amendment or
supplement thereto (other than the financial statements including supporting
schedules and other financial and statistical information derived therefrom, as
to which such counsel need express no comment) contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or at the Closing Date
or any later date on which the Option Shares are to be purchased, as the case
may be, the Registration Statement, the Prospectus and any amendment or
supplement thereto (except as aforesaid) contained any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
Counsel rendering the foregoing opinion may rely as to questions of
fact upon representations or certificates of officers of the Company, and of
government officials. Copies of any opinion, representation or certificate so
relied upon shall be delivered to you, as Representatives of the Underwriters,
and to Underwriters' Counsel.
(e) You shall have received on the Closing Date and on any later date
on which Option Shares are to be purchased, as the case may be, an opinion of
Arent, Fox, Kintner, Xxxxxxx & Xxxx, PLLC, in form and substance satisfactory to
you, with respect to the sufficiency of all such corporate proceedings and other
legal matters relating to this Agreement and the transactions contemplated
hereby as you may reasonably require, and the Company shall have furnished to
such counsel such documents as they may have reasonably requested for the
purpose of enabling them to pass upon such matters.
(f) You shall have received on the Closing Date and on any later date on which
Option Shares are to be purchased, as the case may be, a letter from Xxxxxx
Xxxxxxxx LLP addressed to the Underwriters, dated the Closing Date or such
later date on which Option Shares are to be purchased, as the case may be,
confirming that they are independent public accountants with respect to the
Company within the meaning of the Act and the applicable published Rules and
Regulations and based upon the procedures described in such letter delivered to
you concurrently with the execution
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of this Agreement (herein called the "Original Letter"), but carried out to a
date not more than five business days prior to the Closing Date or such later
date on which Option Shares are to be purchased, as the case may be, (i)
confirming, to the extent true, that the statements and conclusions set forth
in the Original Letter are accurate as of the Closing Date or such later date
on which Option Shares are to be purchased, as the case may be, and (ii)
setting forth any revisions and additions to the statements and conclusions set
forth in the Original Letter which are necessary to reflect any changes in the
facts described in the Original Letter since the date of such letter, or to
reflect the availability of more recent financial statements, data or
information. The letter shall not disclose any change, or development involving
a prospective change, which in your sole judgment could be reasonably expected
to have a Material Adverse Effect, not set forth in the Registration Statement
or Prospectus, and that makes it, in your sole judgment, impracticable or
inadvisable to proceed with the public offering of the Shares as contemplated
by the Prospectus. The Original Letter from Xxxxxx Xxxxxxxx LLP shall be
addressed to or for the use of the Underwriters in form and substance
satisfactory to the Underwriters and shall (i) confirm, to the extent true,
that they are independent public accountants with respect to the Company within
the meaning of the Act and the applicable published Rules and Regulations, (ii)
set forth their opinion with respect to their examination of the financial
condition of the Company as of December 31, 1997 and related statements of
operations, stockholders' equity, and cash flows for the twelve months ended
December 31, 1997, (iii) state that Xxxxxx Xxxxxxxx LLP has performed the
procedures set out in Statement on Auditing Standards No. 71 ("SAS 71") for a
review of interim financial information on the financial statements of the
Company for the quarter ended March 31, 1998 (the "Quarterly Financial
Statements"), (iv) state that in the course of such review, nothing came to
their attention that leads them to believe that any material modifications need
to be made to any of the Quarterly Financial Statements in order for them to be
in compliance with generally accepted accounting principles consistently
applied across the periods presented, and (v) address other matters agreed upon
by Xxxxxx Xxxxxxxx LLP and you. In addition, you shall have received from
Xxxxxx Xxxxxxxx LLP a letter addressed to the Company and made available to you
for the use of the Underwriters stating that their review of the Company's
respective systems of internal accounting controls, to the extent they deemed
necessary in establishing the scope of their examination of the Company's
financial statements as of December 31, 1997 and for the year then ended, did
not disclose any weaknesses in internal controls that they considered to be
material weaknesses.
(g) You shall have received on the Closing Date and on any later date on which
Option Shares are to be purchased, as the case may be, a certificate of the
Company, dated the Closing Date or such later date on which Option Shares are
to be purchased, as the case may be, signed by the Chief Executive Officer and
Chief Financial Officer of the Company, to the effect that, and you shall be
satisfied that:
(i) The representations and warranties of the Company in
this Agreement are true and correct in all material respects, as if
made on and as of the Closing Date or any later date on which Option
Shares are to be purchased, as the case may be, and the Company has
complied in all material respects with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
at or prior to the Closing Date or any later date on which Option
Shares
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are to be purchased, as the case may be;
(ii) To the best of their knowledge, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or are
pending or threatened under the Act;
(iii) When the Registration Statement became effective and
at all times subsequent thereto up to the delivery of such
certificate, the Registration Statement and the Prospectus, and any
post-effective amendments or supplements thereto, contained all
material information required to be included therein by the Act and
the Rules and Regulations and in all material respects conformed to
the requirements of the Act and the Rules and Regulations, the
Registration Statement, and any amendment or supplement thereto, did
not and does not include any 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, the
Prospectus, and any post-effective amendment or supplement thereto,
did not and does not include any untrue statement of a material fact
or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, and, since the effective date of the Registration
Statement, there has occurred no event required to be set forth in an
amended or supplemented Prospectus which has not been so set forth;
and
(iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
there has not been (a) any material adverse change in the condition
(financial or otherwise), earnings, operations, business or business
prospects of the Company, (b) any transaction that is material to the
Company, except transactions entered into in the ordinary course of
business, (c) any obligation, direct or contingent, that is material
to the Company, incurred by the Company or any Subsidiary, except
obligations incurred in the ordinary course of business, (d) any
change in the capital stock or outstanding indebtedness of the Company
that is material to the Company, (e) any dividend or distribution of
any kind declared, paid or made on the capital stock of the Company,
or (f) any loss or damage (whether or not insured) to the property of
the Company or any Subsidiary which has been sustained or will have
been sustained which has a Material Adverse Effect.
(h) The Company shall have obtained and delivered to you the
Lock-up Agreements.
(i) The Company shall have furnished to you such further certificates
and documents as you shall reasonably request (including certificates of
officers of the Company) as to the accuracy of the representations and
warranties of the Company herein, as to the performance by the Company of its
obligations hereunder and as to the other conditions concurrent and precedent to
the obligations of the Underwriters hereunder.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to Underwriters' Counsel. The Company will furnish you with such number of
conformed copies of such opinions, certificates, letters and documents as
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you shall reasonably request.
7. Option Shares.
(a) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein contained, the
Company hereby grants to the several Underwriters, for the purpose of covering
over-allotments in connection with the distribution and sale of the Firm Shares
only, a nontransferable option to purchase up to an aggregate of 615,000 Option
Shares at the purchase price per share for the Firm Shares set forth in Section
3 hereof. Such option may be exercised by the Representatives on behalf of the
several Underwriters on one or more occasions in whole or in part during the
period of thirty days after the date on which the Firm Shares are initially
offered to the public, by giving written notice to the Company. The number of
Option Shares to be purchased by each Underwriter upon the exercise of such
option shall be the same proportion of the total number of Option Shares to be
purchased by the several Underwriters pursuant to the exercise of such option as
the number of Firm Shares purchased by such Underwriter (set forth in Schedule A
hereto) bears to the total number of Firm Shares purchased by the several
Underwriters (set forth in Schedule A hereto), adjusted by the Representatives
in such manner as to avoid fractional shares.
Delivery of definitive certificates for the Option Shares to be
purchased by the several Underwriters pursuant to the exercise of the option
granted by this Section 7 shall be made against payment of the purchase price
therefor by the several Underwriters by wire transfer of immediately available
funds to the account specified by the Company. Such delivery and payment shall
take place at the offices of Arent, Fox, Kintner, Xxxxxxx & Xxxx, PLLC, 0000
Xxxxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, XX 00000-0000 or at such other place as
may be agreed upon among the Representatives and the Company (i) on the Closing
Date, if written notice of the exercise of such option is received by the
Company at least two full business days prior to the Closing Date, or
(ii) on a date which shall not be later than the third full business day
following the date the Company receives written notice of the exercise of such
option, if such notice is received by the Company less than two full business
days prior to the Closing Date.
The certificates for the Option Shares to be so delivered will be made
available to you at such office or such other location, including in New York
City, as you may reasonably request for checking at least one full business day
prior to the date of payment and delivery and will be in such names and
denominations as you may request, such request to be made at least two full
business days prior to such date of payment and delivery. If the Representatives
so elect, delivery of the Option Shares may be made by credit through full fast
transfer to the accounts at The Depository Trust Company designated by the
Representatives.
It is understood that you, individually, and not as the
Representatives of the several Underwriters, may (but shall not be obligated to)
make payment of the purchase price on behalf of any Underwriter or Underwriters
whose funds shall not have been received by you prior to the date of payment and
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delivery for the Option Shares to be purchased by such Underwriter or
Underwriters. Any such payment by you shall not relieve any such Underwriter or
Underwriters of any of its or their obligations hereunder.
(b) Upon exercise of any option provided for in Section 7(a) hereof,
the obligations of the several Underwriters to purchase such Option Shares will
be subject (as of the date hereof and as of the date of payment and delivery for
such Option Shares) to the accuracy of and compliance with the representations,
warranties and agreements of the Company herein, to the accuracy of the
statements of the Company and officers of the Company made pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder, to the conditions set forth in Section 6 hereof, and to the condition
that all proceedings taken at or prior to the payment date in connection with
the sale and transfer of such Option Shares shall be satisfactory in form and
substance to you and to Underwriters' Counsel, and you shall have been furnished
with all such documents, certificates and opinions as you may request in order
to evidence the accuracy and completeness of any of the representations,
warranties or statements, the performance of any of the covenants or agreements
of the Company or the satisfaction of any of the conditions herein contained.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject (including in its capacity as an Underwriter
or as a "qualified independent underwriter" within the meaning of Section
(b)(15) of Rule 2720 of the Conduct Rules of the NASD) under the Act, the
Exchange Act or otherwise, specifically including losses, claims, damages or
liabilities (or actions in respect thereof) arising out of or based upon (i) any
breach of any representation, warranty, agreement or covenant of the Company
herein contained, (ii) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (iii) any untrue statement or alleged untrue
statement of any material fact contained in any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and agrees to reimburse each
Underwriter for any legal or other expenses reasonably incurred by it in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage, liability or
action arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement,
such Preliminary Prospectus or the Prospectus, or any such amendment or
supplement thereto, in reliance upon, and in conformity with, written
information relating to any Underwriter furnished to the Company by such
Underwriter, directly or through you, specifically for use in the preparation
thereof and, provided further, that the indemnity agreement provided in this
Section 8(a) with respect to any Preliminary Prospectus shall not inure to the
benefit of any Underwriter from whom the person asserting any
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losses, claims, damages, liabilities or actions based upon any untrue statement
or alleged untrue statement of material fact or omission or alleged omission to
state therein a material fact purchased Shares, if a copy of the Prospectus in
which such untrue statement or alleged untrue statement or omission or alleged
omission was corrected had not been sent or given to such person within the
time required by the Act and the Rules and Regulations, unless such failure is
the result of noncompliance by the Company with Section 4(d) hereof.
The indemnity agreement in this Section 8(a) shall extend upon the
same terms and conditions to, and shall inure to the benefit of, each person, if
any, who controls any Underwriter within the meaning of the Act or the Exchange
Act. This indemnity agreement shall be in addition to any liabilities which the
Company may otherwise have.
(b) Each Underwriter, severally and not jointly, agrees to indemnify
and hold harmless the Company against any losses, claims, damages or
liabilities, joint or several, to which the Company may become subject under the
Act or otherwise, specifically including losses, claims, damages or liabilities
(or actions in respect thereof) arising out of or based upon (i) any breach of
any representation, warranty, agreement or covenant of such Underwriter herein
contained, (ii) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or any amendment or supplement
thereto, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (iii) any untrue statement or alleged untrue statement of any
material fact contained in any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto, or the omission or alleged omission to state
therein a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, in the case of
subparagraphs (ii) and (iii) of this Section 8(b) 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 such Underwriter, directly or through
you, specifically for use in the preparation thereof, and agrees to reimburse
the Company for any legal or other expenses reasonably incurred by the Company
in connection with investigating or defending any such loss, claim, damage,
liability or action.
The indemnity agreement in this Section 8(b) shall extend upon the
same terms and conditions to, and shall inure to the benefit of, each officer of
the Company who signed the Registration Statement and each director of the
Company and each person, if any, who controls the Company within the meaning of
the Act or the Exchange Act. This indemnity agreement shall be in addition to
any liabilities which each Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party shall, if
a claim in respect thereof is to be made against any indemnifying party under
this Section 8, notify the indemnifying party in writing of the commencement
thereof but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under this Section 8. In case any such action is brought against any
indemnified party, and it notified the indemnifying
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party of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it shall elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, 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 legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party
or parties. Upon receipt of notice from the indemnifying party to such
indemnified party of the indemnifying party's election so to assume the defense
of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 8 for any legal or other expenses 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 in the preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with appropriate local counsel) approved by the
indemnifying party representing all the indemnified parties under Section 8(a),
8(b) and 8(c) hereof who are parties to such action), (ii) the indemnifying
party shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party. In no event shall any indemnifying party be liable in
respect of any amounts paid in settlement of any action unless the indemnifying
party shall have approved the terms of such settlement; provided that such
consent shall not be unreasonably withheld. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or has been threatened to be named a party and
indemnification has been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party
from all liability on all claims that are the subject matter of such
proceeding.
(d) To provide for just and equitable contribution in any action in
which a claim for indemnification is made pursuant to this Section 8 but it is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 8 provides for indemnification in
such case, all the parties hereto shall contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (after contribution
from others) in such proportion so that the Underwriters severally and not
jointly are responsible pro rata for the portion represented by the percentage
that the underwriting discount bears to the initial public offering price
hereunder, and the Company is responsible for the remaining portion, provided,
however, that (i) no Underwriter shall be required to contribute any amount in
excess of the amount by which the underwriting discount applicable to the Shares
purchased by such Underwriter exceeds the amount of damages which such
Underwriter has
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otherwise required to pay and (ii) no person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. The contribution agreement in this Section 8(d) shall extend
upon the same terms and conditions to, and shall inure to the benefit of, each
person, if any, who controls any Underwriter or the Company within the meaning
of the Act or the Exchange Act and each officer of the Company who signed the
Registration Statement and each director of the Company.
(e) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this Section 8, and are fully informed regarding said provisions.
They further acknowledge that the provisions of this Section 8 fairly allocate
the risks in light of the ability of the parties to investigate the Company and
its Subsidiaries and their respective businesses to assure that adequate
disclosure is made in the Registration Statement and Prospectus as required by
the Act and the Exchange Act.
9. Representations, Warranties, Covenants and Agreements to Survive
Delivery. All representations, warranties, covenants and agreements of the
Company and the Underwriters herein or in certificates delivered pursuant
hereto, and the indemnity and contribution agreements contained in Section 8
hereof shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter within the meaning of the Act or the Exchange Act, or by or on
behalf of the Company or any or any of its officers, directors or controlling
persons within the meaning of the Act or the Exchange Act, and shall survive the
delivery of the Shares to the several Underwriters hereunder or termination of
this Agreement.
10. Substitution of Underwriters. If any Underwriter or Underwriters
shall fail at the Closing Date to purchase the number of Firm Shares agreed by
such Underwriter or Underwriters to be purchased hereunder upon tender of such
Firm Shares in accordance with the terms hereof, and if the aggregate number of
Firm Shares which such defaulting Underwriter or Underwriters so agreed but
failed to purchase does not exceed 10% of the Firm Shares, the remaining
Underwriters shall be obligated, severally in proportion to their respective
commitments hereunder, to purchase the Firm Shares of such defaulting
Underwriter or Underwriters.
If any Underwriter or Underwriters so defaults and the aggregate
number of Firm Shares which such defaulting Underwriter or Underwriters agreed
but failed to purchase 10% of the Firm Shares, the remaining Underwriters shall
have the right, but shall not be obligated, to purchase (in such proportions as
may be agreed upon among them) the Firm Shares which the defaulting Underwriter
or Underwriters so agreed but failed to purchase. If such remaining Underwriters
do not, at the Closing Date, purchase the Firm Shares which the defaulting
Underwriter or Underwriters so agreed but failed to purchase, the Closing Date
shall be postponed for twenty-four hours to allow the several Underwriters the
privilege of substituting within twenty-four hours (including non-business
hours) another underwriter or underwriters (which may include any nondefaulting
Underwriter) reasonably
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satisfactory to the Company. If no such underwriter or underwriters shall have
been substituted as aforesaid by such postponed Closing Date, the Closing Date
may, at the option of the Company, be postponed for a further twenty-four
hours, if necessary, to allow the Company the privilege of finding another
underwriter or underwriters, satisfactory to you, to purchase the Firm Shares
which the defaulting Underwriter or Underwriters so agreed but failed to
purchase. If it shall be arranged for the remaining Underwriters or substituted
underwriter or underwriters to take up the Firm Shares of the defaulting
Underwriter or Underwriters as provided in this Section 10, then (i) the
Company shall have the right to postpone the time of delivery for a period of
not more than seven full business days, in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus, or
in any other documents or arrangements, and the Company agrees promptly to file
any amendments to the Registration Statement, supplements to the Prospectus or
other such documents which may thereby be made necessary, and (ii) the
respective number of Firm Shares to be purchased by the remaining Underwriters
and substituted underwriter or underwriters shall be taken as the basis of
their underwriting obligation. If the remaining Underwriters shall not purchase
all such Firm Shares so agreed to be purchased by the defaulting Underwriter or
Underwriters or substitute another underwriter or underwriters as aforesaid and
the Company shall not find or shall not elect to seek another underwriter or
underwriters for such Firm Shares as aforesaid, then this Agreement shall
terminate.
If this Agreement is terminated pursuant to the preceding paragraph of
this Section 10, the Company shall not be liable to any Underwriter (except as
provided in Sections 5 and 8 hereof) nor shall any Underwriter (other than an
Underwriter who shall have failed, otherwise than for some reason permitted
under this Agreement, to purchase the number of Firm Shares agreed by such
Underwriter to be purchased hereunder, which Underwriter shall remain liable to
the Company and the other Underwriters for damages, if any, resulting from such
default) be liable to the Company (except to the extent provided in Sections 5
and 8 hereof).
The term "Underwriter" in this Agreement shall include any person
substituted for an Underwriter under this Section 10.
11. Effective Date of this Agreement and Termination.
(a) This Agreement shall become effective at the earlier of (i) 6:30
A.M., Pacific time, on the first full business day following the effective date
of the Registration Statement, or (ii) the time of the public offering of any of
the Shares by the Underwriters after the Registration Statement becomes
effective. The time of the public offering shall mean the time of the release by
you, for publication, of the first newspaper advertisement relating to the
Shares, or the time at which the Shares are first generally offered by the
Underwriters to the public by letter, telephone, telegram or facsimile,
whichever shall first occur. By giving notice as set forth in Section 12 before
the time this Agreement becomes effective, you, as Representatives of the
several Underwriters, or the Company, may prevent this Agreement from becoming
effective without liability of any party to any other party, except as provided
in Sections 4(i), 5 and 8 hereof.
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(b) You, as Representatives of the several Underwriters, shall have
the right to terminate this Agreement by giving notice as hereinafter specified
at any time on or prior to the Closing Date or on or prior to any later date on
which Option Shares are to be purchased, as the case may be, (i) if the Company
shall have failed, refused or been unable to perform any agreement on its part
to be performed, or because any other condition of the Underwriters' obligations
hereunder required to be fulfilled is not fulfilled, including any change, or
development involving a prospective change, which in your sole judgment could be
reasonably expected to have a Material Adverse Effect, not set forth in the
Registration Statement or Prospectus, and that makes it, in your sole judgment,
impractical or inadvisable to proceed with the public offering of the Shares, as
contemplated by the Prospectus, or (ii) if additional material governmental
restrictions, not in force and effect on the date hereof, shall have been
imposed upon trading in securities generally or minimum or maximum prices shall
have been generally established on the New York Stock Exchange or on the
American Stock Exchange or in the over the counter market by the NASD, or
trading in securities generally shall have been suspended on either such
exchange or in the over the counter market by the NASD, or if a banking
moratorium shall have been declared by federal, New York or California
authorities, or (iii) if the Company shall have sustained a loss by strike,
fire, flood, earthquake, accident or other calamity of such character as to
interfere materially with the conduct of the business and operations of the
Company regardless of whether or not such loss shall have been insured, or (iv)
if there shall have been a material adverse change in the general political or
economic conditions or financial markets as in your reasonable judgment makes it
inadvisable or impracticable to proceed with the offering, sale and delivery of
the Shares, or (v) if there shall have been an outbreak or escalation of
hostilities or of any other insurrection or armed conflict or the declaration by
the United States of a national emergency which, in the reasonable opinion of
the Representatives, makes it impracticable or inadvisable to proceed with the
public offering of the Shares as contemplated by the Prospectus. In the event of
termination pursuant to subparagraph (i) above, the Company shall remain
obligated to pay costs and expenses pursuant to Sections 4(i), 5 and 8 hereof.
Any termination pursuant to any of subparagraphs (ii) through (v) above shall be
without liability of any party to any other party except as provided in Sections
5 and 8 hereof.
If you elect to prevent this Agreement from becoming effective or to
terminate this Agreement as provided in this Section 11, you shall promptly
notify the Company by telephone or facsimile, in each case confirmed by letter.
If the Company shall elect to prevent this Agreement from becoming effective,
the Company shall promptly notify you by telephone or facsimile, in each case,
confirmed by letter.
12. Notices. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and if sent to you shall be
mailed, delivered, telegraphed (and confirmed by letter) or faxed (and confirmed
by letter) to you c/o BancAmerica Xxxxxxxxx Xxxxxxxx, 000 Xxxxxxxxxx Xxxxxx,
Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, facsimile number (000) 000-0000,
Attention: General Counsel, with a copy to Arent, Fox, Kintner, Xxxxxxx & Xxxx,
PLLC, 0000 Xxxxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, XX 00000-0000, facsimile number
(000) 000-0000, Attention: Carter Strong, Esq.; if sent to the Company, such
notice shall be mailed, delivered, telegraphed (and confirmed by letter) or
faxed (and confirmed by letter) to TELEBANC
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FINANCIAL CORPORATION, at 0000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx
00000, facsimile number (000) 000-0000, Attention: Xxxxxx Xxxxx Xxxx, with a
copy to Xxxx Xxxxxxx Xxxxx & Xxxxxxxxxx, 0000 Xxxx Xxxxxx Xxxxx, XxXxxx,
Xxxxxxxx 00000, facsimile number (000) 000-0000, Attention: Xxxxx Xxxxx Xxxxx,
Esq.
13. Parties. This Agreement shall inure to the benefit of and be
binding upon the several Underwriters and the Company and their respective
executors, administrators, successors and assigns. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any person
or entity, other than the parties hereto and their respective executors,
administrators, successors and assigns, and the controlling persons within the
meaning of the Act or the Exchange Act, officers and directors referred to in
Section 8 hereof, any legal or equitable right, remedy or claim 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 the parties hereto and their respective executors,
administrators, successors and assigns and said controlling persons and said
officers and directors, and for the benefit of no other person or entity. No
purchaser of any of the Shares from any Underwriter shall be construed a
successor or assign by reason merely of such purchase.
In all dealings with the Company under this Agreement, you shall act
on behalf of each of the several Underwriters, and the Company shall be entitled
to act and rely upon any statement, request, notice or agreement made or given
by you jointly or by BancAmerica Xxxxxxxxx Xxxxxxxx on behalf of you.
14. Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York, without regard to its
conflict of laws provisions.
15. Counterparts. This Agreement may be signed in several
counterparts, each of which will constitute an original.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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If the foregoing correctly sets forth the understanding among the
Company and the several Underwriters, please so indicate in the space provided
below for that purpose, whereupon this letter shall constitute a binding
agreement among the Company and the several Underwriters.
Very truly yours,
TELEBANC FINANCIAL CORPORATION,
a Delaware corporation
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
Accepted as of the date first above written:
On their behalf and on behalf of each of the
several Underwriters named in Schedule A hereto.
BANCAMERICA XXXXXXXXX XXXXXXXX
CIBC XXXXXXXXXXX CORP.
XXXX XXXXX XXXX XXXXXX, INCORPORATED
By BANCAMERICA XXXXXXXXX XXXXXXXX
By
-----------------------------------
Authorized Signatory
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SCHEDULE A
NUMBER OF
FIRM SHARES
TO BE
UNDERWRITERS PURCHASED
---------------------------- -------------
BANCAMERICA XXXXXXXXX XXXXXXXX
CIBC XXXXXXXXXXX CORP.
XXXX XXXXX XXXX XXXXXX, INCORPORATED
---------
Total . . . . . . . . . . . . . 4,100,000
=========
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DRAFT 7/20/98
EXHIBIT 2(T)
PERSONS SUBJECT TO LOCK-UP PERIODS
1. Each of TeleBanc Financial Corporation's directors and executive
officers, including
a. Xxxxx X. Xxxxxx
x. Xxxxxxxx X. Xxxxxx
c. Xxxxx X. XxXxxx
d. Xxxxx X. Xxxxxxx
x. Xxxx X. Xxxxxx
f. Xxxxxx X. Xxxxxx
g. Xxxx Xxxxxxxxx
h. Xxxxxx Xxxxx Xxxx
i. Xxxxxxxx Xxxxxxxxx
j. Xxxxxxx Xxxxxx
k. Sang-Xxx Xx
l. Xxxxxx Xxxxxxxx
m. Xxxxxxx X. Xxxxxxxx
2. Xxxx Xxxxxx
3. Xxxxxxx Xxxxxx
4. [Xxxxxx Children]
5. Xxxxxxx Xxxxxx
6. Xxxxx Xxxxxxxx
7. Xxxxxx Associates
8. Xxxxxx Trusts
9. CIBC WG Argosy Merchant Fund, LLC
10. Conning & Company
11. Conning Insurance Capital Limited Partnership III
12. Conning Insurance Capital International Partners III, L.P.
13. General American Life Insurance Company
14. General American Mutual Holding Company
15. PC Investment Company
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16. The Northwestern Mutual Life Insurance Company
17. TeleBanc Financial Corporation Employee Stock Ownership Plan
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