Exhibit 1.1
FIRST ALLIANCE CORPORATION
2,950,000 SHARES(1)
COMMON STOCK
UNDERWRITING AGREEMENT
September 11, 1997
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
Potomac Tower
0000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
As Representative of the Several Underwriters
Dear Sirs:
First Alliance Corporation, a Delaware corporation (the "Company"),
and the Xxxxx and Xxxxx Xxxxxxx Revocable Trust U/A 3-7-79 (the "Selling
Stockholder") hereby confirm their agreement with the several underwriters
named in SCHEDULE 1 hereto (the "Underwriters"), for whom you have been duly
authorized to act as representative (in such capacity, the "Representative"),
as set forth below. If you are the only Underwriters, all references herein
to the Representative shall be deemed to be to the Underwriters.
1. SECURITIES. Subject to the terms and conditions herein
contained, the Selling Stockholder proposes to sell to the several
Underwriters 2,950,000 shares (the "Firm Securities") of the Company's Class
A Common Stock, $.01 par value per share ( the "Class A Common Stock"). The
Selling Stockholder also proposes to issue and sell to the several
Underwriters not more than 442,500 additional shares of Class A Common Stock
if requested by the Representative as provided in Section 4 of this
Agreement. Any and all shares of Class A Common Stock to be purchased by the
Underwriters pursuant to such option are referred to herein as the "Option
Securities." The Firm Securities and any Option Securities are collectively
referred to herein as the "Securities." The Class A Common Stock and Class B
Common Stock of the Company are collectively referred to as the "Common
Stock."
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
----------------------------------------------
------------
(1) Plus an option to purchase from the Selling Stockholder up to 442,500
additional shares to cover over-allotments.
1
(a) The Company represents and warrants to, and agrees with,
each of the several Underwriters that:
(i) A registration statement on Form S-3 (File No.
333-32993) with respect to the Securities, including a
prospectus subject to completion, has been filed by the
Company with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended
(the "Act"), and one or more amendments to such registration
statement may have been so filed. After the execution of this
Agreement, the Company will file with the Commission either
(i) if such registration statement, as it may have been
amended, has been declared by the Commission to be effective
under the Act, either (A) if the Company relies on Rule 434
under the Act, a Term Sheet (as hereinafter defined) relating
to the Securities, that shall identify the Preliminary
Prospectus (as hereinafter defined) that it supplements
containing such information as is required or permitted by
Rules 434, 430A and 424(b) under the Act or (B) if the Company
does not rely on Rule 434 under the Act, a prospectus in the
form most recently included in an amendment to such
registration statement (or, if no such amendment shall have
been filed, in such registration statement), with such changes
or insertions as are required by Rule 430A under the Act or
permitted by Rule 424(b) under the Act, and in the case of
either clause (i)(A) or (i)(B) of this sentence, as have been
provided to and approved by the Representative prior to the
execution of this Agreement, or (ii) if such registration
statement, as it may have been amended, has not been declared
by the Commission to be effective under the Act, an amendment
to such registration statement, including a form of
prospectus, a copy of which amendment has been furnished to
and approved by the Representative prior to the execution of
this Agreement. The Company may also file a related
registration statement with the Commission pursuant to Rule
462(b) under the Act for the purpose of registering certain
additional Securities, which registration statement shall be
effective upon filing with the Commission. As used in this
Agreement, the term "Original Registration Statement" means
the registration statement initially filed relating to the
Securities, as amended at the time when it was or is declared
effective, including all financial schedules and exhibits
thereto and including any information omitted therefrom
pursuant to Rule 430A under the Act and included in the
Prospectus (as hereinafter defined); the term "Rule 462(b)
Registration Statement" means any registration statement filed
with the Commission pursuant to Rule 462(b) under the Act
(including the Registration Statement and any Preliminary
Prospectus or Prospectus incorporated therein at the time such
Registration Statement becomes effective); the term
"Registration Statement" includes
2
both the Original Registration Statement and any Rule 462(b)
Registration Statement; the term "Preliminary Prospectus"
means each prospectus subject to completion filed with such
registration statement or any amendment thereto (including the
prospectus subject to completion, if any, included in the
Registration Statement or any amendment thereto at the time it
was or is declared effective); the term "Prospectus" means:
(A) if the Company relies on Rule 434 under the Act, the Term
Sheet relating to the securities that is first filed pursuant
to Rule 424(b)(7) under the Act, together with the Preliminary
Prospectus identified therein that such Term Sheet
supplements; (B) if the Company does not rely on Rule 434
under the Act, the prospectus first filed with the Commission
pursuant to Rule 424(b) under the Act; or (C) if the Company
does not rely on Rule 434 under the Act and if no prospectus
is required to be filed pursuant to Rule 424(b) under the Act,
the prospectus included in the Registration Statement; and the
term "Term Sheet" means any term sheet that satisfies the
requirements of Rule 434 under the Act. Any reference herein
to the "date" of a Prospectus that includes a Term Sheet shall
mean the date of such Term Sheet.
(ii) The Commission has not issued any order
preventing or suspending the use of any Preliminary
Prospectus. When any Preliminary Prospectus was filed with
the Commission it (A) contained all statements required to be
stated therein in accordance with, and complied in all
material respects with the requirements of, the Act and the
rules and regulations of the Commission thereunder and (B) did
not include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading. When the Registration
Statement or any amendment thereto was or is declared
effective, it (A) contained or will contain all statements
required to be stated therein in accordance with, and complied
or will comply in all material respects with the requirements
of, the Act and the rules and regulations of the Commission
thereunder and (B) did not or will not include any untrue
statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading.
When the Prospectus or any Term Sheet that is a part thereof
or any amendment or supplement to the Prospectus is filed with
the Commission pursuant to Rule 424(b) (or, if the Prospectus
or any part thereof or such amendment or supplement is not
required to be so filed, when the Registration Statement or
the amendment thereto containing such amendment or supplement
to the Prospectus was or is declared effective) and on the
Firm Closing Date and any Option Closing Date (both as
hereinafter defined), the Prospectus, as amended or
supplemented at any
3
such time, (A) contained or will contain all statements
required to be stated therein in accordance with, and complied
or will comply in all material respects with the requirements
of, the Act and the rules and regulations of the Commission
thereunder and (B) did not or will not include any untrue
statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. The foregoing provisions of this paragraph (ii)
do not apply to statements or omissions made in any
Preliminary Prospectus, the Registration Statement or any
amendment thereto or the Prospectus or any amendment or
supplement thereto in reliance upon and in conformity with
written information furnished to the Company by any
Underwriter through the Representative specifically for use
therein.
(iii) If the Company has elected to rely on Rule 462(b)
and the Rule 462(b) Registration Statement has not been declared
effective (i) the Company has filed a Rule 462(b) Registration
Statement in compliance with and that is effective upon filing
pursuant to Rule 462(b) and has received confirmation of its
receipt and (ii) the Company has given irrevocable instructions
for transmission of the applicable filing fee in connection with
the filing of the Rule 462(b) Registration Statement, in
compliance with Rule 111 promulgated under the Act or the
Commission has received payment of such filing fee.
(iv) The Company and each of its subsidiaries have
been duly organized and are validly existing as corporations
in good standing under the laws of their respective
jurisdictions of incorporation and are duly qualified to
transact business as foreign corporations, are in good
standing under the laws of all other jurisdictions where the
ownership or leasing of their respective properties or the
conduct of their respective businesses requires such
qualification, except where the failure to be so qualified
does not result in a material adverse change in the condition
(financial or otherwise), management, business, prospects, net
worth or results of operations of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect")
and are conducting their respective businesses so as to comply
with all applicable statutes and regulations, including
without limitation, applicable licensing and consumer credit
laws and regulations in each of the jurisdictions in which the
Company and each of its subsidiaries conducts its respective
business, except where the failure to comply would not have a
Material Adverse Effect.
(v) The Company and each of its subsidiaries have
full power (corporate and other) to own or lease their respective
properties and
4
conduct their respective businesses as described in the
Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus); and the Company has full power (corporate and
other) to enter into this Agreement and to carry out all the
terms and provisions hereof to be carried out by it.
(vi) The issued shares of capital stock of each of
the Company's subsidiaries have been duly authorized and validly
issued, are fully paid and nonassessable and are owned
beneficially by the Company free and clear of any security
interests, liens, encumbrances, equities or claims.
(vii) The Company has an authorized, issued and
outstanding capitalization as set forth in the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus). All of the issued shares of capital stock of the
Company, including the Securities, have been duly authorized and
validly issued and are fully paid and nonassessable. At the Firm
Closing Date or the Option Closing Date, no holders of
outstanding shares of capital stock of the Company will be
entitled as such to any preemptive or other rights to subscribe
for any of the Securities, and no holder of securities of the
Company has any right which has not been fully exercised or
waived to require the Company to register the offer or sale of
any securities owned by such holder under the Act in the public
offering contemplated by this Agreement.
(viii) The capital stock of the Company conforms to the
description thereof contained in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus).
(ix) Except as disclosed in the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus), there are no outstanding (A) securities or
obligations of the Company or any of its subsidiaries convertible
into or exchangeable for any capital stock of the Company or any
such subsidiary, (B) warrants, rights or options to subscribe for
or purchase from the Company or any such subsidiary any such
capital stock or any such convertible or exchangeable securities
or obligations, or (C) obligations of the Company or any such
subsidiary to issue any shares of capital stock, any such
convertible or exchangeable securities or obligations, or any
such warrants, rights or options.
(x) The consolidated financial statements and
schedules of the Company, and, to the Company's knowledge,
Standard Pacific Savings, F.A. (the "Bank") and their respective
consolidated subsidiaries included
5
in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus) fairly present the financial condition of the
Company, the Bank and their respective consolidated
subsidiaries and the results of operations and cash flows as
of the dates and periods therein specified. Such financial
statements and schedules have been prepared in accordance with
generally accepted accounting principles ("GAAP") consistently
applied throughout the periods involved (except as otherwise
noted therein). The selected financial data set forth under
the captions "Capitalization" and "Selected Consolidated
Financial Data" in the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus)
fairly present, in accordance with GAAP on the basis stated in
the Prospectus (or such Preliminary Prospectus), the
information included therein.
(xi) Deloitte & Touche LLP, who have audited certain
financial statements of the Company and its consolidated
subsidiaries and delivered their report with respect to the
Company's audited consolidated financial statements included in
the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus), are independent public accountants as required by
the Act and the applicable rules and regulations thereunder.
Xxxxxx Xxxxxxxx LLP, who have audited certain financial
statements of the Bank and its consolidated subsidiaries and
delivered their report with respect to the Bank's audited
consolidated financial statements included in the Registration
Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), are
independent public accountants as required by the Act and the
applicable rules and regulations thereunder.
(xii) The execution and delivery of this Agreement have
been duly authorized by the Company and this Agreement has been
duly executed and delivered by the Company, and is the valid and
binding agreement of the Company, enforceable against the Company
in accordance with its terms, except as such enforceability may
be limited by the effect of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to
rights and remedies of creditors or by general equitable
principles.
(xiii) No legal or governmental proceedings are pending
to which the Company or any of its subsidiaries is a party or to
which the property of the Company or any of its subsidiaries is
subject that are required to be described in the Registration
Statement or the Prospectus and are not described therein (or, if
the Prospectus is not in existence, the
6
most recent Preliminary Prospectus), to the best of the
Company's knowledge, and no such proceedings have been
threatened against the Company or any of its subsidiaries or
with respect to any of their respective properties; and no
contract or other document is required to be described in the
Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement that is not described
therein (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus) or filed as required.
(xiv) The offering and sale of the Firm Securities and
the Option Securities by the Selling Stockholder to the
Underwriters pursuant to this Agreement, the compliance by the
Company with the other provisions of this Agreement and the
consummation of the other transactions herein contemplated do not
(A) require the consent, approval, authorization, registration or
qualification of or with any governmental authority, except such
as have been obtained, such as may be required under state or
foreign country securities or blue sky laws, such as may be
required by the National Association of Securities Dealers, Inc.
(the "NASD") and, if the Registration Statement filed with
respect to the Securities (as amended) is not effective under the
Act as of the time of execution hereof, such as may be required
(and shall be obtained as provided in this Agreement) under the
Act, or (B) conflict with or result in a breach or violation of
any of the terms and provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, lease or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries or any of their respective properties are bound, or
the charter documents or by-laws of the Company or any of its
subsidiaries, or any statute or any judgment, decree, order, rule
or regulation of any court or other governmental authority or any
arbitrator applicable to the Company or any of its subsidiaries.
(xv) Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus), neither the Company nor any of
its subsidiaries has sustained any loss or interference with
their respective businesses or properties having or resulting in
a Material Adverse Effect from fire, flood, hurricane, accident
or other calamity, whether or not covered by insurance, or from
any labor dispute or any legal or governmental proceeding and
there has not been any event, circumstance, or development that
results in, or that the Company believes would result in, a
Material Adverse Effect, except in each case as described in or
contemplated by the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus).
7
(xvi) The Company has not, directly or indirectly
(except for the sale of Securities under this Agreement), (i)
taken any action designed to cause or to result in, or that has
constituted or which might reasonably be expected to constitute,
the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities or
(ii) since the filing of the Registration Statement (A) sold, bid
for, purchased, or paid anyone any compensation for soliciting
purchases of, the Securities or (B) paid or agreed to pay to any
person any compensation for soliciting another to purchase any
other securities of the Company.
(xvii) None of the Company, its subsidiaries or any
employee of the Company or its subsidiaries has made any material
payment of funds of the Company or its subsidiaries prohibited by
law and no funds of the Company or its subsidiaries have been set
aside to be used for any payment prohibited by law.
(xviii) The description of past securitization
transactions effected by the Company, as contained in the
Registration Statement and the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus), is
true and complete in all material respects and to the Company's
best knowledge, no event or series of events has occurred that
would result in any of the securities issued in connection with
any of such transactions being downgraded or placed on a watch
list with negative implications by any rating agency or similar
organization, or that would impair the Company's or its
subsidiaries' ability to consummate future securitization
transactions upon economic terms consistent with past
securitization transactions or otherwise cause the Company and
its subsidiaries to suffer any Material Adverse Effect with
respect to any past or future securitization transaction (other
than any such event or series of events described in the
Prospectus, or, if the Prospectus is not yet in existence, the
most recent Preliminary Prospectus).
(xix) (a) The Company and its subsidiaries possess all
certificates, authorizations and permits, including, without
limitation, all applicable mortgage lending licenses, issued by
the appropriate federal, state or foreign regulatory authorities
necessary to conduct their respective businesses except where the
failure to possess any such item would not have a Material
Adverse Effect, and (b) neither the Company nor any such
subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate,
authorization, license or permit that, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a Material Adverse Effect, except
8
as described in or contemplated by the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus).
(xx) Assuming that the rights of the Company or any
of its subsidiaries, as holder of a mortgage servicing
receivable or of a residual certificate, in each case backed
by a pool of securitized mortgages, in combination with its
right as servicer of the pool to forclose on a mortgage in
the pool in the event of default, would be deemed to
constitute a lien on or other interest in real estate within
the meaning of Section 3(c)(5)(C) of the Investment Company
Act of 1940, as amended (the "1940 Act"), the Company is not
an investment company under the 1940 Act, and the
transactions contemplated by this Agreement will not cause
the Company to become an investment company subject to
registration under the 1940 Act.
(xxi) The Company has filed all foreign, federal, state
and local tax returns that are required to be filed or has
requested extensions thereof (except in any case in which the
failure so to file would not have a Material Adverse Effect) and
has paid all taxes required to be paid by it and any other
assessment, fine or penalty levied against it, to the extent that
any of the foregoing is due and payable, except for any such
assessment, fine or penalty that is currently being contested in
good faith or as described in or contemplated by the Prospectus
(or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(xxii) Except for the shares of capital stock of each of
the subsidiaries directly or indirectly owned by the Company,
neither the Company nor any such subsidiary owns any shares of
stock or any other equity securities of any corporation or has
any equity interest in any firm, partnership, association or
other entity.
(xxiii) The Company and each of its subsidiaries maintain
a system of internal accounting controls sufficient to provide
reasonable assurance that (A) transactions are executed in
accordance with management's general or specific authorizations;
(B) transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP and to maintain
asset accountability; (C) access to assets is permitted only in
accordance with management's general or specific authorization;
and (D) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(xxiv) Except as described in the Registration Statement
and the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus), no default exists, and
no event has occurred that, with notice or lapse of time or both,
would constitute a default, in the due performance and observance
of any term, covenant or condition of any indenture, mortgage,
deed of trust, lease or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or any of their respective
properties
9
is bound or may be affected, in any respect that would have a
Material Adverse Effect.
(xxv) The Company has not distributed and, prior to the
later of (A) the Firm Closing Date or any Option Closing Date and
(B) the completion of the distribution of the Securities, will
not distribute any offering material in connection with the
offering and sale of the Securities other than the Registration
Statement or any amendment thereto, any Preliminary Prospectus,
the Prospectus or Term Sheet or any amendment or supplement
thereto, or other materials, if any, permitted by the Act.
(xxvi) Neither the Company nor its subsidiaries own any
items of real property other than as described in the
Registration Statement and the Prospectus, (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus) and
each of them has marketable title to all real and personal
property owned by each of them, in each case free and clear of
any security interests, liens, encumbrances, equities, claims and
other defects, except such as do not have a Material Adverse
Effect on the value of such property and do not interfere with
the use made or proposed to be made of such property by the
Company or such subsidiary, and any real property and buildings
held under lease by the Company or any such subsidiary are held
under valid, subsisting and enforceable leases, with such
exceptions as are not material and do not interfere with the use
made or proposed to be made of such property and buildings by the
Company or such subsidiary, in each case except as described in
or contemplated by the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus).
(xxvii) No labor dispute with the employees of the
Company or any of its subsidiaries exists or, to the Company's
knowledge, is threatened or imminent that could result in a
Material Adverse Effect, except as described in or contemplated
by the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus).
(xxviii) The Company and its subsidiaries own or possess,
or can acquire on reasonable terms, all material trademarks,
service marks, trade names, licenses, copyrights and proprietary
or other confidential information currently employed by them in
connection with their respective businesses, and neither the
Company nor any such subsidiary has received any notice of
infringement of or conflict with asserted rights of any third
party with respect to any of the foregoing which, singly or in
the aggregate, if the subject of an unfavorable decisions, ruling
or finding, would have a Material Adverse Effect, except as
described in or
10
contemplated by the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus).
(xxix) The Company and each of its subsidiaries are
insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as are prudent
and customary in the businesses in which they are engaged; and
neither the Company nor any such subsidiary has any reason to
believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a Material Adverse
Effect, except as described in or contemplated by the Prospectus
(or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(xxx) The Company has filed all reports required under
the Exchange Act with respect to the registration statements
filed in connection with the asset securitizations sponsored by
the Company.
(b) Any certificate signed by the Chief Executive Officer, Chief
Financial Officer or Secretary of the Company and delivered to the
Representative or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter, as to the
matters covered thereby.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDER.
----------------------------------------------------------
(a) The Selling Stockholder represents and warrants to, and
agrees with, the several Underwriters that:
(i) The Selling Stockholder has, and on the
Closing Date and Option Closing Date hereinafter mentioned
will have, good and marketable title to the Firm Securities
and the Option Securities proposed to be sold by the Selling
Stockholder hereunder on such Closing Date and such Option
Closing Date, as the case may be, and full right, power and
authority to enter into this Agreement and to sell, assign,
transfer and deliver such Firm Securities and such Option
Securities hereunder, free and clear of all voting trust
arrangements, liens, encumbrances, equities, security
interests, restrictions and claims whatsoever; and upon
delivery of and payment for such Firm Securities and such
Option Securities hereunder, the Selling Stockholder will
convey to the Underwriters good and marketable title thereto,
free and clear of all liens, encumbrances, equities, claims,
restrictions, security interests, voting trusts or other
defects of title whatsoever.
11
(ii) The Selling Stockholder has executed and
delivered a Power of Attorney and caused to be executed and
delivered on its behalf a Custody Agreement (hereinafter
collectively referred to as the "Stockholders Agreement," and
in connection herewith the Selling Stockholder further
represents, warrants and agrees that the Selling Stockholder
has deposited in custody, under the Stockholders Agreement,
with the agent named therein (the "Agent") as custodian,
certificates in negotiable form for the Firm Securities and
the Option Securities to be sold hereunder by the Selling
Stockholder, for the purpose of further delivery pursuant to
this Agreement. The Selling Stockholder agrees that the Firm
Securities and the Option Securities to be sold by such
Selling Stockholder on deposit with the Agent are subject to
the interests of the Company and the Underwriters to the
extent set forth herein and in the Stockholders Agreement,
that the arrangements made for such custody are to that extent
irrevocable, and that the obligations of the Selling
Stockholder hereunder shall not be terminated, except as
provided in this Agreement or in the Stockholders Agreement,
by any act of the Selling Stockholder, by operation of law, by
the termination or revocation of the trust agreement or other
governing documents of the Selling Stockholder or by the
occurrence of any other event. If the trust agreement or other
governing documents of the Selling Stockholder should be
terminated or revoked before the delivery of the Firm
Securities or the Option Securities hereunder, the documents
evidencing the Firm Securities or the Option Securities, as
the case may be, then on deposit with the Agent shall be
delivered by the Agent in accordance with the terms and
conditions of this Agreement and the Stockholders Agreement as
if such termination, revocation or other event had not
occurred, regardless of whether or not the Agent shall have
received notice thereof. This Agreement and the Stockholders
Agreement have been duly executed and delivered by or on
behalf of the Selling Stockholder and the form of the
Stockholders Agreement has been delivered to you.
(iii) The performance of this Agreement and the
Stockholders Agreement and the consummation of the transactions
contemplated hereby and by the Stockholders Agreement will not
result in a breach or violation by the Selling Stockholder of any
of the terms or provisions of, or constitute a default by the
Selling Stockholder under any material indenture, mortgage, deed
of trust, trust (constructive or other), loan agreement, lease,
franchise, license or other agreement or instrument to which the
Selling Stockholder is a party or by which the Selling
Stockholder or any of its properties is bound, or any judgment,
decree, order, rule or regulation of any court or governmental
agency or body applicable to the Selling Stockholder or any of
its properties, except (x) for
12
any violation, breach, or default that could not have an
adverse effect on the Selling Stockholder's sale of the Firm
Securities or the Option Securities to be sold hereunder or
the Selling Stockholder's performance of any of its other
obligations hereunder or under the Stockholders Agreement and
(y) that the Selling Stockholder makes no representation or
warranty hereunder with respect to federal or state securities
or "blue sky" laws or any similar laws in applicable foreign
jurisdictions.
(iv) The Selling Stockholder has not taken and will
not take, directly or indirectly, any action designed to or
which might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Common Stock
of the Company to facilitate the sale or resale of the Firm
Securities or the Option Securities.
(v) Each Preliminary Prospectus that has been
distributed by the Underwriters or the Company to prospective
investors and the Prospectus, insofar as they include or
reflect information with respect to the Selling Stockholder,
has conformed in all material respects to the requirements of
the Act and the rules and regulations of the Commission
thereunder and has not included any untrue statement of a
material fact or omitted to state a material fact necessary to
make the statements therein not misleading in light of the
circumstances under which they were made; and neither the
Registration Statement nor the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus), nor any amendment or supplement thereto, insofar
as they include or reflect information with respect to the
Selling Stockholder, will include any untrue statement of a
material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein
not misleading.
(vi) The Selling Stockholder, without independent
investigation, is not aware that any of the representations or
warranties of the Company set forth in Section 2 above is
untrue or inaccurate in any material respect.
(vii) All stock transfer or other taxes (other than
income taxes), if any, that are required to be paid in connection
with the sale and transfer of the Firm Securities or the Option
Securities proposed to be sold by the Selling Stockholder to the
several Underwriters pursuant to this Agreement will be fully
paid or provided for by the Selling Stockholder.
(viii) No consent, approval, authorization or order of,
or any filing with, any court or governmental agency or body is
required for the consummation by the Selling Stockholder of the
transactions on its part
13
contemplated in this Agreement, the Power of Attorney or the
Custody Agreement, except as may be required under the Act or
state securities or "blue sky" laws or similar laws in
applicable foreign jurisdictions.
(ix) Other than as permitted by the Act and the rules and
regulations of the Commission thereunder, the Selling Stockholder
has not distributed and will not distribute any preliminary
prospectus, the Prospectus or any other offering material in
connection with the offering and sale of the Firm Securities or
the Option Securities proposed to be sold by the Selling
Stockholder.
(b) The Selling Stockholder agrees with the Company and the
Underwriters not to offer to sell, sell or contract to sell or otherwise dispose
of any shares of Common Stock or securities convertible into or exchangeable for
any shares of Common Stock in accordance with the terms of separate letter
agreements between the Selling Stockholder and the Representatives.
(c) Any certificate signed by the Selling Stockholder and
delivered to the Representative or to counsel for the Underwriters shall be
deemed a representation and warranty by the Selling Stockholder, to each
Underwriter, as to the matters covered thereby.
4. PURCHASE, SALE AND DELIVERY OF THE SECURITIES.
----------------------------------------------
(a) On the basis of the representations, warranties, agreements
and covenants herein contained and subject to the terms and conditions herein
set forth, the Selling Stockholder agrees to sell to each of the Underwriters,
and each of the Underwriters, severally and not jointly, agrees to purchase from
the Selling Stockholder, at a purchase price of $___ per share, the number of
Firm Securities set forth opposite the name of such Underwriter in Schedule 1
hereto. One or more certificates in definitive form for the Firm Securities
that the several Underwriters have agreed to purchase hereunder, and in such
denomination or denominations and registered in such name or names as the
Representative requests upon notice to the Selling Stockholder at least 48 hours
prior to the Firm Closing Date, shall be delivered by or on behalf of the
Selling Stockholder to the Representative for the respective accounts of the
Underwriters, against payment by or on behalf of the Underwriters of the
aggregate purchase price therefor by wire transfer in same day funds (the "Wired
Funds") to the account of the Selling Stockholder. Such delivery of and payment
for the Firm Securities shall be made at the offices of Xxxxxx, Xxxx & Xxxxxxxx
LLP, 0 Xxxx Xxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxxxx, 00000 at 9:30 A.M.,
California time, on September 16, 1997, or at such other place, time or date as
the Representative and the Selling Stockholder may agree upon or as the
Representative may determine pursuant to Section 10 hereof, such time and date
of delivery against payment being herein referred to as the "Firm Closing Date."
The Selling Stockholder will make such certificate or certificates for the Firm
Securities available for checking and packaging by the Representative at the
offices in New York, New York of the Company's transfer agent or registrar at
least 24 hours prior to the Firm
14
Closing Date.
(b) For the sole purpose of covering any over-allotments in
connection with the distribution and sale of the Firm Securities as contemplated
by the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), the Selling Stockholder hereby grants to the several
Underwriters an option to purchase, severally and not jointly, the Option
Securities. The purchase price to be paid for any Option Securities shall be
the same price per share as the price per share for the Firm Securities set
forth above in paragraph (a) of this Section 4. The option granted hereby may
be exercised as to all or any part of the Option Securities from time to time
within thirty days after the date of the Prospectus (or, if such 30th day shall
be a Saturday or Sunday or a holiday, on the next business day thereafter when
the New York Stock Exchange is open for trading). The Underwriters shall not be
under any obligation to purchase any of the Option Securities prior to the
exercise of such option. The Representative may from time to time exercise the
option granted hereby by giving notice in writing or by telephone (confirmed
within 24 hours in writing) to the Selling Stockholder setting forth the
aggregate number of Option Securities as to which the several Underwriters are
then exercising the option and the date and time for delivery of and payment for
such Option Securities. Any such date of delivery shall be determined by the
Representative but shall not be earlier than two business days or later than
five business days after such exercise of the option and, in any event, shall
not be earlier than the Firm Closing Date. The time and date set forth in such
notice, or such other time on such other date as the Representative and the
Selling Stockholder may agree upon or as the Representative may determine
pursuant to Section 10 hereof, is herein called the "Option Closing Date" with
respect to such Option Securities. Upon exercise of the option as provided
herein, the Selling Stockholder shall become obligated to sell to each of the
several Underwriters, and, subject to the terms and conditions herein set forth,
each of the Underwriters (severally and not jointly) shall become obligated to
purchase from the Selling Stockholder, the same percentage of the total number
of the Option Securities as to which the several Underwriters are then
exercising the option as such Underwriter is obligated to purchase of the
aggregate number of Firm Securities, as adjusted by the Representative in such
manner as it deems advisable to avoid fractional shares. If the option is
exercised as to all or any portion of the Option Securities, one or more
certificates in definitive form for such Option Securities, and payment
therefor, shall be delivered on the related Option Closing Date in the manner,
and upon the terms and conditions, set forth in paragraph (a) of this Section 4,
except that reference therein to the Firm Securities and the Firm Closing Date
shall be deemed, for purposes of this paragraph 4(b), to refer to such Option
Securities and Option Closing Date, respectively.
(c) It is understood that you, individually and not as the
Representative, may (but shall not be obligated to) make payment on behalf of
any Underwriter or Underwriters for any of the Securities to be purchased by
such Underwriter or Underwriters. No such payment shall relieve such
Underwriter or Underwriters from any of its or their obligations hereunder.
(d) The Selling Stockholder hereby acknowledges that the wire
15
transfer by or on behalf of the Underwriters of the purchase price for any of
the Firm Securities or the Option Securities, as the case may be, does not
constitute closing of a purchase and sale of the Securities. Only execution and
delivery of a receipt (by facsimile or otherwise) for the Securities by the
Underwriters indicates completion of the closing of a purchase of the Securities
from the Selling Stockholder. Furthermore, in the event that the Underwriters
wire funds to the Selling Stockholder prior to the completion of the closing of
a purchase of the Firm Securities or the Option Securities, as the case may be,
the Selling Stockholder hereby acknowledges that until the Underwriters execute
and deliver a receipt for the Securities, by facsimile or otherwise, the Selling
Stockholder will not be entitled to the wired funds and shall return the wired
funds to the Underwriters as soon as practicable (by wire transfer of same-day
funds) upon demand. In the event that the closing of a purchase of Securities
is not completed and the wired funds are not returned by the Selling Stockholder
to the Underwriters on the same day the wired funds were received by the Selling
Stockholder, the Selling Stockholder agrees to pay to the Underwriters in
respect of each day the wired funds for the Option Securities or the Firm
Securities, as the case may be, are not returned by it, in same-day funds,
interest at the federal funds rate as stated in the Wall Street Journal on the
date hereof on the amount of such wired funds.
5. OFFERING BY THE UNDERWRITERS. Upon your authorization of the
release of the Firm Securities, the several Underwriters propose to offer the
Firm Securities for sale to the public upon the terms set forth in the
Prospectus.
6. COVENANTS OF THE COMPANY AND THE SELLING STOCKHOLDER. The
Company and the Selling Stockholder, severally and not jointly, covenant and
agree with each of the Underwriters that:
(a) The Company and the Selling Stockholder will use their
respective best efforts to cause the Registration Statement, if not effective at
the time of execution of this Agreement, to become effective as promptly as
possible. If required, the Company will file the Prospectus or any Term Sheet
that constitutes a part thereof and any amendment or supplement thereto with the
Commission in the manner and within the time period required by Rules 434 and
424(b) under the Act. During any time when a prospectus relating to the
Securities is required to be delivered under the Act, the Company and the
Selling Stockholder (i) will comply with all requirements imposed upon either of
them by the Act and the rules and regulations of the Commission thereunder to
the extent necessary to permit the continuance of sales of or dealings in the
Securities in accordance with the provisions hereof and of the Prospectus, as
then amended or supplemented, and (ii) will not file with the Commission the
Prospectus, Term Sheet or the amendment referred to in the second sentence of
Section 2(a) hereof, any amendment or supplement to such Prospectus, Term Sheet
or any amendment to the Registration Statement or any Rule 462(b) Registration
Statement of which the Representative shall not previously have been advised and
furnished with a copy for a reasonable period of time prior to the proposed
filing and as to which filing the Representative shall not have given its
consent. The Company will prepare and file with the Commission, in accordance
with the rules and regulations of the Commission, promptly upon request by the
Representative or counsel for the Underwriters, any
16
amendments to the Registration Statement or amendments or supplements to the
Prospectus that may be necessary or advisable in connection with the
distribution of the Securities by the several Underwriters, and will use its
best efforts to cause any such amendment to the Registration Statement to be
declared effective by the Commission as promptly as possible. The Company
will advise the Representative, promptly after receiving notice thereof, of
the time when the Registration Statement or any amendment thereto has been
filed or declared effective or the Prospectus or any amendment or supplement
thereto has been filed and will provide to the Representative copies of each
such filing.
(b) The Company and the Selling Stockholder will advise the
Representative, promptly after receiving notice or obtaining knowledge thereof,
of (i) the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement or any amendment thereto or any order preventing or suspending the use
of any Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, (ii) the suspension of the qualification of the Securities for offering
or sale in any jurisdiction, (iii) the institution, threatening or contemplation
of any proceeding for any such purpose, or (iv) any request made by the
Commission for amending the Original Registration Statement or any Rule 462(b)
Registration Statement, for amending or supplementing the Prospectus or for
additional information. The Company and the Selling Stockholder will use their
respective best efforts to prevent the issuance of any such stop order and, if
any such stop order is issued, to obtain the withdrawal thereof as promptly as
possible.
(c) The Company and the Selling Stockholder will arrange for the
qualification of the Securities for offering and sale under the securities or
blue sky laws of such jurisdictions as the Representative may designate and will
continue such qualifications in effect for as long as may be necessary to
complete the distribution of the Securities; provided, however, that in
connection therewith the Company shall not be required to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction.
(d) If, at any time prior to the later of (i) the final date
when a prospectus relating to the Securities is required to be delivered under
the Act or (ii) the Option Closing Date, any event occurs as a result of which
the Prospectus, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, or if for any other reason it is necessary at
any time to amend or supplement the Prospectus to comply with the Act or the
rules or regulations of the Commission thereunder, the Company will promptly
notify the Representative thereof and, subject to Section 5(a) hereof, will
prepare and file with the Commission, at the Selling Stockholder's expense, an
amendment to the Registration Statement or an amendment or supplement to the
Prospectus that corrects such statement or omission or effects such compliance.
(e) The Company will, without charge, provide (i) to the
17
Representative and to counsel for the Underwriters a signed copy of the
registration statement originally filed with respect to the Securities and each
amendment thereto (in each case including exhibits thereto) and any Rule 462(b)
Registration Statement, (ii) to each other Underwriter, a conformed copy of such
registration statement and any Rule 462(b) Registration Statement and each
amendment thereto (in each case without exhibits thereto) and (iii) so long as a
prospectus relating to the Securities is required to be delivered under the Act,
as many copies of each Preliminary Prospectus or the Prospectus or any amendment
or supplement thereto as the Representative may reasonably request; without
limiting the application of clause (iii) of this sentence, the Company, not
later than (A) 9:00 A.M., New York City time, on the business day following the
date of determination of the public offering price, if such determination
occurred at or prior to 10:00 A.M., New York City time, on such date or (B) 2:00
P.M., New York City time, on the business day following the date of
determination of the public offering price, if such determination occurred after
10:00 A.M., New York City time, on such date, will deliver to the Underwriters,
without charge, as many copies of the Prospectus and any amendment or supplement
thereto as the Representative may reasonably request for purposes of confirming
orders that are expected to settle on the Firm Closing Date.
(f) If the Company elects to rely on Rule 462(b), the Company
shall both file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) and the Selling Stockholder shall pay the applicable
fees in accordance with Rule 111 promulgated under the Act by the earlier of
(i) 10:00 P.M., Eastern time on the date of this Agreement and (ii) the time
confirmations are sent or given, as specified by Rule 462(b)(2).
(g) Neither the Company nor the Selling Stockholder shall,
directly or indirectly, without the prior written consent of the Representative,
on behalf of the Underwriters, offer, sell, offer to sell, contract to sell,
pledge, grant any option to purchase or otherwise sell or dispose (or announce
any offer, sale, offer of sale, contract of sale, pledge, grant of any option to
purchase or other sale or disposition) of any shares of Common Stock or any
securities convertible into, or exchangeable or exercisable for, shares of
Common Stock for a period of 120 days after the date of the Prospectus, except
issuances under the Company's 1996 Stock Incentive Plan or pursuant to the
exercise of warrants or employee stock options or pursuant to the terms of
convertible securities of the Company outstanding on the date hereof.
(h) Neither the Company nor the Selling Stockholder will,
directly or indirectly, (i) take any action designed to cause or to result in,
or that has constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities or (ii)(A) sell, bid for,
purchase, or pay anyone any compensation for soliciting purchases of, the
Securities or (B) pay or agree to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
(i) The Company and the Selling Stockholder will obtain the
lockup agreements described in Section 8(h) hereof prior to the Firm Closing
Date.
18
(j) If at any time during the 25-day period after the
Registration Statement becomes effective or the period prior to the Option
Closing Date, any rumor, publication or event relating to or affecting the
Company shall occur as a result of which in your opinion the market price of the
Common Stock has been or is likely to be materially affected (regardless of
whether such rumor, publication or event necessitates a supplement to or
amendment of the Prospectus), the Company will, after written notice from you
advising the Company to the effect set forth above, forthwith prepare, consult
with you concerning the substance of, and disseminate a press release or other
public statement, reasonably satisfactory to you, your counsel and counsel to
the Company responding to or commenting on such rumor, publication or event.
(k) The Company will cause the Securities to be duly included
for quotation on the Nasdaq National Market prior to the Firm Closing Date.
The Company will use its best efforts to ensure that the Securities remain
included for quotation on the Nasdaq National Market following the Firm Closing
Date.
7. EXPENSES. The Selling Stockholder and the Company will pay all
costs and expenses incident to the performance of their obligations under this
Agreement, as described in the Registration Statement, whether or not the
transactions contemplated herein are consummated or this Agreement is terminated
pursuant to Section 12 hereof, including all costs and expenses incident to (i)
the printing or other production of documents with respect to the transactions,
including any costs of printing the Registration Statement originally filed with
respect to the Securities and any amendment thereto, any Rule 462(b)
Registration Statement, any Preliminary Prospectus and the Prospectus and any
amendment or supplement thereto, this Agreement and any blue sky memoranda, (ii)
all arrangements relating to the delivery to the Underwriters of copies of the
foregoing documents, (iii) the fees and disbursements of the counsel, the
accountants and any other experts or advisors retained by the Selling
Stockholder or the Company, (iv) preparation, issuance and delivery to the
Underwriters of any certificates evidencing the Securities, including transfer
agent's and registrar's fees, (v) the qualification of the Securities under
state securities and "blue sky" laws and similar laws in applicable foreign
jurisdictions, including filing fees and fees and disbursements of counsel for
the Underwriters relating thereto, and (vi) the filing fees of the Commission
and the NASD relating to the Securities. If the sale of the Securities provided
for herein is not consummated because any condition to the obligations of the
Underwriters set forth in Section 8 hereof is not satisfied, because this
Agreement is terminated pursuant to Section 12 hereof or because of any failure,
refusal or inability on the part of the Company or the Selling Stockholder to
perform all obligations and satisfy all conditions on its part to be performed
or satisfied hereunder other than by reason of a default by any of the
Underwriters, the Selling Stockholder will reimburse the Representative upon
demand for all reasonable out-of-pocket expenses (including reasonable counsel
fees and disbursements) that shall have been incurred by it in connection with
the proposed purchase and sale of the Securities. The Selling Stockholder
shall not in any event be liable to any of the Underwriters for the loss of
anticipated profits from the transactions covered
19
by this Agreement.
8. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of
the several Underwriters to purchase and pay for the Firm Securities shall be
subject to the accuracy of the representations and warranties of the Company and
the Selling Stockholder contained herein as of the date hereof and as of the
Firm Closing Date, as if made on and as of the Firm Closing Date, to the
accuracy of the statements of the Company's officers made pursuant to the
provisions hereof, to the performance by the Company and the Selling Stockholder
of their respective covenants and agreements hereunder and to the following
additional conditions:
(a) If the Original Registration Statement or any amendment
thereto filed prior to the Firm Closing Date has not been declared effective as
of the time of execution hereof, the Registration Statement or such amendment,
and if the Company has elected to rely upon Rule 462(b), the Rule 462(b)
Registration Statement, shall have been declared effective not later than the
earlier of (i) 11:00 A.M., New York City time, on the date on which the
amendment to the Registration Statement originally filed with respect to the
Securities or to the Registration Statement, as the case may be, containing
information regarding the public offering price of the Securities has been filed
with the Commission, and (ii) the time confirmations are sent or given as
specified by Rule 462(b) or, with respect to the Original Registration
Statement, such later time and date as shall have been consented to by the
Representative; if required, the Prospectus or any Term Sheet that constitutes a
part thereof and any amendment or supplement thereto shall have been filed with
the Commission in the manner and within the time period required by Rules 434
and 424(b) under the Act; no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto shall have been issued, and no
proceedings for that purpose shall have been instituted or threatened or, to the
knowledge of the Company or the Representative, shall be contemplated by the
Commission; and the Company shall have complied with any request of the
Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise).
(b) The Representative shall have received an opinion, dated the
Firm Closing Date, of Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel for the Company and
the Selling Stockholder, to the effect that:
(i) the Company and each of its subsidiaries listed in
Schedule 2 hereto (the "Subsidiaries") have been duly organized
and are validly existing as corporations in good standing under
the laws of their respective jurisdictions of incorporation and
are duly qualified to transact business as foreign corporations
and are in good standing under the laws of all other
jurisdictions where the ownership or leasing of their respective
properties or the conduct of their respective businesses requires
such qualification, except where the failure to be so qualified
does not result in a Material Adverse Effect; the Selling
Stockholder has been duly organized and is validly existing as a
trust under the laws of its jurisdiction of organization.
20
(ii) the Company and each of the Subsidiaries have
corporate power to own or lease their respective properties and
conduct their respective businesses as described in the
Registration Statement and the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus); and
the Company and the Selling Stockholder each have the necessary
power and authority to enter into this Agreement and to carry out
all the terms and provisions hereof to be carried out by each of
them;
(iii) the issued shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable and are owned by the Company free
and clear of any perfected security interests that have been in
existence for at least 21 days preceding the date of such opinion
or, to the best knowledge of such counsel, any other security
interests, liens, encumbrances or claims;
(iv) the Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus; all of the issued
shares of capital stock of the Company have been duly authorized
and validly issued and are fully paid and nonassessable, and, to
the best knowledge of such counsel, were not issued in violation
of or subject to any preemptive rights or other rights to
subscribe for or purchase securities; the Securities are duly
authorized, validly issued, fully paid and nonassessable; to the
best knowledge of such counsel, no holders of outstanding shares
of capital stock of the Company are entitled as such to any
preemptive or other rights to subscribe for any of the
Securities; and, to the best knowledge of such counsel, no
holders of securities of the Company are entitled to have such
securities registered under the Registration Statement;
(v) the statements set forth under the heading
"Description of Capital Stock" in the Prospectus, insofar as such
statements purport to summarize certain provisions of the capital
stock of the Company, provide a fair summary of such provisions;
and the statements set forth under the heading
"Business--Regulation," and "Shares Eligible for Future Sale" in
the Prospectus, insofar as such statements constitute a summary
of the legal matters, documents or proceedings referred to
therein, provide a fair summary of such legal matters, documents
and proceedings in all material respects;
(vi) the execution and delivery of this Agreement have been
duly authorized by all necessary corporate action of the Company
and the Selling Stockholder and this Agreement has been duly
executed and
21
delivered by the Company and the Selling Stockholder;
(vii) to the knowledge of such counsel, (1) no legal or
governmental proceedings are pending to which the Company or any
of the Subsidiaries is a party or to which the property of the
Company or any of the Subsidiaries is subject that are required
to be described in the Registration Statement or the Prospectus
and are not described therein, and no such proceedings have been
threatened against the Company or any of the Subsidiaries or with
respect to any of their respective properties and (2) no contract
or other document is required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement that is not described therein or filed as
required;
(viii) except for the X00 xxxxxxx Xxxxxx Xxxxxxx
financing facility provided by Prudential Securities Incorporated
finalized on August 19, 1997 and the temporary $2 million
increase in the Coast Security Mortgage, Inc. credit facility
extended in the second half of August 1997, to the knowledge of
such counsel, subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus, (1) the Company and its Subsidiaries have not
incurred any material liability or obligation, direct or
contingent, nor entered into any material transaction not in the
ordinary course of business; and (2) the Company has not
purchased any of its outstanding capital stock, nor declared,
paid or otherwise made any dividend or distribution of any kind
on its capital stock, except in each case as described in or
contemplated by the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus);
(ix) the offering and sale of the Firm Securities and the
Option Securities by the Selling Stockholder to the Underwriters
pursuant to this Agreement, the compliance by the Company and the
Selling Stockholder with the other provisions of this Agreement
and the consummation of the other transactions herein
contemplated do not (1) require the consent, approval,
authorization, registration or qualification of or with any
governmental authority, except such as have been obtained and
such as may be required under state securities or "blue sky" laws
or similar laws in applicable foreign jurisdictions and by the
NASD, (2) conflict with or result in a breach or violation of any
of the terms and provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, lease or other agreement
or instrument known to such counsel to which the Selling
Stockholder, the Company or any of the Subsidiaries is a party or
by which the Company or any of the Subsidiaries or any of their
respective properties are bound, or, so far as it is known to
such counsel, any statute
22
or any judgment, decree, order, rule or regulation of any court
or other governmental authority or any arbitrator having
jurisdiction over the Selling Stockholder, the Company or any
of the Subsidiaries, in each case, where such conflict, breach,
violation or default would have a Material Adverse Effect or (3)
conflict with or violate any of the terms and provisions of the
trust agreement, charter documents or by-laws of the Selling
Stockholder or the Company, as the case may be;
(x) Upon delivery of certificates for the Firm Securities
or Option Securities, as the case may be, to be sold by the
Selling Stockholder pursuant to the Underwriting Agreement, as
evidenced by the executed receipt for such securities by the
Underwriter, and payment for such Firm Securities or Option
Securities, as the case may be, as provided therein, valid and
marketable title to such Securities shall pass to the
Underwriters, severally, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, restriction on transfer,
claim or equity, known to such counsel, provided that the
Underwriters are without notice of any defect in the title of
such Securities and take such Securities in good faith;
(xi) the Registration Statement is effective under the Act;
any required filing of the Prospectus, or any Term Sheet that
constitutes a part thereof, pursuant to Rules 434 and 424(b) has
been made in the manner and within the time period required by
Rules 434 and 424(b); and, to such counsel's best knowledge, no
stop order suspending the effectiveness of the Registration
Statement or any amendment thereto has been issued, and no
proceedings for that purpose have been instituted or threatened
or are contemplated by the Commission;
(xii) the Registration Statement originally filed with
respect to the Securities and each amendment thereto, any Rule
462(b) Registration Statement and the Prospectus (in each case,
other than the financial statements and notes thereto, schedules
and reports thereon and other financial, numerical, statistical
and accounting data and information contained therein, as to
which such counsel need express no opinion) comply as to form in
all material respects with the applicable requirements of the Act
and the rules and regulations of the Commission thereunder;
(xiii) if the Company elects to rely on Rule 434, the
Prospectus is not "materially different," as such term is used in
Rule 434, from the prospectus included in the Registration
Statement at the time of its effectiveness or an effective
post-effective amendment thereto (including such information that
is permitted to be omitted pursuant to Rule 430A);
23
(xiv) Assuming that the rights of the Company or any
of its subsidiaries, as holder of a mortgage servicing
receivable or of a residual certificate, in each case backed
by a pool of securitized mortgages, in combination with its
right as servicer of the pool to forclose on a mortgage in
the pool in the event of default, would be deemed to
constitute a lien on or other interest in real estate within
the meaning of Section 3(c)(5)(C) of the 1940 Act the Company
is not, and the transactions contemplated by this Agreement will
not cause the Company to become, an investment company subject
to registration under the 1940 Act.
Such counsel shall also state that they have no reason to believe that the
Registration Statement, as of its effective date, contained any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus, as of its date or the date of such opinion, included or includes any
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (except such counsel
need express no view as to the financial statements and notes thereto, schedules
and reports thereon, and other financial and statistical data included or
incorporated by reference in the Registration Statement or Prospectus).
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deem(s) proper, on certificates of responsible
officers of the Company and public officials and opinions of such other counsel
as are reasonably acceptable to the Representative.
References to the Registration Statement and the Prospectus in this
paragraph (b) shall include any amendment or supplement thereto at the date of
such opinion.
(c) The Company shall have received an opinion dated the Firm
Closing Date from Xxxxx X. Xxxxxxx, General Counsel to the Company, in form and
substance satisfactory to the Representative.
(d) The Company shall have received from each of Deloitte &
Touche LLP and Xxxxxx Xxxxxxxx LLP letters dated, respectively, the date hereof
and the Firm Closing Date, in form and substance satisfactory to the
Representative, to the effect that:
(i) they are independent accountants with respect to the
Company and its consolidated subsidiaries, and the Bank and its
consolidated subsidiaries, respectively, within the meaning of
the Act and the applicable rules and regulations thereunder;
(ii) in their opinion, the audited consolidated financial
statements examined by them and included in the Registration
Statement and the Prospectus (or Preliminary Prospectus) comply
in form in all material respects with the applicable accounting
requirements of the Act and the related published rules and
regulations;
(iii) on the basis of carrying out certain specified
procedures (which do not constitute an examination made in
accordance with generally accepted auditing standards) that would
not necessarily reveal
24
matters of significance with respect to the comments set
forth in this paragraph (iii), a reading of the minute books
of the shareholders, the board of directors and any committees
thereof, and inquiries of certain officials who have
responsibility for financial and accounting matters for the
Company and its consolidated subsidiaries, in the case of
Deloitte & Touche LLP, and the Bank and its consolidated
subsidiaries, in the case of Xxxxxx Xxxxxxxx LLP, nothing came
to their respective attention that caused them to believe that
at a specific date not more than five business days prior to
the date of such letter, there were any changes in the capital
stock or total debt of the Company and its consolidated
subsidiaries or the Bank and its consolidated subsidiaries, as
the case may be, or any decreases in stockholders' equity of
the Company and its consolidated subsidiaries or the Bank and
its consolidated subsidiaries, in each case compared with
amounts shown on the Company's, or the Bank's, December 31,
1996 consolidated balance sheet, or for the period from
January 1, 1997 to such specified date, there were any
decreases, as compared with the total revenues, net income or
pro forma net income per share, respectively, of the Company
and its consolidated subsidiaries or the Bank and its
consolidated subsidiaries, as the case may be, of the
corresponding period of 1996, except in all instances for
changes, decreases or increases set forth in such letter; and
(iv) they have carried out certain specified procedures,
not constituting an audit, with respect to certain amounts,
percentages and financial information that are derived from the
general accounting records of the Company and its consolidated
subsidiaries, or the Bank and its consolidated subsidiaries, as
the case may be, and are included in the Registration Statement
and the Prospectus (or Preliminary Prospectus), and have compared
such amounts, percentages and financial information with such
records of the Company and its consolidated subsidiaries, or the
Bank and its consolidated subsidiaries, as the case may be, and
with information derived from such records and have found them
to be in agreement, excluding any questions of legal
interpretation.
In the event that the letters referred to above set forth any such
changes, decreases or increases which, in the reasonable discretion of the
Representative, are likely to result in a Material Adverse Effect, it shall be a
further condition to the obligations of the Underwriters that such letters shall
be accompanied by a written explanation of the Company as to the significance
thereof, unless the Representative deems such explanation unnecessary.
References to the Registration Statement and the Prospectus in this
paragraph (d) with respect to either letter referred to above shall include any
amendment or supplement thereto
25
at the date of such letter.
(e) The Representative shall have received a certificate, dated
the Firm Closing Date, of Xxxxx Xxxxxxx and Xxxx X. Xxxxx in their capacities as
the chief executive officer and the principal financial and accounting officer,
respectively, of the Company to the effect that:
(i) the representations and warranties of the Company in
this Agreement are true and correct as if made on and as of the
Firm Closing Date; the Registration Statement, as amended as of
the Firm Closing Date, does not include any untrue statement of a
material fact or omit to state any material fact necessary to
make the statements therein not misleading, and the Prospectus,
as amended or supplemented as of the Firm Closing Date, does not
include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; and the Company has performed all covenants
and agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Firm Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto has been issued,
and no proceedings for that purpose have been instituted or
threatened or, to the best of the Company's knowledge, are
contemplated by the Commission; and
(iii) subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus, neither the Company nor any of its subsidiaries has
sustained any loss or interference with their respective
businesses or properties having or resulting in a Material
Adverse Effect from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any labor
dispute or any legal or governmental proceeding, and there has
not been any event, circumstance, or development that results in,
or that the Company believes would result in, a Material Adverse
Effect, except in each case as described in or contemplated by
the Prospectus (exclusive of any amendment or supplement
thereto).
(f) The Representative shall have received a certificate,
dated the Firm Closing Date (or the Option Closing Date, as the case may be),
of the Selling Stockholder, to the effect that (i) the representations and
warranties of the Selling Stockholder in this Agreement are true and correct
as if made on and as of the Firm Closing Date; (ii) the Registration
Statement, as amended as of the Firm Closing Date, does not include any
untrue statement of a material fact or
26
omit to state any material fact necessary to make the statements therein not
misleading; (iii) the Prospectus, as amended or supplemented as of the Firm
Closing Date, does not include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading and (iv) the Selling Stockholder has performed all covenants and
agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Firm Closing Date.
(g) The Representative shall have received from the Selling
Stockholder and from each other person or entity who owns more than
2,000,000 shares of the Company's Class B Common Stock (as calculated on the
Firm Closing Date) an agreement to the effect that such person or entity will
not, except to the extent otherwise specifically permitted by the terms of each
such person's or entity's agreement, directly or indirectly, without the prior
written consent of the Representative, offer, sell, offer to sell, contract to
sell, pledge, grant any option to purchase or otherwise sell or dispose (or
announce any offer, sale, offer of sale, contract of sale, pledge, grant of an
option to purchase or other sale or disposition) of any shares of Common Stock
or any securities convertible into, or exchangeable or exercisable for, shares
of Common Stock for a period of 120 days after the Firm Closing Date.
(h) On or before the Firm Closing Date, the Representative and
counsel for the Underwriters shall have received such further certificates,
documents or other information as they may have reasonably requested from the
Company.
(i) The Representative shall have received an opinion, dated the
Firm Closing Date, of Manatt, Xxxxxx & Xxxxxxxx, LLP, counsel for the
Underwriters, with respect to the sale of the Firm Securities, the Registration
Statement and Prospectus, and such other related matters as the Representative
may reasonably require, and the Company shall have furnished to such counsel
such documents as they may reasonably request for the purpose of enabling them
to pass upon such matters.
All opinions, certificates, letters and documents delivered pursuant
to this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representative and
counsel for the Underwriters. The Company shall furnish to the Representative
such conformed copies of such opinions, certificates, letters and documents in
such quantities as the Representative and counsel for the Underwriters shall
reasonably request.
The respective obligations of the several Underwriters to purchase and
pay for any Option Securities shall be subject, in their discretion, to each of
the foregoing conditions to purchase the Firm Securities, except that all
references to the Firm Securities and the Firm Closing Date shall be deemed to
refer to such Option Securities and the related Option Closing Date,
respectively.
27
9. INDEMNIFICATION AND CONTRIBUTION.
---------------------------------
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter or such
controlling person may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon:
(i) any untrue statement or alleged untrue statement
made by the Company in Section 2 of this Agreement,
(ii) any untrue statement or alleged untrue statement
of any material fact based upon written information furnished
by or on behalf of the Company contained in (A) the Registration
Statement or any amendment thereto, any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto or (B) any
application or other document, or any amendment or supplement
thereto, executed by the Company and filed in any jurisdiction in
order to qualify the Securities under the securities or blue sky
laws thereof or filed with the Commission or any securities
association or securities exchange (each, an "Application"),
(iii) the omission or alleged omission by the Company
to state in the Registration Statement or any amendment thereto,
any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, or any Application a material fact required
to be stated therein or necessary to make the statements therein
not misleading; or
(iv) any untrue statement or alleged untrue statement
by the Company of any material fact contained in any audio or
visual materials used in connection with the marketing of the
Securities, including without limitation, slides, videos, films
or tape recordings, provided such materials were used or
approved in advance of use by the Company
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating, defending against
or appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action.
28
(b) The Selling Stockholder agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter or such controlling person may become
subject under the Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based
upon:
(i) any untrue statement or alleged untrue statement
made by the Selling Stockholder in Section 3 of this Agreement,
(ii) any untrue statement or alleged untrue statement
of any material fact based upon written information furnished by
or on behalf of the Selling Stockholder contained in (A) the
Registration Statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus or any amendment or supplement
thereto or (B) any Application,
(iii) the omission or alleged omission by the Selling
Stockholder to state in the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus
or any amendment or supplement thereto, or any Application a
material fact required to be stated therein or necessary to make
the statements therein not misleading; or
(iv) any untrue statement or alleged untrue statement
by the Selling Stockholder of any material fact contained in any
audio or visual materials used in connection with the marketing of
the Securities, including without limitation, slides, videos,
films or tape recordings, provided such materials were used or
approved in advance of use by the Selling Stockholder
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating, defending against
or appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action.
(c) The Company and the Selling Stockholder jointly and
severally agree to indemnify and hold harmless each Underwriter and each person,
if any, who controls any Underwriter within the meaning of Section 15 of the Act
or Section 20 of the Exchange
29
Act, against any losses, claims, damages or liabilities, joint or several, to
which such Underwriter or such controlling person may become subject under
the Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement
made by the Company and the Selling Stockholder jointly in this
Agreement,
(ii) any untrue statement or alleged untrue statement
of any material fact based upon written information furnished by
or on behalf of the Company that the Selling Stockholder,
without independent investigation, is aware is untrue, contained
in (A) the Registration Statement or any amendment thereto, any
Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto or (B) any Application,
(iii) any omission or alleged omission by the Company
to state in the Registration Statement or any amendment thereto,
any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, or any Application a material fact required
to be stated therein or necessary to make the statements therein
not misleading, but only if the Selling Stockholder, without
independent investigation, is aware of such omission; or
(iv) any untrue statement or alleged untrue statement
by the Company and the Selling Stockholder jointly of any material
fact contained in any audio or visual materials used in
connection with the marketing of the Securities, including
without limitation, slides, videos, films or tape recordings,
provided such materials were used or approved in advance of use
by the Company
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating, defending against
or appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action.
(d) Notwithstanding the foregoing provisions in Sections 9(a),
9(b) or 9(c), the Company and the Selling Stockholder will not be liable to any
Underwriter or any person controlling such Underwriter (i) under such provisions
to the extent that any such loss, claim, damage or liability arises out of or is
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration Statement or any amendment
30
thereto, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto or any Application in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through the
Representative specifically for use therein and (ii) with respect to any such
untrue statement or omission made in any Preliminary Prospectus that is
corrected in the Prospectus (or any amendment or supplement thereto) if the
person asserting any such loss, claim, damage or liability purchased
Securities from such Underwriter but was not sent or given a copy of the
Prospectus (as amended or supplemented) at or prior to the written
confirmation of the sale of such Securities to such person in any case where
such delivery of the Prospectus (as amended or supplemented) is required by
the Act, unless such failure to deliver the Prospectus (as amended or
supplemented) was a result of noncompliance by the Company with Section 6(d)
or (e) of this Agreement. This indemnity agreement will be in addition to
any liability that the Company and the Selling Stockholder may otherwise
have. Neither the Company nor the Selling Stockholder will, without the
prior written consent of the Representative, settle or compromise or consent
to the entry of any judgment in any pending or threatened claim, action, suit
or proceeding in respect of which indemnification may be sought hereunder
(whether or not any Underwriter or any person who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
is a party to such claim, action, suit or proceeding), unless such
settlement, compromise or consent includes an unconditional release of all of
the Underwriters and such controlling persons from all liability arising out
of such claim, action, suit or proceeding.
(e) Each Underwriter, severally and not jointly, will indemnify
and hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement, the Selling Stockholder and each person, if
any, who controls the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act against any losses, claims, damages or
liabilities to which the Company or any such director or officer of the Company,
the Selling Stockholder or controlling person of the Company or the Selling
Stockholder may become subject under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any amendment thereto,
any Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, or any Application or (ii) the omission or the alleged omission to
state therein a material fact required to be stated in the Registration
Statement or any amendment thereto, any Preliminary Prospectus or the Prospectus
or any amendment or supplement thereto, or any Application or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representative specifically for use therein; and, subject to the limitation set
forth immediately preceding this clause, will reimburse, as incurred, any legal
or other expenses reasonably incurred by the Company or any such director,
officer or controlling person or the Selling Stockholder in connection with
investigating or defending any such loss, claim, damage, liability or any action
in respect thereof. This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have.
31
(f) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 9, notify the indemnifying party of the commencement thereof,
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 9, except to the extent that the indemnifying party has been
materially prejudiced by such omission. In case any such action is brought
against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded or
shall have been advised by its counsel that there may be one or more legal
defenses available to it and/or other indemnified parties that conflict with
those available to the indemnifying party, the indemnifying party shall not have
the right to direct the defense of such action on behalf of such indemnified
party or parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party will not be liable to such indemnified party under this Section 9 for any
legal or other expenses, other than reasonable costs of investigation,
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Representative in the case of
paragraph (a), (b) or (c) of this Section 9, representing the indemnified
parties under such paragraph (a), (b) or (c) who are parties to such action or
actions) or (ii) the indemnifying party does not promptly retain counsel
reasonably satisfactory to the indemnified party or (iii) the indemnifying party
has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party. After such notice from the indemnifying
party to such indemnified party, the indemnifying party will not be liable for
the costs and expenses of any settlement of such action effected by such
indemnified party without the consent of the indemnifying party.
(g) In circumstances in which the indemnity agreement provided
for in the preceding paragraphs of this Section 9 is unavailable or
insufficient, for any reason, to hold harmless an indemnified party in
respect of any losses, claims, damages or liabilities (or actions in respect
thereof), each indemnifying party, in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to
reflect (i) the relative benefits received by the indemnifying party or
parties on the one hand and
32
the indemnified party on the other from the offering of the Securities or
(ii) if the allocation provided by the foregoing clause (i) is not permitted
by applicable law, not only such relative benefits but also the relative
fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or omissions
or alleged statements or omissions that resulted in such losses, claims,
damages or liabilities (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by the
Company and the Selling Stockholder on the one hand and the Underwriters on
the other shall be deemed to be in the same proportion as the total proceeds
from the offering (before deducting expenses) received by the Selling
Stockholder bear to the total underwriting discounts and commissions received
by the Underwriters. The relative fault of the parties shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company, the Selling
Stockholder or the Underwriters, the parties' relative intents, knowledge,
access to information and opportunity to correct or prevent such statement or
omission, and any other equitable considerations appropriate in the
circumstances. The Company, the Selling Stockholder and the Underwriters
agree that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation that does not take into account the equitable considerations
referred to above in this paragraph (g). Notwithstanding any other provision
of this paragraph (g), no Underwriter shall be obligated to make
contributions hereunder that in the aggregate exceed the total public
offering price of the Securities purchased by such Underwriter under this
Agreement, less the aggregate amount of any damages that such Underwriter has
otherwise been required to pay in respect of the same or any substantially
similar claim, and no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute hereunder are several in proportion
to their respective underwriting obligations and not joint, and contributions
among Underwriters shall be governed by the provisions of the
Representative's Agreement Among Underwriters. For the purposes of this
paragraph 9(g), each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act shall have
the same rights to contribution as such Underwriter, and each director of the
Company, each officer of the Company who signed the Registration Statement,
and each person, if any, who controls the Company or the Selling Stockholder
within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act, shall have the same rights to contribution as the Company or Selling
Stockholder, as the case may be.
(h) In making a claim for indemnification under this Section 9,
each Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act may
proceed against (i) both the Company and the Selling Stockholder jointly, (ii)
the Company only or (iii) the Selling Stockholder only.
33
(i) Notwithstanding any other provision of this Agreement, the
aggregate liability of the Selling Stockholder under this Agreement, including
this Section 9 hereof, shall not exceed the sum of Fifteen Million Dollars
($15,000,000). This limitation shall not, however, limit the liability of the
Company under this Section 9.
10. DEFAULT OF UNDERWRITERS. If one or more Underwriters default in
their obligations to purchase Firm Securities or Option Securities hereunder and
the aggregate number of such Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase is ten percent or less of the
aggregate number of Firm Securities or Option Securities to be purchased by all
of the Underwriters at such time hereunder, then the other Underwriters may make
arrangements satisfactory to the Representative for the purchase of such
Securities by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representative), but if no such arrangements are
made by the Firm Closing Date or the related Option Closing Date, as the case
may be, the other Underwriters shall be obligated severally in proportion to
their respective commitments hereunder to purchase the Firm Securities or Option
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase. If one
34
or more Underwriters so default with respect to an aggregate number of
Securities that is more than ten percent of the aggregate number of Firm
Securities or Option Securities, as the case may be, to be purchased by all
of the Underwriters at such time hereunder, and if arrangements satisfactory
to the Representative are not made within 36 hours after such default for the
purchase by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representative) of the Securities with respect to
which such default occurs, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter or the Company other than as
provided in Section 12 hereof. In the event of any default by one or more
Underwriters as described in this Section 10, the Representative shall have
the right to postpone the Firm Closing Date or the Option Closing Date, as
the case may be, established as provided in Section 4 hereof for not more
than seven business days in order that any necessary changes may be made in
the arrangements or documents for the purchase and delivery of the Firm
Securities or Option Securities, as the case may be. As used in this
Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 10. Nothing herein shall relieve any
defaulting Underwriter from liability for its default.
11. SURVIVAL. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, its
officers, the Selling Stockholder and the several Underwriters set forth in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement shall remain in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company, any of its officers or
directors, the Selling Stockholder, any Underwriter or any controlling person
referred to in Section 9 hereof and (ii) delivery of and payment for the
Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 7 and 9 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
12. TERMINATION.
(a) This Agreement may be terminated with respect to the Firm
Securities or any Option Securities in the sole discretion of the Representative
by notice to the Selling Stockholder or the Company, as the case may be, given
prior to the Firm Closing Date or the related Option Closing Date, respectively,
in the event that the Company or the Selling Stockholder shall have failed,
refused or been unable to perform all obligations and satisfy all conditions to
be performed or satisfied by either of them hereunder at or prior thereto or, if
at or prior to the Firm Closing Date or such Option Closing Date, respectively,
(i) the Company or any of its subsidiaries shall
have, in the sole judgment of the Representative, sustained any
loss or interference with their respective businesses or
properties having or resulting in a Material Adverse Effect
from fire, flood, hurricane, accident or other calamity,
whether or not covered by insurance, or from any labor dispute
or any legal or governmental proceeding or there shall have
been any event, circumstance or development that results in, or
that the Company believes
35
would result in, a Material Adverse Effect, except in each case
as described in or contemplated by the Prospectus (exclusive of
any amendment or supplement thereto);
(ii) trading in the Common Stock shall have been
suspended by the Commission or the Nasdaq National Market or
trading in securities generally on the New York Stock Exchange
or Nasdaq National Market shall have been suspended or minimum
or maximum prices shall have been established on either such
exchange or market system;
(iii) a banking moratorium shall have been declared by
New York or United States authorities; or
(iv) there shall have been (A) an outbreak or
escalation of hostilities between the United States and any
foreign power, (B) an outbreak or escalation of any other
insurrection or armed conflict involving the United States or
(C) any other calamity or crisis or material adverse change in
general economic, political or financial conditions having an
effect on the U.S. financial markets that, in the sole
judgment of the Representative, makes it impractical or
inadvisable to proceed with the public offering or the delivery
of the Securities as contemplated by the Registration
Statement, as amended as of the date hereof.
(b) Termination of this Agreement pursuant to this Section 12
shall be without liability of any party to any other party except as provided in
Section 11 hereof.
13. INFORMATION SUPPLIED BY UNDERWRITERS. The statements set forth
in (i) the last paragraph on the front cover page, (ii) under the heading
"Underwriting" in any Preliminary Prospectus or the Prospectus and (iii) on page
2 in any Preliminary Prospectus or the Prospectus pertaining to stabilization
(to the extent such statements relate to the Underwriters) constitute the only
information furnished by any Underwriter through the Representative to the
Company for the purposes of this Agreement. The Underwriters confirm that such
statements (to such extent) are correct.
14. NOTICES. All communications hereunder shall be in writing and,
if sent to any of the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission and confirmed in writing to Friedman, Billings, Xxxxxx &
Co., Inc., Potomac Tower, 0000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx
00000, Attention: Xxxxxxxx Xxxxxxx; and if sent to the Company, shall be
delivered or sent by mail, telex or facsimile transmission and confirmed in
writing to the Company at 00000 Xxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000,
Attention: General Counsel; and if sent to the Selling Stockholder, shall be
delivered or sent by mail, telex or facsimile transmission and confirmed in
writing to the Selling Stockholder at 00000 Xxx Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxx 00000, Attention: Chief Executive Officer.
36
15. SUCCESSORS. This Agreement shall inure to the benefit of and
shall be binding upon the several Underwriters, the Company, the Selling
Stockholder and their respective successors and legal representatives, and
nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or claim
under or in respect of this Agreement, or any provisions herein contained, this
Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of such persons and for the benefit of
no other person except that (i) the indemnities of the Company and Selling
Stockholder contained in Section 9 of this Agreement shall also be for the
benefit of any person or persons who control any Underwriter within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act and (ii) the
indemnities of the Underwriters contained in Section 9 of this Agreement shall
also be for the benefit of the directors of the Company, the officers of the
Company who have signed the Registration Statement, the Selling Stockholder and
any person or persons who control the Company or the Selling Stockholder within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act. No
purchaser of Securities from any Underwriter shall be deemed a successor because
of such purchase.
16. APPLICABLE LAW. The validity and interpretation of this
Agreement, and the terms and conditions set forth herein, shall be governed by
and construed in accordance with the laws of the State of California, without
giving effect to any provisions relating to conflicts of laws.
17. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. All judicial
proceedings arising out of or relating to this Agreement may be brought in any
state or federal court of competent jurisdiction in the State of California, and
by execution and delivery of this Agreement, the Company and the Selling
Stockholder each accepts for itself and in connection with their respective
properties, generally and unconditionally, the nonexclusive jurisdiction of the
aforesaid courts and waives any defense of forum non conveniens and irrevocably
agree to be bound by any judgment rendered thereby in connection with this
Agreement. The Selling Stockholder designates and appoints Xxxxx Xxxxxxx, and
the Company designates and appoints Xxxxx X. Xxxxxxx and such other persons as
may hereafter be selected by the Company or the Selling Stockholder irrevocably
agreeing in writing to so serve, as their respective agents to receive on its
behalf service of all process in any such proceedings in any such court, such
service being hereby acknowledged by the Company and the Selling Stockholder to
be effective and binding service in every respect. A copy of any such process
so served shall be mailed by registered mail to the Company and/or the Selling
Stockholder at their respective addresses provided in Section 14 hereof;
provided, however, that, unless otherwise provided by applicable law, any
failure to mail such copy shall not affect the validity of service of such
process. If any agent appointed by the Company or the Selling Stockholder
refuses to accept service, the Company and the Selling Stockholder each hereby
agrees that service of process sufficient for personal jurisdiction in any
action against the Company or the Selling Stockholder in the State of California
may be made by registered or certified mail, return receipt requested, to the
Company and/or the Selling Stockholder, as applicable, at their respective
addresses provided in Section 14 hereof, and Selling Stockholder and the Company
each hereby acknowledge that such service shall be effective and
37
binding in every respect. Nothing herein shall affect the right to serve
process in any other manner permitted by law or shall limit the right of any
Underwriter to bring proceedings against the Company and the Selling
Stockholder in the courts of any other jurisdiction.
38
18. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
If the foregoing correctly sets forth our understanding please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute an agreement binding the Company, the
Selling Stockholder and each of the several Underwriters.
Very truly yours,
FIRST ALLIANCE CORPORATION
By: _________________________________
THE XXXXX AND XXXXX XXXXXXX
REVOCABLE TRUST U/A 3-7-79
"Selling Stockholder"
By the Committee
By:______________________________
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
By: _______________________________
Name:
Title:
By: _______________________________
Name:
Title:
For itself and as the Representative.
39
Schedule 1
UNDERWRITERS
Number of Firm Securities
to be Purchased
Friedman, Billings, Xxxxxx & Co., Inc _____________________
Bear Xxxxxxx & Co. Inc. _____________________
Xxxxxxxxxx Securities _____________________
40
Schedule 2
SUBSIDIARIES
Name Jurisdiction of Incorporation
FIRST ALLIANCE CORPORATION
First Alliance Acceptance Corp. Delaware
First Alliance Company Limited United Kingdom
First Alliance Mortgage Company California
First Alliance Services, Inc. California
FIRST ALLIANCE MORTGAGE COMPANY
First Alliance Mortgage Company Minnesota
First Alliance Mortgage Company Limited United Kingdom
First Alliance Residual Holding Co. Delaware
41
