1
EXHIBIT 1.1
$27,500,000
TeleBanc Capital Trust II
BLUS(SM)
% Beneficial Unsecured Securities, Series A
(Liquidation Amount $25 per Capital Security)
UNDERWRITING AGREEMENT
July --, 1998
CIBC Oppenheimer Corp.
As Representative of the several
Underwriters named in
Schedule I attached hereto.
Xxxxxxxxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Telebanc Capital Trust II (the "Trust"), a statutory business
trust created under the Business Trust Act (the "Delaware Act") of the State of
Delaware, and TeleBanc Financial Corporation, a Delaware corporation (the
"Company"), propose to sell to you and the other underwriters named in Schedule
I to this Agreement (the "Underwriters"), for whom you are acting as
representative (the "Representative"), an aggregate of 1,100,000 shares of its
--% Beneficial Unsecured Securities, Series A (liquidation amount $25 per
Capital Security) (the "Capital Securities").
The Capital Securities will be guaranteed by the Company with
respect to distributions and amounts payable upon liquidation or redemption of
such Capital Securities (the "Guarantee") pursuant to the Guarantee Agreement
(the "Guarantee Agreement"), to be entered into between the Company and
Wilmington Trust Company, as trustee (the "Guarantee Trustee"), for the benefit
of holders from time to time of the Capital Securities. The Company will be
the owner of all of the beneficial ownership interests represented by the
common securities (the "Common Securities") of the Trust. Proceeds from the
sale of Capital Securities to the Underwriters and from the concurrent sale of
Common Securities to the Company will be used to purchase ---% Series A
Subordinated Debentures, due July --, 2028 (the "Debentures") of the Company.
The Debentures will be issued by the Company pursuant to an Indenture (the
"Indenture"), to be entered into between the Company and Wilmington Trust
Company, as trustee (the "Debenture Trustee"). This Agreement, the Indenture,
the Debentures, the Trust Agreement (as defined in Section 4(s)) and the
Guarantee Agreement are referred to collectively as the "Operative Documents."
1. Sale and Purchase of the Capital Securities.
On the basis of the representations, warranties and agreements
contained in, and subject to the terms and conditions of, this Agreement, the
Trust and the Company agree to sell to each of the Underwriters, and each of
the Underwriters agrees, severally and not
2
2
jointly, to purchase the respective number of Capital Securities set forth
opposite the name of such Underwriter on Schedule I to this Agreement at a
purchase price of 100% of the liquidation amount thereof (the "Initial Price"),
plus accrued distributions, if any, from July --, 1998 to the Closing Date (as
hereinafter defined).
2. Delivery and Payment. Delivery of the Capital Securities
to the Representative for the respective accounts of the Underwriters, and
payment of the purchase price by wire transfer or certified or official bank
check or checks payable in immediately available (same day) funds to the Trust,
shall take place at the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx at 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx at 10:00 a.m., New York City time, on the third
business day following the date of this Agreement, or at such time on such
other date, not later than ten business days after the date of this Agreement,
as shall be agreed upon by the Trust, the Company and the Representative (such
time and date of delivery and payment are called the "Closing Date"). On the
Closing Date, the Trust shall deliver or cause to be delivered to you for the
account of each Underwriter against payment to or upon the order of the Trust
of the purchase price in Federal or other funds immediately available in New
York City, the Capital Securities in the form of one or more permanent global
securities in definitive form (the "Global Securities") deposited with the
Property Trustee as custodian for the Depository Trust Company ("DTC") and
registered in the name of Cede & Co., as nominee for DTC. Interests in any
permanent Global Securities will be held only in book-entry form through DTC.
Time shall be of the essence, and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obligation of each
Underwriter hereunder.
As compensation for the Underwriters' commitment and in view of
the fact that proceeds from the sale of Capital Securities to the Underwriters
will be used to purchase the Debentures, the Company shall pay, on the Closing
Date to the Underwriters a commission of $--- per Capital Security purchased by
the Underwriters on the Closing Date by wire transfer of immediately available
(same day) funds to a bank account designated by the Representative.
3. Registration Statement and Prospectus; Public Offering.
The Company and the Trust have prepared in conformity with the requirements of
the Securities Act of 1933, as amended (the "Securities Act"), and the
published rules and regulations thereunder (the "Rules") adopted by the
Securities and Exchange Commission (the "Commission") a registration statement
on Form S-2 (No. 333-53689), including a preliminary prospectus relating to the
Capital Securities, and have filed with the Commission the Registration
Statement (as hereinafter defined) and such amendments thereof as may have been
required to the date of this Agreement. Such Registration Statement has been
declared effective by the Commission, and no further amendments thereto or
supplements thereof have been filed by the Company or the Trust with the
Commission. Copies of such Registration Statement (including all amendments
thereof) and of the related preliminary prospectus have heretofore been
delivered by the Company and the Trust to you. The term "Preliminary
Prospectus" means any preliminary prospectus (as described in Rule 430 of the
Rules) included at any time as a part of the Registration Statement. The
Registration Statement as amended at the time and on the date it became
effective (the "Effective Date"), including all exhibits and information, if
any, deemed to be part of the Registration Statement pursuant to Rule 424(b)
and Rule 430A of the Rules, is called the "Registration Statement." The term
"Prospectus" means the prospectus in the form first used to confirm sales of
the Capital Securities (whether such prospectus was included in the
Registration Statement at the time of
3
3
effectiveness or was subsequently filed with the Commission pursuant to Rule
424(b) of the Rules). Reference made herein to the Registration Statement, any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include any documents incorporated by reference therein pursuant to Item 12 of
Form S-2 under the Securities Act as of the date of such Preliminary Prospectus
or Prospectus, as the case may be.
The Company and the Trust understand that the Underwriters
propose to make a public offering of the Capital Securities as set forth in and
pursuant to the Prospectus as soon after the date of this Agreement as the
Representative deems advisable. The Company and the Trust hereby confirm that
the Underwriters and dealers have been authorized to distribute or cause to be
distributed each Preliminary Prospectus and are authorized to distribute the
Prospectus (as from time to time amended or supplemented if the Company and the
Trust furnish amendments or supplements thereto to the Underwriters).
4. Representations and Warranties of the Trust and the
Company. The Trust and the Company, jointly and severally, hereby represent and
warrant to, and agree with, each Underwriter as follows:
(a) On the Effective Date the Registration Statement complied,
and on the date of the Prospectus, on the date any post-effective
amendment to the Registration Statement shall become effective, on the
date any supplement or amendment to the Prospectus is filed with the
Commission and on the Closing Date, the Registration Statement and the
Prospectus (and any amendment thereof or supplement thereto) will
comply, in all material respects, with the applicable provisions of
the Securities Act and the Rules and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations
of the Commission thereunder. The Registration Statement did not, as
of the Effective Date, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading; and
on the other dates referred to above, neither the Registration
Statement nor the Prospectus, nor any amendment thereof or supplement
thereto, will contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary
in order to make the statements therein not misleading. When any
Preliminary Prospectus was first filed with the Commission (whether
filed as part of the Registration Statement or any amendment thereto
or pursuant to Rule 424(a) of the Rules) and when any amendment
thereof or supplement thereto was first filed with the Commission,
such Preliminary Prospectus as amended or supplemented complied in all
material respects with the applicable provisions of the Securities Act
and the Rules and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading.
Notwithstanding the foregoing, the Company and the Trust make no
representation or warranty as to the following information (the
"Underwriters' Information") contained in the Prospectus: the first
sentence of the last paragraph of text on the front page of the
Prospectus, concerning the terms of the offering by the Underwriters;
the paragraph on the inside front cover page of the Prospectus
concerning stabilization by the Underwriters; the third paragraph of
text under the caption "Underwriting" in the Prospectus, concerning
the terms of the offering by the Underwriters; and the last paragraph
of text under the caption "Underwriting" in the Prospectus. The
Company and the Trust acknowledge that the
4
4
Underwriters' Information constitute the only information furnished in
writing by the Representative on behalf of the several Underwriters
specifically for inclusion in the Registration Statement, any
Preliminary Prospectus or the Prospectus.
(b) The documents incorporated by reference in the
Registration Statement and the Prospectus, when they were filed with
the Commission, conformed in all material respects to the requirements
of the Exchange Act and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein not
misleading.
(c) The consolidated financial statements of the Company
(including all notes and schedules thereto) included in the
Registration Statement and Prospectus present fairly the financial
condition, the results of operations and cash flows and stockholders'
equity and the other information purported to be shown therein of the
Company and its subsidiaries (as defined in Section 12) at the
respective dates and for the respective periods to which they apply;
and such financial statements have been prepared in conformity with
generally accepted accounting principles, consistently applied
throughout the periods involved, except as otherwise disclosed therein
and all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the results for such periods have
been made.
(d) Xxxxxx Xxxxxxxx LLP, whose reports are filed with the
Commission as a part of the Registration Statement, are and, during
the periods covered by their reports, were independent public
accountants as required by the Securities Act and the Rules.
(e) The Company and each of TeleBanc and TeleBanc Capital
Markets, Inc. (collectively, the "Subsidiaries") have been duly
incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation, are
qualified to do business and are in good standing as foreign
corporations in each jurisdiction in which their respective ownership
or lease of property or the conduct of their respective businesses
requires such qualification, except where the failure to so qualify
will not have a material adverse effect on the financial condition or
results of operations of the Company and its subsidiaries, taken as a
whole, and have all corporate power necessary to own or hold their
respective properties, to operate their branches and to conduct the
businesses in which they are engaged; and none of the subsidiaries of
the Company (other than each of the Subsidiaries) is a "significant
subsidiary", as such term is defined in Rule 405 of the Rules. The
deposit accounts of TeleBanc are insured by the Savings Association
Insurance Fund of the Federal Deposit Insurance Corporation ("FDIC")
to the fullest extent permitted by law and the rules and regulations
of the FDIC, and no proceedings for the termination of such insurance
are pending or threatened.
(f) The Company and each of the Subsidiaries owns, possesses or
has obtained all governmental licenses, permits, certificates,
consents, orders, approvals and other authorizations required under
the laws of the State of Delaware, the United States and any other
jurisdiction in which the Company or the Subsidiaries transact
business in order to own or lease, as the case may be, and to operate
its properties and to conduct its business as presently conducted and
as described in the Prospectus; all of such
5
5
licenses, permits, certificates, consents, orders, approvals and
authorizations are in full force and effect and neither the Company
nor any of the Subsidiaries has received any notice of proceedings
relating to any revocation or modification thereof.
(g) The Company and the Subsidiaries each have good and
marketable title in fee simple to all real property and good title to
all personal property owned by it, in each case free and clear of all
liens, encumbrances and defects except such as do not materially
affect the value of such property or do not materially interfere with
the use made of such property by the Company or such Subsidiary; and
all real property and buildings held under lease by the Company or any
of the Subsidiaries are held by them under valid, subsisting and
enforceable leases, with such exceptions as are not material and do
not interfere with the use made of such property and buildings by the
Company or such Subsidiary.
(h) There is no action, suit, investigation or proceeding,
governmental or otherwise, pending or, to the Company's best
knowledge, threatened or contemplated (and the Company does not know
of any basis therefor) to which the Company or any of its Subsidiaries
is or may be a party or of which the business or property of the
Company or any of its Subsidiaries is or may be subject in either case
that is material to the Company and its Subsidiaries, taken as a
whole, or which is required to be disclosed in the Prospectus.
(i) Except as disclosed in or contemplated by the Registration
Statement and the Prospectus, subsequent to the respective dates as of
which information is given in the Registration Statement and the
Prospectus, there has not been any material adverse change in the
business, financial condition, management or results of operations of
the Company and its Subsidiaries whether or not arising from
transactions in the ordinary course of business, and neither the
Company nor any of its Subsidiaries has sustained any material loss or
interference with its assets, businesses or properties from fire,
explosion, earthquake, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or any court or legislative or
other governmental action, order or decree.
(j) Except as may be disclosed in the Prospectus, the business
of the Company and the Subsidiaries has been conducted in all material
respects in compliance with all applicable laws, rules and regulations
of the State of Delaware, the United States and any other jurisdiction
in which the Company or any of the Subsidiaries transact business, and
of any regulatory agency or authority therein, which laws are material
to the operations of the Company and its Subsidiaries, taken as a
whole. Neither the Company nor any of the Subsidiaries is in violation
in any material respect of any term or provision of its charter or
by-laws or other governing documents or of any franchise, license,
permit, judgment, decree, order, statute, rule, regulation, directive,
policy or guideline to which it or its property may be subject, except
for such violations which could not, individually or in the aggregate,
have a material adverse effect on the Company and its Subsidiaries,
taken as a whole.
(k) No default exists, and no event has occurred which with
notice or lapse of time or both would constitute a default, in the due
performance and observance of any term, covenant or condition by the
Company or any of the Subsidiaries of any material
6
6
agreement, indenture, mortgage, deed of trust, note or any other
material agreement or material instrument to which the Company or any
of the Subsidiaries is a party or by which any of them or their
respective properties or businesses may be bound.
(l) Neither the execution, delivery and performance of the
Operative Documents by the Company and the Trust nor the consummation
of any of the transactions contemplated hereby or thereby will
conflict with or result in the breach or violation of any term or
provision of, or constitute a default (or an event which with notice
or lapse of time or both would constitute a default) under, or require
any consent or waiver under, or result in the creation or imposition
of any lien, charge, claim, encumbrance or security interest on any
properties or assets of the Company or any of the Subsidiaries
pursuant to the terms of, any material agreement, indenture, mortgage
or other material agreement or material instrument to which the
Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound or to which any of the property or
assets of the Company or any of its Subsidiaries is subject, nor will
such actions violate the charter or by-laws or other governing
document of the Company or any of its Subsidiaries or any applicable
law, rule, regulation, decision, order or decree of any court or
governmental agency or governmental authority having jurisdiction over
the Company or any of its Subsidiaries or any of their properties,
except for such violations which will not have a material effect on
the Company.
(m) No consent, approval, authorization or order of, or filing,
registration, or qualification with, any governmental agency or
authority is required in connection with the execution, delivery and
performance by the Company and the Trust of the Operative Documents or
the consummation of the transactions contemplated hereby and taken
thereby, except (A) as may be required under the Securities Act and
the Rules, the Exchange Act, or the Blue Sky laws of the various
states of the United States in connection with any sales of Capital
Securities therein or (B) as have already been obtained or made.
(n) There are no contracts or other documents which are
required to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules which
have not been described in the Prospectus or filed as exhibits to the
Registration Statement or incorporated therein by reference as
permitted by the Rules.
(o) The Company's capitalization is as set forth in the
Prospectus; all of the issued shares of capital stock of each of the
Subsidiaries of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable and are owned by the
Company, directly or indirectly, free and clear of all liens,
encumbrances, equities or claims of any third parties; and no holder
of any security of the Company has the right to have any security
owned by such holder included in the Registration Statement.
(p) Since the date of the latest balance sheet included in the
Registration Statement and the Prospectus, except as reflected
therein, neither the Company nor any of the Subsidiaries has (i)
issued or granted any securities (other than shares of the Company's
common stock issued [under the Company's Dividend Reinvestment Common
Stock Purchase Plan], pursuant to the exercise of outstanding stock
options
7
7
or to employees or directors under bonus or other compensation plans
or arrangements) or incurred any material liability or obligation,
whether fixed or contingent, except for liabilities or obligations
incurred in the ordinary course of its banking business, (ii) entered
into any transaction not in the ordinary course of its banking
business, or (iii) declared or paid any dividend or made any
distribution on any shares of its capital stock (other than regularly
declared quarterly dividends) or redeemed, purchased or otherwise
acquired or agreed to redeem, purchase or otherwise acquire any shares
of its capital stock.
(q) The Capital Securities and the Common Securities have been
duly and validly authorized and, when issued and delivered against
payment therefor as provided herein, will be duly and validly issued,
fully paid and non-assessable; and the Capital Securities and the
Common Securities, when issued and delivered, will conform in all
material respects to the descriptions thereof contained in the
Prospectus.
(r) The Indenture has been duly authorized, and when duly
executed by the proper officers of the Company (assuming due execution
and delivery by the Indenture Trustee) and delivered by the Company
will constitute a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing; and the Debentures
have been duly authorized and, when duly executed, authenticated,
issued and delivered as contemplated in the Indenture, will constitute
valid and binding obligations of the Company entitled to the benefits
of the Indenture and enforceable in accordance with their terms,
subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing; and the
Debentures, when issued and delivered, will conform in all material
respects to the description thereof contained in the Prospectus.
(s) The Trust has been duly created and is validly existing as
a statutory business trust in good standing under the Delaware Act
with the trust power and authority to own property and conduct its
business as described in the Prospectus, and has conducted and will
conduct no business other than the transactions contemplated by this
Agreement as described in the Prospectus; the Trust is not a party to
or bound by any agreement or instrument other than this Agreement, the
Amended and Restated Trust Agreement (the "Trust Agreement") among the
Company, Wilmington Trust Company, as property trustee (the "Property
Trustee") and as Delaware trustee (the "Delaware Trustee") and the
individuals named therein as the Administrative Trustees (the
"Administrative Trustees", and together with the Property Trustee and
the Delaware Trustees, the "Trustees"), and the agreements and
instruments contemplated by the Trust Agreement and described in the
Prospectus; the Trust has no liabilities or obligations other than
those arising out of the transactions contemplated by this Agreement
and the agreements and instruments contemplated by the Trust Agreement
and described in the Prospectus; and the Trust is not a party to or
subject to any action, suit or proceeding of any nature.
8
8
(t) The Trust Agreement has been duly authorized by the
Company and, when duly executed and delivered by the Company and the
Trustees, will be a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting the rights of creditors generally, general equitable
principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing, and will
conform in all material respects to the description thereof contained
in the Prospectus. Each of the Administrative Trustees is an employee
of the Company and has been duly authorized by the Company to serve in
such capacity and to execute and deliver the Trust Agreement.
(u) The Guarantee Agreement has been duly authorized and, when
duly executed and delivered by the proper officers of the Company and
the Guarantee Trustee, will constitute a valid and legally binding
agreement of the Company enforceable against the Company in accordance
with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing; and
the Guarantee Agreement, when executed and delivered, will conform in
all material respects to the description thereof contained in the
Prospectus.
(v) This Agreement has been duly authorized, executed and
delivered by each of the Company and the Trust.
(w) Neither the Trust nor the Company nor any subsidiary of the
Company is required to register as an "investment company" within the
meaning of such term under the Investment Company Act of 1940 (the
"Investment Company Act") and the rules and regulations of the
Commission thereunder as a result of the consummation of the
transactions contemplated by the Operative Documents.
(x) The conditions for use of Form S-2 by the Company and the
Trust, as set forth in the General Instructions thereto, have been
satisfied.
5. Conditions of the Underwriters' Obligations. The
obligations of the Underwriters under this Agreement are several and not joint.
The respective obligations of the Underwriters to purchase the Capital
Securities on the Closing Date are subject to each of the following terms and
conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 6(A)(a) of this Agreement.
(b) No order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus shall have been or shall be
in effect and no order suspending the effectiveness of the
Registration Statement shall be in effect and no proceedings for such
purpose shall be pending before or threatened by the Commission, and
any requests for additional information on the part of the Commission
(to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the satisfaction of the
Representative.
9
9
(c) No Underwriter shall have been advised by the Company or
shall have discovered and disclosed to the Company that the
Registration Statement or the Prospectus or any amendment or
supplement thereto, contains an untrue statement of fact which, in the
opinion of counsel to the Underwriters, is material, or omits to state
a fact which, in the opinion of counsel to the Underwriters, is
material and is required to be stated therein or is necessary to make
the statements therein, in light of the circumstances under which they
are made, not misleading.
(d) The representations and warranties of the Trust and the
Company contained in this Agreement and in the certificates delivered
pursuant to Section 5(e) shall be true and correct when made and on
and as of the Closing Date as if made on such date and each of the
Trust and the Company shall have performed all covenants and
agreements and satisfied all the conditions contained in this
Agreement required to be performed or satisfied by it at or before the
Closing Date.
(e) The Representative shall have received on the Closing Date
a certificate, addressed to the Representative and dated the Closing
Date, of the chief executive or chief operating officer and the chief
financial officer of the Company, to the effect that the signers of
such certificate have carefully examined the Registration Statement,
the Prospectus and this Agreement and that (i) the representations and
warranties of the Company contained in this Agreement are true and
correct in all material respects as if made on and as of the Closing
Date with the same effect as if made on the Closing Date, and the
Company has performed all covenants and agreements and satisfied all
conditions contained in this Agreement required to be performed or
satisfied by it at or prior to the Closing Date, including without
limitation, the condition set forth in Section 5(n) and (ii) they have
carefully examined the Registration Statement and the Prospectus and,
in their opinion (A) as of the Effective Date, the Registration
Statement and the Prospectus did not include any untrue statement of a
material fact and did not omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and (B) since the Effective Date no event has occurred
which should have been set forth in a supplement to the Prospectus or
an amendment to the Registration Statement.
(f) The Representative shall have received at the time this
Agreement is executed and on the Closing Date a signed letter from
Xxxxxx Xxxxxxxx LLP addressed to the Representative and dated,
respectively, the date of this Agreement and the Closing Date, in form
and substance reasonably satisfactory to the Representative,
confirming that they are independent accountants within the meaning of
the Securities Act and the Rules and are in compliance with the
applicable requirements relating to the qualification of accountants
under Rule 2-01 of Regulation S-X of the Commission and stating in
effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included or incorporated by
reference in the Registration Statement and the Prospectus and
reported on by them comply as to form in all material respects
with the applicable accounting requirements of the Securities
Act and the Rules;
(ii) on the basis of a reading of the financial statements
and amounts included or incorporated by reference in the
Registration Statement
10
10
and the Prospectus, carrying out certain procedures (but not an
examination in accordance with generally accepted auditing
standards) which would not necessarily reveal matters of
significance with respect to the comments set forth in such
letter, a reading of the minutes of the meetings of the
shareholders and board of directors of the Company and its
Subsidiaries, and inquiries of certain officials of the Company
who have responsibility for financial and accounting matters of
the Company and its Subsidiaries, nothing came to their
attention which caused them to believe that there were any
changes, increases or decreases, as of the date of the letter,
in consolidated net interest income, net income, long-term debt
or capital stock compared to the same period in the prior year
or as of December 31, 1997, as the case may be, except in all
instances for changes, increases or decreases set forth or
contemplated in the Registration Statement or as otherwise set
forth in this letter; and
(iii) they have performed certain other procedures as a
result of which they determined that certain information of an
accounting, financial or statistical nature set forth in the
Registration Statement and the Prospectus agrees with the
financial statements or accounting or other records of the
Company and is arithmetically correct.
References to the Registration Statement and the Prospectus in this paragraph
(h) are to such documents as amended and supplemented at the date of such
letters.
(g) The Representative shall have received on the Closing Date
from Xxxx Xxxxxxx Xxxxx & Xxxxxxxxxx, counsel to the Company and the
Trust, an opinion, addressed to the Representative and dated the
Closing Date, and stating in effect that:
(i) The Company and each of the Subsidiaries have been
duly incorporated and are validly existing as corporations in
good standing under the laws of their respective jurisdictions
of incorporation, are duly qualified to do business and are in
good standing as foreign corporations in each jurisdiction in
which their respective ownership or lease of property or the
conduct of their respective businesses requires such
qualification except where the failure to so qualify will not
have a material adverse effect on the financial condition or
results of operations of the Company and its subsidiaries, taken
as a whole, and have all corporate power necessary to own or
hold their respective properties, to operate their branches and
conduct the business in which they are engaged as described in
the Prospectus;
(ii) The Company's capitalization is as set forth in the
Prospectus; and all of the issued shares of capital stock of
each of the Subsidiaries of the Company have been duly and
validly authorized and issued and are fully paid and
non-assessable and, to the best of such counsel's knowledge, are
owned directly or indirectly by the Company, free and clear of
all liens, encumbrances, equities or claims; and no holder of
any security of the Company has the right, under the Company's
certificate of incorporation or by-laws or any agreement or
instrument known to such counsel, to have any security owned by
such holder included in the Registration Statement.
11
11
(iii) The Registration Statement was declared effective
under the Securities Act at the time and on the date specified
in such counsel's opinion and to the best knowledge of such
counsel, no stop order or other order suspending the
effectiveness of the Registration Statement has been issued and
no proceedings for that purpose are pending before the
Commission under the Securities Act.
(iv) The Registration Statement and the Prospectus
and any further amendments or supplements thereto made by the
Company prior to the Closing Date (other than the financial
statements and related notes and schedules therein, as to which
such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Securities Act
and the Rules; and the documents incorporated by reference in
the Prospectus (other than the financial statements and related
schedules therein, as to which such counsel need express no
opinion), when they were filed with the Commission, complied as
to form in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission
thereunder.
(v) The Company and the Trust meet all the conditions
necessary for the use of Form S-2 in connection with the
issuance and sale of the Capital Securities, the Guarantee and
the Debentures.
(vi) To the best knowledge of such counsel, the
businesses of the Company and the Subsidiaries have been
conducted in all material respects in compliance with all
applicable laws, rules and regulations of the State of Delaware
and the United States, which laws are material to the operations
of the Company and the Subsidiaries, taken as a whole. To the
best knowledge of such counsel, neither the Company nor any of
the Subsidiaries is in violation of or conflict with any term or
provision of its charter or by-laws or other governing documents
and neither the Company nor any of the Subsidiaries is in
violation of any franchise, license, permit, judgment, decree,
order, statute, rule, regulation, directive, policy or guideline
to which it or its property may be subject, except for such
violations which could not, individually or in the aggregate,
have a material adverse effect on the Company and the
Subsidiaries, taken as a whole.
(vii) To the best knowledge of such counsel, no default
exists, and no event has occurred which with notice or lapse of
time or both would constitute a default, in the due performance
and observance of any term, covenant or condition by the Company
or any of the Subsidiaries of any material agreement, indenture,
mortgage, deed of trust, note or any other material agreement or
material instrument to which the Company or any of the
Subsidiaries is a party or by which it or its properties or
businesses may be bound.
(viii) The execution, delivery and performance of the
Operative Documents by the Company and the Trust and the
consummation of the transactions contemplated hereby and thereby
will not conflict with or result in the breach or violation of
any term or provision of, or constitute a default (or
12
12
an event which with notice or lapse of time or both would
constitute a default) under, or require any consent or waiver
under, or result in the creation or imposition of any lien,
charge, claim, encumbrance or security interest on any
properties or assets of the Company or any of its Subsidiaries
pursuant to the terms of, any material agreement, indenture,
mortgage or other material agreement or material instrument
known to such counsel to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound or to which any of the property or assets
of the Company or any of its Subsidiaries is subject, nor will
such actions violate the charter or by-laws or other governing
document of the Company or any of its Subsidiaries or any
applicable law, rule or administrative regulation of any court
or governmental agency or governmental authority having
jurisdiction over the Company or any of its Subsidiaries or any
of their properties, except for such violations which could not
have, individually or in the aggregate, a material adverse
effect on the Company.
(ix) No consent, approval, authorization or order of or
filing, registration, or qualification with any governmental
agency or authority is required in connection with the execution
and delivery by the Company and the Trust of the Operative
Documents and the consummation of the transactions contemplated
hereby except (A) as may be required under the Exchange Act or
the Blue Sky laws of the various states of the United States in
connection with any sales of Capital Securities therein or (B)
as have already been obtained or made.
(x) This Agreement has been duly authorized, executed and
delivered by the Company and duly executed and delivered by the
Trust.
(xi) The Trust Agreement has been duly authorized,
executed and delivered by the Company.
(xii) The Indenture has been duly authorized, executed
and delivered by the Company and (assuming due authorization,
execution and delivery thereof by the Indenture Trustee)
constitutes a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair
dealing; and the Debentures have been duly authorized, executed,
issued and delivered by the Company as contemplated in the
Indenture and (assuming due authentication by the Indenture
Trustee) constitute valid and binding obligations of the Company
entitled to the benefits of the Indenture and enforceable in
accordance with their terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
13
13
(xiii) The Guarantee Agreement has been duly authorized,
executed and delivered by the Company and, assuming due
authorization, execution and delivery by the Guarantee Trustee,
constitutes a valid and legally binding obligation of the
Company enforceable against the Company in accordance with its
terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
(xiv) The statements contained in the Prospectus under
the caption "Certain United States Federal Income Tax
Consequences" are accurate in all material respects and
constitute a fair summary of the matters set forth therein;
(xv) To the best of such counsel's knowledge,
there are no contracts or other documents which are required to
be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules
which have not been so described or filed as required.
(xvi) The statements in the Prospectus under the
captions "Description of Series A Capital Securities,"
"Description of Series A Subordinated Debentures," "Description
of Series A Guarantee," and "Relationship Among the Series A
Capital Securities, the Series A Subordinated Debentures and the
Series A Guarantee," insofar as such statements constitute a
summary of documents referred to therein or matters of law, are
fair summaries in all material respects and accurately present
the information called for with respect to such documents and
matters.
(xvii) To the best knowledge of such counsel, there is
no action, suit, investigation or proceeding, governmental or
otherwise, pending, threatened or contemplated to which the
Company or any of its Subsidiaries is or may be a party or of
which the business or property of the Company or any of its
Subsidiaries is or may be subject in either case that is
required to be disclosed in the Prospectus.
(xviii) Neither the Trust nor the Company nor any
subsidiary of the Company is required to register as an
investment company under the Investment Company Act as a result
of the transactions contemplated by the Operative Documents.
To the extent deemed advisable by such counsel, they may rely as
to matters of fact on certificates of responsible officers of the
Company and public officials and on the opinions of other counsel
satisfactory to the Representative as to matters which are governed by
laws other than the Delaware General Corporation Law and the federal
laws of the United States of America; provided that such counsel shall
state that in their opinion the Underwriters and they are justified in
relying on such other opinions. Copies of such certificates and other
opinions shall be furnished to the Representative and counsel for the
Underwriters.
14
14
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of
the Company, representatives of the Representative and representatives
of the independent certified public accountants of the Company, at
which conferences the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although such
counsel is not passing upon and does not assume any responsibility for
the accuracy, completeness or fairness of the statements contained in
the Registration Statement and the Prospectus (except as specified in
the foregoing opinion), on the basis of the foregoing, no facts have
come to the attention of such counsel which lead such counsel to
believe that the Registration Statement at the time it became
effective (except with respect to the financial statements and notes
and schedules thereto and other financial data, as to which such
counsel need express no belief) contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or that the Prospectus as amended or supplemented (except
with respect to the financial statements and notes and schedules
thereto and other financial data, as to which such counsel need make
no statement), as of its issue date and at the date of such opinion,
contained any untrue statement of a material fact or omitted 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.
(h) On the Closing Date there shall have been furnished to the
Representative the opinion (addressed to the Underwriters) of Morris,
James, Hitchens & Xxxxxxxx, as special Delaware counsel to the Trust
and the Company, dated the Closing Date, and in form and substance
satisfactory to counsel for the Underwriters, to the effect that:
(i) The Trust has been duly created and is validly
existing in good standing as a business trust under the Delaware
Act, and all filings required under the laws of the State of
Delaware with respect to the creation and valid existence of the
Trust as a business trust have been made;
(ii) Under the Delaware Act and the Trust
Agreement the Trust has the trust power and authority to own its
property and conduct its business as set forth in the Trust
Agreement;
(iii) The Trust Agreement constitutes a valid and
binding obligation of the Company and the Trustees, and is
enforceable against the Company and the Trustees in accordance
with its terms, subject, as to enforcement, to the effect upon
the Trust Agreement of (i) bankruptcy, insolvency, moratorium,
receivership, reorganization, liquidation, fraudulent transfer
and other similar laws relating to the rights and remedies of
creditors generally, (ii) principles of equity, including
applicable law relating to fiduciary duties (regardless of
whether considered and applied in a proceeding in equity or at
law), and (iii) the effect of applicable public policy on the
enforceability of provisions relating to indemnification or
contribution;
(iv) Under the Delaware Act and the Trust
Agreement, the Trust has the trust power and authority (i) to
execute and deliver, and to perform its obligations under, the
Underwriting Agreement and (ii) to issue and perform its
obligations under the Capital Securities and the Common
Securities;
15
15
(v) Under the Delaware Act and the Trust Agreement, the
execution and delivery by the Trust of this Agreement, and the
performance by the Trust of its obligations hereunder, have been
duly authorized by all necessary trust action on the part of the
Trust;
(vi) The Capital Securities have been duly
authorized by the Trust Agreement and are duly and validly
issued and, subject to the qualifications set forth herein,
fully paid and nonassessable undivided beneficial interests in
the assets of the Trust and are entitled to the benefits of the
Trust Agreement. The holders of the Capital Securities, as
beneficial owners of the Trust, will be entitled to the same
limitation of personal liability extended to stockholders of
private corporations for profit organized under the General
Corporation Law of the State of Delaware. Such counsel may note
that the holders of Capital Securities may be obligated,
pursuant to the Trust Agreement, (i) to provide indemnity and/or
security in connection with and pay taxes or governmental
charges arising from transfers or exchanges of certificates of
Capital Securities and the issuance of replacement certificates
of Capital Securities, and (ii) to provide security or indemnity
in connection with requests of or directions to the Property
Trustee to exercise its rights and powers under the Trust
Agreement;
(vii) Under the Delaware Act and the Trust
Agreement, the issuance of the Capital Securities is not subject
to preemptive rights;
(viii) The issuance and sale by the Trust of the
Capital Securities and Common Securities, the execution,
delivery and performance by the Trust of the Underwriting
Agreement, the consummation by the Trust of the transactions
contemplated hereby and compliance by the Trust with its
obligations hereunder, and the performance by the Company, as
depositor, of its obligations under the Trust Agreement (A) do
not violate (i) any of the provisions of the certificate of
trust of the Trust or the Trust Agreement or (ii) any applicable
Delaware law or administrative regulation (except that such
counsel need express no opinion with respect to the securities
laws of the State of Delaware) and (B) do not require any
consent, approval, license, authorization or validation of, or
filing or registration with, any Delaware legislative,
administrative or regulatory body under the laws or
administrative regulations of the State of Delaware (except that
such counsel need express no opinion with respect to the
securities laws of the state of Delaware); and
(ix) Assuming that the Trust derives no income
from or in connection with sources within the State of Delaware
and has no assets, activities (other than maintaining the
Delaware Trustee and the filing of documents with the Secretary
of State of the State of Delaware) or employees in the State of
Delaware, the holders of the Capital Securities (other than
those holders of Capital Securities who reside or are domiciled
in the State of Delaware) will have no liability for income
taxes imposed by the State of Delaware solely as a result of
their participation in the Trust, and the Trust will not be
liable for any income tax imposed by the State of Delaware.
16
16
(i) On the Closing Date there shall have been furnished to the
Representative the opinion (addressed to the Underwriters) of Xxxxxxx
Xxxxxxx & Xxxxxxxx, counsel for the Underwriters, with respect to, as
applicable, the incorporation of the Company, the Registration
Statement, the Prospectus (other than financial statements and other
financial data included therein) and other related matters as the
Representative may reasonably request, and such counsel shall have
received such documents and information as they may reasonably request
to enable them to pass upon such matters.
(j) The Capital Securities to be purchased on the Closing Date
by the Underwriters shall have been approved for listing on the NASDAQ
National Market System.
(k) All corporate proceedings and other legal matters incident
to the authorization, form and validity of the Operative Documents,
the Registration Statement and the Prospectus shall be satisfactory in
all respects to counsel for the Underwriters, and the Representative
shall have been furnished with such additional documents and
certificates as the Representative or counsel for the Underwriters may
reasonably request related to this Agreement, the Prospectus or the
transactions contemplated hereby.
(l) [Subsequent to the execution and delivery of this Agreement
(i) no downgrading shall have occurred in the rating accorded the
Company's debt securities by any "nationally recognized statistical
rating organization," as that term is defined by the Commission for
purposes of Rule 436(g)(2) of the Rules and (ii) no such organization
shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the
Company's debt securities.]
6. Covenants of the Trust and the Company. (A) The Trust and
the Company covenant and agree as follows:
(a) To prepare the Prospectus in a form approved by the
Representative and file such Prospectus pursuant to Rule 424(b) under
the Securities Act not later than the second business day following
the execution and delivery of this Agreement, and to promptly advise
the Representative (i) when any amendment to the Registration
Statement shall have become effective, (ii) of any request by the
Commission for any amendment of the Registration Statement or the
Prospectus or for any additional information, (iii) of the prevention
or suspension of the use of any Preliminary Prospectus or the
Prospectus or of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose, and
(iv) of the receipt by the Trust or the Company of any notification
with respect to the suspension of the qualification of the Capital
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. Neither the Trust nor
the Company shall file any amendment of the Registration Statement or
supplement to the Prospectus unless the Trust or the Company has
furnished the Representative a copy for its review prior to filing and
shall not file any such proposed amendment or supplement to which the
Representative reasonably object. Each of the Trust and the Company
shall use its
17
17
best efforts to prevent the issuance of any such stop order and, if
issued, to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Capital
Securities is required to be delivered under the Securities Act and
the Rules, 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 any material fact necessary to make the
statements therein in the light of the circumstances under which they
were made not misleading, or if it shall be necessary to amend or
supplement the Prospectus to comply with the Securities Act or the
Rules, to promptly shall prepare and file with the Commission, subject
to the second sentence of paragraph (a) of this Section 6(A), an
amendment or supplement which shall correct such statement or omission
or an amendment which shall effect such compliance.
(c) To make generally available to its security holders and to
the Representative as soon as practicable, but not later than 45 days
after the end of the 12-month period beginning at the end of the
fiscal quarter of the Company during which the Effective Date occurs
(or 90 days if such 12-month period coincides with the Company's
fiscal year), an earning statement (which need not be audited) of the
Company, covering such 12-month period, which shall satisfy the
provisions of Section 11(a) of the Securities Act or Rule 158 of the
Rules.
(d) To furnish to the Representative and counsel for the
Underwriters, without charge, (i) signed copies of the Registration
Statement (including all exhibits thereto and amendments thereof) and
to each other Underwriter a copy of the Registration Statement
(without exhibits thereto) and all amendments thereof (ii) copies of
any document incorporated by reference in the Prospectus (including
exhibits thereto) and, (iii) so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Securities Act or the
Rules, as many copies of any preliminary prospectus and the Prospectus
and any amendments thereof and supplements thereto as the
Representative may reasonably request.
(e) To cooperate with the Representative and its counsel in
endeavoring to qualify the Capital Securities for offer and sale under
the laws of such jurisdictions as the Representative may designate and
to maintain such qualifications in effect so long as required for the
distribution of the Capital Securities.
(f) For a period of five years after the date of this
Agreement, to supply to the Representative, copies of such financial
statements and other periodic and special reports as the Company may
from time to time distribute generally to the holders of any class of
its capital stock and to furnish to the Representative a copy of each
annual or other report it shall be required to file with the
Commission.
(g) Without the prior written consent of the Representative,
for a period of 180 days after the date of this Agreement, not to
offer, issue, sell, contract to sell or otherwise dispose of any
additional securities of the Trust or the Company substantially
similar to the Capital Securities or any securities convertible into
or exchangeable for or that represent the right to receive any such
similar securities.
18
18
(h) On or before completion of this offering the Company and
the Trust shall make all filings required under applicable securities
laws and by the NASDAQ National Market System.
(B) Each of the Trust and the Company agrees to pay, or reimburse if
paid by the Representative, whether or not the transactions contemplated hereby
are consummated or this Agreement is terminated, all costs and expenses
incident to the public offering of the Capital Securities and the performance
of the obligations of the Trust and the Company under this Agreement including
those relating to: (i) the preparation, printing, filing and distribution of
the Registration Statement including all exhibits thereto, each Preliminary
Prospectus, the Prospectus, all amendments and supplements to the Registration
Statement and the Prospectus, and the printing, filing and distribution of this
Agreement; (ii) the preparation and delivery of certificates for the Capital
Securities to the Underwriters; (iii) the registration or qualification of the
Capital Securities for offer and sale under the securities or Blue Sky laws of
the various jurisdictions referred to in Section 6(A)(e), including the
reasonable fees and disbursements of counsel for the Underwriters in connection
with such registration and qualification and the preparation, printing,
distribution and shipment of preliminary and supplementary Blue Sky memoranda;
(iv) the furnishing (including costs of shipping and mailing) to the
Representative and to the Underwriters of copies of each Preliminary
Prospectus, the Prospectus and all amendments or supplements to the Prospectus,
and of the several documents required by this Section to be so furnished, as
may be reasonably requested for use in connection with the offering and sale of
the Capital Securities by the Underwriters or by dealers to whom Capital
Securities may be sold; (v) the furnishing (including costs of shipping and
mailing) to the Representative and to the Underwriters of copies of all reports
and information required by Section 6(A)(vi); (vi) inclusion of the Capital
Securities for quotation on the NASDAQ National Market System and (vii) all
transfer taxes, if any, with respect to the sale and delivery of the Capital
Securities by the Trust to the Underwriters. Subject to the provisions of
Section 9, the Underwriters agree to pay, whether or not the transactions
contemplated hereby are consummated or this Agreement is terminated, all costs
and expenses incident to the performance of the obligations of the Underwriters
under this Agreement not payable by the Company or the Trust pursuant to the
preceding sentence, including, without limitation, the fees and disbursements
of counsel for the Underwriters.
7. Indemnification.
(a) The Trust and the Company agree, jointly and severally, to
indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act against any and all
losses, claims, damages and liabilities, joint or several (including
any reasonable investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted), to which they, or any of
them, may become subject under the Securities Act, the Exchange Act or
other Federal or state law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities arise out of or
are based upon any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment thereof or
supplement thereto, or arise out of or are based upon any omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading;
19
19
provided, however, that such indemnity shall not inure to the benefit
of any Underwriter (or any person controlling such Underwriter) on
account of any losses, claims, damages or liabilities arising from the
sale of the Capital Securities to any person by such Underwriter if
such untrue statement or omission or alleged untrue statement or
omission was made in such preliminary prospectus, the Registration
Statement or the Prospectus, or such amendment or supplement, in
reliance upon and in conformity with information furnished in writing
to the Company by the Representative on behalf of any Underwriter
specifically for use therein. This indemnity agreement will be in
addition to any liability which the Trust and the Company may
otherwise have.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Trust and the Company, each person, if
any, who controls the Trust or the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act,
each director of the Company, and each officer of the Trust or of the
Company who signs the Registration Statement, to the same extent as
the foregoing indemnity from the Trust and the Company to each
Underwriter, but only insofar as such losses, claims, damages or
liabilities arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which was contained
in the Underwriters' Information.
(c) Any party that proposes to assert the right to be
indemnified under this Section will, promptly after receipt of notice
of commencement of any action, suit or proceeding against such party
in respect of which a claim is to be made against an indemnifying
party or parties under this Section, notify each such indemnifying
party of the commencement of such action, suit or proceeding,
enclosing a copy of all papers served. No indemnification provided
for in Section 7(a) or 7(b) shall be available to any party who shall
fail to give notice as provided in this Section 7(c) if the party to
whom notice was not given was unaware of the proceeding to which such
notice would have related and was prejudiced by the failure to give
such notice but the omission so to notify such indemnifying party of
any such action, suit or proceeding shall not relieve it from any
liability that it may have to any indemnified party for contribution
or otherwise than under this Section. In case any such action, suit
or proceeding shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in, and, to the
extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election
so to assume the defense thereof and the approval by the indemnified
party of such counsel, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses, except as
provided below and except for the reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the
defense thereof. The indemnified party shall have the right to employ
its counsel in any such action, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i)
the employment of counsel by such indemnified party has been
authorized in writing by the indemnifying parties, (ii) the
indemnified party shall have reasonably concluded that there may be a
conflict of interest between the indemnifying parties and the
indemnified party in the conduct of the defense of such action (in
which case the indemnifying parties shall not have the right to
direct the
20
20
defense of such action on behalf of the indemnified party) or
(iii) the indemnifying parties shall not have employed counsel to
assume the defense of such action within a reasonable time after
notice of the commencement thereof, in each of which cases the fees
and expenses of counsel shall be at the expense of the indemnifying
parties. An indemnifying party shall not be liable for any settlement
of any action, suit, proceeding or claim effected without its written
consent.
8. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 7(a) is due in accordance with its terms but for any reason is held to
be unavailable from the Trust or the Company, each of the Trust, the Company,
and the Underwriters shall contribute to the aggregate losses, claims, damages
and liabilities (including any investigation, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claims asserted, but after deducting any
contribution received by the Trust or the Company from persons other than the
Underwriters, such as persons who control the Trust or the Company within the
meaning of the Securities Act, officers of the Trust or of the Company who
signed the Registration Statement and directors of the Company, who may also be
liable for contribution) to which the Trust, the Company and one or more of the
Underwriters may be subject in such proportion as is appropriate to reflect the
relative benefits received by the Trust and the Company on the one hand and the
Underwriters on the other from the offering of the Capital Securities or, if
such allocation is not permitted by applicable law or indemnification is not
available as a result of the indemnifying party not having received notice as
provided in Section 7 hereof, in such proportion as is appropriate to reflect
not only the relative benefits referred to above but also the relative fault of
the Trust and the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Trust, the
Company and the Underwriters shall be deemed to be in the same proportion as
(x) the total proceeds from the offering before deducting expenses) received by
the Trust and the Company, as set forth in the table on the cover page of the
Prospectus, bear to (y) the underwriting discounts received by the
Underwriters, as set forth in the table on the cover page of the Prospectus.
The relative fault of the Trust and the Company or the Underwriters shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact related to information supplied by the
Trust and the Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Trust, the Company and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 8
were determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this Section 8, (i) in no case shall any
Underwriter be liable or responsible for any amount in excess of the
underwriting discount applicable to the Capital Securities purchased by such
Underwriter hereunder, and (ii) the Trust and the Company shall be liable and
responsible for any amount in excess of such underwriting discount; provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Securities Act
or Section 20(a) of the Exchange Act shall have the same rights to contribution
as such Underwriter, and each person, if any, who controls the Trust or the
21
21
Company within the meaning of the Section 15 of the Securities Act or Section
20(a) of the Exchange Act, each officer of the Trust or of the Company who
shall have signed the Registration Statement and each director of the Company
shall have the same rights to contribution as the Trust and the Company,
subject in each case to clauses (i) and (ii) in the immediately preceding
sentence of this Section 8. Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action, suit or proceeding
against such party in respect of which a claim for contribution may be made
against another party or parties under this Section, notify such party or
parties from whom contribution may be sought, but the omission so to notify
such party or parties from whom contribution may be sought shall not relieve
the party or parties from whom contribution may be sought from any other
obligation it or they may have hereunder or otherwise than under this Section.
No party shall be liable for contribution with respect to any action, suit,
proceeding or claim settled without its written consent. The Underwriter's
obligations to contribute pursuant to this Section 8 are several in proportion
to their respective underwriting commitments and not joint.
9. Termination. This Agreement may be terminated with
respect to the Capital Securities to be purchased on the Closing Date by the
Representative by notifying the Trust and the Company at any time:
(a) in the absolute discretion of the Representative at or
before the Closing Date: (i) if on or prior to such date, any domestic
or international event or act or occurrence has materially disrupted,
or in the opinion of the Representative will in the future materially
disrupt, the securities markets; (ii) if there has occurred any new
outbreak or material escalation of hostilities or other calamity or
crisis the effect of which on the financial markets of the United
States of America is such as to make it, in the judgment of the
Representative, inadvisable to proceed with the offering; (iii) if
there shall be such a material adverse change in general financial,
political or economic conditions or the effect of international
conditions on the financial markets in the United States of America is
such as to make it, in the judgment of the Representative, inadvisable
or impracticable to market the Capital Securities; (iv) if trading in
the Capital Securities has been suspended by the Commission or trading
generally on the New York Stock Exchange, Inc. or on the American
Stock Exchange, Inc. has been suspended or limited, or minimum or
maximum ranges for prices for securities shall have been fixed, or
maximum ranges for prices for securities have been required, by said
exchanges or by order of the Commission, the National Association of
Securities Dealers, Inc., or any other governmental or regulatory
authority; or (v) if a banking moratorium has been declared by any
state or Federal authority, or
(b) at or before the Closing Date, that any of the conditions
specified in Section 5 shall not have been fulfilled when and as
required by this Agreement.
If this Agreement is terminated pursuant to any of its
provisions, neither the Trust nor the Company shall be under any liability to
any Underwriter, and no Underwriter shall be under any liability to the Trust
and the Company, except that (y) if this Agreement is terminated by the
Representative or the Underwriters because of any failure, refusal or inability
on the part of the Trust or the Company to comply with the terms or to fulfill
any of the conditions of this Agreement, the Trust or the Company will
reimburse the Underwriters for all out-of-pocket expenses (including the
reasonable fees and disbursements
22
22
of their counsel) incurred by them in connection with the proposed purchase and
sale of the Capital Securities or in contemplation of performing their
obligations hereunder and (z) no Underwriter who shall have failed or refused
to purchase the Capital Securities agreed to be purchased by it under this
Agreement, without some reason sufficient hereunder to justify cancellation or
termination of its obligations under this Agreement, shall be relieved of
liability to the Trust the Company or to the other Underwriters for damages
occasioned by its failure or refusal.
10. Substitution of Underwriters. If one or more of the
Underwriters shall fail (other than for a reason sufficient to justify the
cancellation or termination of this Agreement under Section 9) to purchase on
the Closing Date the Capital Securities agreed to be purchased on the Closing
Date by such Underwriter or Underwriters, the Representative may find one or
more substitute underwriters to purchase such Capital Securities or make such
other arrangements as the Representative may deem advisable or one or more of
the remaining Underwriters may agree to purchase such Capital Securities in
such proportions as may be approved by the Representative, in each case upon
the terms set forth in this Agreement. If no such arrangements have been made
by the close of business on the business day following the Closing Date,
(a) if the number of Capital Securities to be purchased by the
defaulting Underwriters on the Closing Date shall not exceed 10% of
the Capital Securities that all the Underwriters are obligated to
purchase on the Closing Date, then each of the nondefaulting
Underwriters shall be obligated to purchase such Capital Securities on
the terms herein set forth in proportion to their respective
obligations hereunder; provided, that in no event shall the maximum
number of Capital Securities that any Underwriter has agreed to
purchase pursuant to Section 1 be increased pursuant to this Section
10 by more than one ninth of such number of Capital Securities without
the written consent of such Underwriter, or
(b) if the number of Capital Securities to be purchased by the
defaulting Underwriters on the Closing Date shall exceed 10% of the
Capital Securities that all the Underwriters are obligated to purchase
on the Closing Date, then the Company and Trust shall be entitled to
an additional business day within which it may, but is not obligated
to, find one or more substitute underwriters reasonably satisfactory
to the Representative to purchase such Capital Securities upon the
terms set forth in this Agreement.
In any such case, either the Representative, the Trust or the
Company shall have the right to postpone the Closing Date for a period of not
more than five (5) business days in order that necessary changes and
arrangements (including any necessary amendments or supplements to the
Registration Statement or Prospectus) may be effected by the Representative,
the Trust and the Company. If the number of Capital Securities to be purchased
on the Closing Date by such defaulting Underwriter or Underwriters shall exceed
10% of the Capital Securities that all the Underwriters are obligated to
purchase on the Closing Date, and none of the nondefaulting Underwriters, the
Trust or the Company shall make arrangements pursuant to this Section within
the period stated for the purchase of the Capital Securities that the
defaulting Underwriters agreed to purchase, this Agreement shall terminate with
respect to the Capital Securities to be purchased on the Closing Date without
liability on the part of any nondefaulting Underwriter to the Trust and the
Company and without liability on the part of the Trust and the Company, except
in both cases as provided
23
23
in Sections 6(B), 7, 8 and 9. The provisions of this Section shall not in any
way affect the liability of any defaulting Underwriter to the Trust, the
Company or the nondefaulting Underwriters arising out of such default. A
substitute underwriter hereunder shall become an Underwriter for all purposes
of this Agreement.
11. Miscellaneous. The respective agreements,
representations, warranties, indemnities and other statements of the Trust and
the Company or their officers and of the Underwriters set forth in or made
pursuant to this Agreement shall remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter, the Trust or the
Company or any of the officers, directors or controlling persons referred to in
Sections 7 and 8 hereof, and shall survive delivery of and payment for the
Capital Securities. The provisions of Sections 6(B), 7, 8 and 9 shall survive
the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the
Underwriters, the Trust and the Company, and each of their respective
successors and assigns, and, to the extent expressed herein, for the benefit of
persons controlling any of the Underwriters, the Trust or the Company, and
directors and officers of the Trust and the Company, and each of their
respective successors and assigns, and no other person shall acquire or have
any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser of Capital Securities from any
Underwriter merely because of such purchase.
All notices and communications hereunder shall be in writing and
mailed or delivered or by telephone or telegraph if subsequently confirmed in
writing, (a) if to the Representative, to CIBC Xxxxxxxxxxx Corp., Xxxxxxxxxxx
Xxxxx, Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention:
____________, (b) if to the Trust or the Company, to the address of the Company
set forth on the cover page of the Registration Statement, Attention:
Secretary.
This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to principles of conflict
of laws.
24
This Agreement may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
among us.
Very truly yours,
TELEBANC CAPITAL TRUST II
By
----------------------------------
Name:
Title:
TELEBANC FINANCIAL CORPORATION
By
----------------------------------
Name:
Title:
Confirmed:
CIBC XXXXXXXXXXX CORP.
As representative of the several
Underwriters named in Schedule I annexed
hereto.
By CIBC XXXXXXXXXXX CORP.
By
----------------------------
Name:
Title:
Underwriting Agreement
25
SCHEDULE I
Number of
Capital Securities
Securities Underwriter to be Purchased
---------------------- ---------------
CIBC Xxxxxxxxxxx Corp. ......................
Xxxx Xxxxx Xxxx Xxxxxx Incorporated..........
BancAmerica Xxxxxxxxx Xxxxxxxx...............
---------------
1,100,000
===============
