Exhibit 1.1
NATIONAL FINANCIAL SECURITIES CORPORATION
____________________
Trust Certificates
(Issuable in Series)
UNDERWRITING AGREEMENT
STANDARD PROVISIONS
____________________
May 2000
National Financial Securities Corporation, a Delaware corporation (the
"Company"), proposes to sell Trust Certificates in various series (each, a
"Series"), in one or more offerings on terms determined at the time of sale,
each to be issued by a separate trust (the "Trust") under a trust agreement,
which incorporates by reference therein standard terms (the "Trust Agreement"),
for such Series between the Company and the trustee named therein (the
"Trustee"). The securities of each Series related to a Trust (the "Securities")
will represent in the aggregate the entire beneficial ownership interest in one
or more underlying securities deposited into the Trust by the Company (the
"Collateral").
The Securities for a Series will be issued by a separate Trust. Under
the Trust Agreement for any Series, the Trustee will collect payment on the
Collateral, and will remit payments to the holders of the Securities. For
federal income tax purposes, each Trust will be treated as a grantor trust under
subpart E of Part I of subchapter J of the Internal Revenue Code of 1986, as
amended (the "Code") and not as a partnership or an association taxable as a
corporation, and the Securities will represent undivided beneficial ownership
interests in the interest and principal payments on the Collateral.
The Company will sell, assign and transfer Collateral acquired by it
to the related Trust (the "Issuer") for each Series, all in exchange for the
related Securities. The Collateral is expected to be acquired by the Company
from one or more of its affiliates (each, in such capacity, a "Seller"), in each
case pursuant to a mutually acceptable sales or other agreement (each, a "Sales
Agreement"), between the Company and the Seller of such Collateral, containing
customary provisions and negotiated in good faith. The net proceeds to the
Company from the sale of each Series of Securities principally will be used to
pay the purchase price of the Collateral acquired for the related Trust.
The Securities are more fully described in the Registration Statement
(as hereinafter defined). Each Series of Securities, and any classes of
Securities within each Series, may vary, among other things, as to number and
types of classes, aggregate principal amount, final stated distribution dates
and the rate or rates, allocation, priority and timing of distributions thereof.
From time to time, the Company may enter into one or more underwriting
agreements (each, an "Underwriting Agreement") that provide for the sale of all
or a portion of certain classes of a Series of Securities (such securities to be
so purchased being herein collectively referred to as the "Underwritten
Securities") to the underwriters named in the related underwriting agreement
(the "Underwriters"). The standard provisions set forth herein are to be
incorporated by reference in any such Underwriting Agreement. An Underwriting
Agreement, including the provisions hereof incorporated therein by reference, is
herein referred to as the "Agreement." Unless otherwise defined herein, all
capitalized terms shall have the meanings assigned to them in the Underwriting
Agreement and if not defined therein shall have the meanings assigned to them in
the Trust Agreement.
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The Underwriting Agreement relating to each offering of Securities
shall specify the principal amount of Securities to be issued and their
respective interest rates or methods of determining same, the price or prices at
which the Underwritten Securities are to be purchased by the Underwriters from
the Company, the initial public offering prices or the method by which the
prices at which such Underwritten Securities are to be sold will be determined,
the names of the firms, if any, designated as representatives of the
Underwriters (the "Representatives"), the principal amount of Underwritten
Securities to be purchased by each Underwriter, and the date, time and manner of
delivery of the Underwritten Securities and payment therefor. Each such
offering of Underwritten Securities will be governed by the Agreement, which
shall inure to the benefit of and be binding upon the Underwriters participating
in the offering of such Underwritten Securities.
The Company is a limited-purpose finance corporation and wholly-owned
subsidiary of [BB&T PARENT], a [Delaware] corporation ("BB&T"). BB&T, in turn,
is an indirect subsidiary of [BB&T Holding Company].
1. Representations and Warranties. (a) The Company represents and
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warrants to, and agrees with, each Underwriter that:
(i) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 for
the registration of securities under the Securities Act of 1933, as
amended (the "Act"), which registration statement has become
effective, and has filed such amendments thereto and such additional
registration statements as may have been required to the date of the
Agreement. Such registration statement, as amended at the date of the
Agreement, meets the requirements set forth in Rule 415 under the Act
and complies in all other material respects with the Act and the rules
and regulations thereunder. The Company proposes to file with the
Commission pursuant to Rule 424 under the Act a supplement to the form
of prospectus included in such registration statement relating to the
Securities and the plan of distribution thereof. Such registration
statement, including the exhibits thereto, as amended at the date of
the Agreement, and including all information, if any, filed with the
Commission pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and incorporated by reference therein, is
hereinafter called the "Registration Statement"; the latter of such
prospectus in the form in which it appears in the Registration
Statement or in the form most recently revised and filed with the
Commission pursuant to Rule 424 is hereinafter called the "Base
Prospectus"; such form of prospectus supplemented by the supplement to
the form of prospectus specifically relating to the Securities, in the
form in which it shall be first filed with the Commission pursuant to
Rule 424 (including the Base Prospectus as so supplemented) is
hereinafter called the "Final Prospectus." Any preliminary form of
the Final Prospectus which has heretofore been filed pursuant to Rule
424 or, prior
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to the effective date of the Registration Statement, pursuant to Rule
402(a), 424(a) or 430A, is hereinafter called a "Preliminary Final
Prospectus."
(ii) As of the date of the Agreement, when the Final
Prospectus is first filed pursuant to Rule 424 under the Act, when,
prior to the Closing Date (as hereinafter defined), any amendment to
the Registration Statement becomes effective, when any supplement to
the Final Prospectus is filed with the Commission, and at the Closing
Date, (A) the Registration Statement, as amended as of any such time,
and the Final Prospectus, as amended or supplemented as of any such
time, complies and will comply in all material respects with the
applicable requirements of the Act and the rules and regulations
thereunder and (B) the Registration Statement, as amended as of any
such time, does not contain and will not contain any untrue statement
of a material fact and does not omit and will not omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein not misleading and the Final Prospectus,
as amended or supplemented as of any such time, does not and will not
include an untrue statement of a material fact and does not omit and
will not omit to state a material fact necessary in order to make the
statements, in light of the circumstances under which they were made,
not misleading; provided, however, that the Company makes no
representations or warranties as to the information contained in or
omitted from the Registration Statement or the Final Prospectus or any
amendment thereof or supplement thereto in reliance upon and in
conformity with Underwriting Information (as defined herein) furnished
in writing to the Company by or on behalf of any Underwriter
specifically for use in connection with the preparation of the
Registration Statement and the Final Prospectus.
(iii) As of the date of the Agreement, when the Final
Prospectus is first filed pursuant to Rule 424 under the Act, when,
prior to the Closing Date, any amendment to the Registration Statement
becomes effective, when any supplement to the Final Prospectus is
filed with the Commission, and at the Closing Date, there has not and
will not have been (A) any request by the Commission for any further
amendment of the Registration Statement or the Final Prospectus or for
any additional information, (B) any issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement
or the initiation or threat of any proceeding for that purpose, or (C)
any notification with respect to the suspension of the qualification
of the Underwritten Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose.
(iv) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware with full corporate power and authority to own its
properties and conduct its business as now conducted by it and to
enter into and perform its obligations under the Agreement and Trust
Agreement, and has qualified to do business as a foreign corporation
and is in good standing under the laws of each jurisdiction that
requires such
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qualification wherein it owns or leases material properties, except
where the failure to so qualify would not have a material adverse
effect on the Company or its ability to perform its obligations under
the Agreement and the Trust Agreement.
(v) The execution, delivery and performance of the
Agreement and Trust Agreement are within the corporate power of the
Company. The Agreement has been and, as of the Closing Date the Trust
Agreement will have been, duly authorized by all necessary action on
the part of the Company, and neither the issuance and sale of the
Underwritten Securities, nor the execution and delivery by the Company
of the Agreement or the Trust Agreement, nor the consummation by the
Company of any of the transactions herein or therein contemplated, nor
compliance by the Company with the provisions hereof or thereof, will
(A) violate the articles of incorporation or by-laws of the Company,
(B) result in a breach or violation of, or constitute a default under,
any law, governmental rule or regulation or any judgment, decree or
order binding on the Company or its properties, or any of the
provisions of any indenture, mortgage, deed of trust, contract or
other instrument to which the Company is a party or by which it is
bound, or (C) result in the creation of any lien, charge, or
encumbrance upon any of its properties pursuant to the terms of any
such indenture, mortgage, deed of trust, contract or other instrument
(other than the related Trust Agreement).
(vi) The Agreement has been duly executed and delivered by
the Company and, as of the Closing Date, the related Trust Agreement
will have been duly executed by the Company and, assuming the due
authorization, execution and delivery by the other parties thereto,
each constitutes, or will constitute, a legal, valid and binding
agreement of the Company, enforceable against the Company in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and to general principles of equity regardless of
whether enforcement is sought in a proceeding in equity or at law, and
except that the provisions relating to indemnification and
contribution may be unenforceable as against public policy.
(vii) The Underwritten Securities and the Trust Agreement
will conform in all material respects to the descriptions thereof
contained in the Final Prospectus, and, when duly and validly executed
by the Trustee and the Underwritten Securities are delivered to and
paid for by the Underwriters as provided herein, such Underwritten
Securities will be validly issued and entitled to the benefits of the
Trust Agreement.
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(viii) Since the respective dates as of which information
is given in the Registration Statement and the Final Prospectus, there
has not been any material adverse change or development involving a
prospective material adverse change in the business, operations,
financial condition, properties or assets of the Company.
(ix) There are no actions, suits or proceedings against,
or investigations of, the Company pending, or, to the knowledge of the
Company, threatened, before any court, administrative agency or other
tribunal (A) asserting the invalidity of the Agreement, the Trust
Agreement, or the Underwritten Securities, (B) seeking to prevent the
issuance of the Underwritten Securities or the consummation of any of
the transactions contemplated by the Agreement or any related Trust
Agreement, (C) that might materially and adversely affect the
performance by the Company of its obligations under the Agreement or
the related Trust Agreement, or (D) seeking to affect adversely the
federal or state income tax attributes of the Securities as described
in the Final Prospectus.
(x) No filing or registration with, notice to,
qualification of or with, or consent, approval, authorization or order
or other action of any person, corporation or other organization or of
any court, supervisory or governmental authority or agency is required
for the consummation by the Company of the transactions contemplated
by the Agreement or the Trust Agreement except such as have been, or
will have been prior to the Closing Date, obtained under the Act, or
state securities laws or Blue Sky laws, or from the National
Association of Securities Dealers, Inc. in connection with the
purchase and distribution of the Underwritten Securities by the
Underwriters, or the assignment of the Collateral to the Trustee
pursuant to the Trust Agreement that have not yet been completed.
(xi) At the time of execution of the related Trust
Agreement, the Company will have good and marketable title to the
Collateral being assigned to the Trustee, free and clear of any lien,
adverse claim, mortgage, charge, pledge or other encumbrance or
security interest, and will not have assigned to any other person any
of its right, title or interest in such Collateral; and will have the
power and authority to transfer such Collateral to the Trustee; and
upon the execution and delivery of the Trust Agreement, the Trustee
will have acquired ownership of all of the Company's right, title and
interest in and to the related Collateral; and, upon the execution of
the Trust Agreement, the Company will transfer all its right, title
and interest in such Collateral to the Trustee.
(xii) [Under generally accepted accounting principles, the
Company will report its transfer of the Collateral to the Trust
pursuant to the Trust Agreement and the sale of the Underwritten
Securities as a sale of its interest in the Collateral. The Company
has been advised by its independent certified public accountants that
it concurs with such treatment under generally accepted accounting
principles. For
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federal income tax purposes, the Company will treat the transfer of
the Collateral to the Trust and the sale of the Securities as a sale
of its interest in the Collateral.]
(xiii) As of the Closing Date, any accounts or funds
constituting part of the Trust with respect to the Securities will
name the Trustee as the beneficiary thereof and will be delivered to
and held by the Trustee and any cash will be delivered to the Trustee,
and the Trustee either will own such assets, or have a first priority
perfected security interest therein, in either case subject to no
prior lien, security interest, pledge, charge or other encumbrance.
(xiv) Any taxes, fees and other governmental charges in
connection with the execution, delivery and issuance of the Agreement
and the Trust Agreement and the execution, delivery and sale of the
Securities have been or will be paid at or prior to the Closing Date.
(xv) Neither the Company nor the Trust is, and the
issuance and sale of the Securities in the manner contemplated by the
Final Prospectus will not cause the Company or the Trust to become,
subject to registration or regulation as an Investment Company or an
affiliate of an Investment Company under the Investment Company Act of
1940, as amended.
(xvi) The Trust Agreement has been qualified under the
Trust Indenture Act of 1939, as amended.
(xvii) Immediately prior to the delivery of the
Underwritten Securities to the Underwriters, the Company will own the
Securities free and clear of any lien, adverse claim, pledge,
encumbrance or other security interest, and will not have assigned to
any person any of its right, title or interest in the Securities, and,
upon consummation of the transactions contemplated in the Agreement,
the Company will transfer all its right, title and interest in the
Securities to the Underwriters free and clear of any lien, adverse
claim, pledge, encumbrance or other security interest.
(xviii) At the Closing Date, the representations and
warranties made by the Company in the Trust Agreement will be true and
correct in all material respects.
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Any certificate signed by an officer of the Company and delivered
to the Trustee, the Underwriters or to their counsel in connection
with an offering of the Securities shall state that it is a
representation and warranty as to the matters covered thereby by the
Company as to the matters covered thereby.
2. Purchase and Sale. Subject to the terms and conditions and in
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reliance upon the representations and warranties set forth herein, the Company
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company, at the applicable purchase prices set
forth in the Underwriting Agreement (plus accrued interest as therein set
forth), Underwritten Securities representing the respective aggregate
approximate principal amounts, notional amounts or percentage interests, as the
case may be, of the various classes of Securities set forth in the Underwriting
Agreement or opposite such Underwriter's name in an attachment to the
Underwriting Agreement.
3. Delivery and Payment. Delivery of and payment for the
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Underwritten Securities shall be made at the office, on the date and at the time
specified in the Underwriting Agreement, which date and time may be postponed by
agreement between the Underwriters and the Company or as provided in Section 10
hereof (such date and time of delivery and payment for the Underwritten
Securities being herein called the "Closing Date"). Delivery of the
Underwritten Securities shall be made to the Underwriters against payment by the
Underwriters of the purchase price thereof to or upon the order of the Company
in the type of funds specified in the Underwriting Agreement. The Underwritten
Securities shall be registered in such names and in such authorized
denominations as the Underwriters may request not less than two full business
days in advance of the Closing Date.
The Company agrees to have the Underwritten Securities available for
inspection, checking and packaging by the Underwriters in New York, New York (or
such other location within the continental United States requested by the
Underwriters), not later than 1:00 p.m. on the business day prior to the Closing
Date.
4. Offering by Underwriters. It is understood that the several
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Underwriters propose to offer the Underwritten Securities for sale to the public
as set forth in the Final Prospectus.
5. Agreements. (a) The Company covenants and agrees with the several
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Underwriters that:
(i) Substantially contemporaneously with the execution of
the Agreement, the Company will prepare the supplement to the Base
Prospectus setting forth the principal amount of Securities
covered thereby and the material terms thereof, the initial public
offering price of the Underwritten Securities or the manner of
offering such Underwritten Securities, the price at which the
Underwritten Securities are to be purchased by the Underwriters
from the Company, the selling concessions and reallowance, if any,
and such other information as the Underwriters and the Company
deem appropriate in connection with the offering of
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the Securities. Until the Closing Date, the Company will not file
any amendment to the Registration Statement or supplement to the
Base Prospectus, and thereafter, will not file any supplement to
the Final Prospectus relating to the Securities unless the Company
has furnished the Underwriters a copy for their review prior to
filing and will not file any such proposed amendment or supplement
to which the Underwriters reasonably object. Subject to the
foregoing sentence, the Company will cause the Final Prospectus to
be filed with the Commission pursuant to Rule 424 under the Act
and a report on Form 8-K will be filed with the Commission within
15 days following the Closing setting forth specific information
concerning the Securities and the Collateral and including, as an
exhibit, a copy of the Trust Agreement. The Company will promptly
advise the Underwriters (A) when the Final Prospectus shall have
been filed with the Commission pursuant to Rule 424 has been filed
with the Commission, (B) when any amendment to the Registration
Statement shall have become effective, (C) of any request by the
Commission for any amendment of the Registration Statement or the
Final Prospectus or for any additional information, (D) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation or
threatening of any proceeding for that purpose, and (E) of the
receipt by the Company of any notification with respect to the
suspension of the qualification of the Underwritten Securities for
sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company will use its best efforts
to prevent the issuance of any such stop order or suspension and,
if issued, to obtain as soon as possible the withdrawal thereof.
(ii) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event
occurs as a result of which in the opinion of counsel to the
Company or the Underwriters, the Final 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 Final Prospectus to comply with the Act or
the rules and regulations thereunder, the Company will promptly
prepare and file with the Commission, subject to paragraph (i) of
this Section 5(a), an amendment or supplement that will correct
such statement or omission or an amendment that will effect such
compliance and, if such amendment or supplement is required to be
contained in a post-effective amendment of the Registration
Statement, will use its best efforts to cause such amendment of
the Registration Statement to be made effective as soon as
possible and will promptly file all reports and any definitive
proxy or information statements required to be filed by the
Company pursuant to Sections 13, 14, and 15 of the Exchange Act
subsequent to the date of the Prospectus for so long as the
delivery of a Prospectus is required in connection with the
offering or sale of the Securities; provided however, that any
such amendment or update prepared more than nine months after the
Closing Date shall be at the expense of the Underwriters.
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(iii) The Company will furnish to counsel for the
Underwriters and to each Underwriter, without charge, conformed copies
of the Registration Statement (including exhibits thereto) and each
amendment thereto which shall become effective on or prior to the
Closing Date, and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Act, as many copies of
any Preliminary Final Prospectus and the Final Prospectus and any
amendments thereof and supplements thereto as the Underwriters may
reasonably request.
(iv) The Company will apply the net proceeds from the sale
of the Securities in the manner set forth in the Prospectus.
(v) The Company will pay all the fees and disbursements
of its counsel and of independent accountants for the Company relating
to legal review, opinions of counsel for the Company, audits, review
of unaudited financials, cold comfort review or otherwise; the costs
and expenses of printing (or otherwise reproducing) and delivering the
Agreement, the Trust Agreement and the Securities; the initial fees,
costs and expenses of the Trustee under the Trust Agreement and its
counsel; the costs and expenses incident to the preparation, printing,
distribution and filing of the Registration Statement (including
exhibits thereto), the Base Prospectus, the Preliminary Final
Prospectus and the Final Prospectus, and all amendments of and
supplements to the foregoing, and of the Securities; and the fees of
rating agencies. Except as provided in Section 7 hereof, the
Underwriters shall be responsible for paying all costs and expenses
incurred by them in connection with their purchase and sale of the
Underwritten Securities.
(vi) The Company will use its best efforts to arrange for
the qualification of the Securities for sale under the laws of such
jurisdictions as the Underwriters may designate in the Underwriting
Agreement, to maintain such qualifications in effect so long as
required for the distribution of the Securities and to arrange for the
determination of the legality of the Securities for purchase by
investors; provided, however, that the Company shall not be required
to qualify to do business in any jurisdiction where it is not now so
qualified or to take any action which would subject it to general or
unlimited service of process in any jurisdiction where it is not now
so subject; and provided further, that the Underwriters will pay all
costs and expenses associated therewith.
(vii) So long as any Securities are outstanding, the
Company will cause the Trustee to furnish to the Underwriter, as soon
as available, a copy of (A) the annual statement of compliance
delivered under the Trust Agreement, [(B) the annual independent
public accountants' servicing report furnished pursuant to the Trust
Agreement,] (C) each report, statement or other document regarding the
Securities filed with the Commission under the Exchange Act or mailed
to the holders of the Securities, pursuant to the Trust Agreement or
otherwise, (D) any
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reports provided by certified public accountants pursuant to the
Trust Agreement regarding the reports, statements or other
documents included in (C) above, and (E) from time to time, such
other information concerning the Securities as the Underwriter
may reasonably request and which may be furnished by the Company
without undue expense.
6. Conditions to the Obligations of the Underwriters. The
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obligations of the Underwriters under the Agreement to purchase the Securities
shall be subject to the performance by the Company of its obligations hereunder
and in the Trust Agreement, and the following additional conditions:
(a) To the accuracy on the date of the Agreement and on the
Closing Date (if made on such Closing Date) and as of the date of the
effectiveness of any amendment to the Registration Statement filed
prior to the Closing Date of the representations and warranties on the
part of the Company contained herein.
(b) The Registration Statement shall have become effective and
no stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and
not withdrawn and no proceedings for that purpose shall have been
instituted or threatened; and the Final Prospectus shall have been
filed or mailed for filing with the Commission in accordance with Rule
424 under the Act, and all actions required to be taken and all
filings required to be made by the Company under the Act prior to the
sale of the Securities shall have been duly taken or made.
(c) The Company shall have delivered to the Underwriters a
certificate of the Company, signed by the President or any Vice
President or Assistant Vice President of the Company and dated the
Closing Date, to the effect that the signer of such certificate has
carefully examined the Registration Statement, the Final Prospectus,
and the Agreement and that: (A) the representations and warranties of
the Company in the Agreement are true and correct in all material
respects at and as of the Closing Date with the same effect as if made
on the Closing Date; (B) the Company has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date; (C) no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted
or, to the Company's knowledge, threatened; (D) nothing has come to
such Officer's attention that would lead him or her to believe that
the Final Prospectus contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the
statements, in the light of the circumstances under which they were
made, not misleading; and (E) there has been no material adverse
change or development involving a prospective material adverse change
in the business, operations, financial condition, properties or assets
of the Company.
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[(d) The Underwriters shall have received from a nationally
recognized independent accounting firm, two letters, (i) one dated the
date of the Agreement and satisfactory in form and substance to the
Underwriters and counsel for the Underwriters covering such matters
relating to the Trust as the Underwriters may reasonably request; and
(ii) the other dated the Closing Date and satisfactory in form and
substance to the Underwriters and counsel for the Underwriters (A)
confirming the information contained in the letter dated the date of
the Agreement and (B) covering such other matters relating to the
Trust as the Underwriters may reasonably request.]
(e) Opinions
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(i) The Underwriters shall have received from the counsel
for the Company, a favorable opinion, dated the Closing Date and
satisfactory in form and substance to counsel for the
Underwriters, as to such matters reasonably requested by the
Underwriters.
(ii) The Company shall have furnished to the Underwriters
the opinions of counsel to the Trustee, dated the Closing Date
and satisfactory in form and substance to counsel for the
Underwriters, as to the due authorization, execution and delivery
of the Trust Agreement by the Trustee and such other matters
reasonably requested by the Underwriters.
(f) The Underwritten Securities have been assigned the ratings
set forth in the Underwriting Agreement, which shall be in one of the
four highest rating categories by one or more "nationally recognized
statistical rating organizations" (as that term is defined by the
Commission) designated in the Underwriting Agreement. On the Closing
Date, (i) such rating or ratings shall not have been rescinded and
there shall not have been any downgrading, or public notification of a
possible downgrading or public notice of a possible change, without
indication of direction; and (ii) no downgrading, or public
notification of a possible downgrading or public notification of a
possible change, without indication of direction, shall have occurred
in the rating accorded any of the debt securities of any person,
providing any form of credit enhancement for the Securities by any
"nationally recognized statistical rating organization."
(g) [Reserved.]
(h) On the Closing Date, there shall not have occurred any
change, or any development involving a prospective change, in or
affecting the business or properties of the Company since the date of
the Underwriting Agreement that the Underwriter concludes in the
reasonable judgment of the Underwriter materially impairs the
investment quality of the Underwritten Securities so as to make it
impractical or inadvisable to proceed with the public offering or the
delivery of the Underwritten Securities as contemplated by the Final
Prospectus.
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(i) All proceedings in connection with the transactions
contemplated by the Agreement and all documents incident hereto shall
be satisfactory in form and substance to the Underwriters and counsel
for the Underwriters, and the Underwriters and counsel for the
Underwriters shall have received such information, certificates and
documents as they may reasonably request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in
the Agreement, if the Company is in breach of any covenants or
agreements contained herein or if any of the opinions and certificates
mentioned above or elsewhere in the Agreement shall not be in all
material respects reasonably satisfactory in form and substance to the
Underwriters and counsel for the Underwriters, the Agreement and all
obligations of the Underwriters under the Agreement may be canceled
at, or at any time prior to, the Closing Date by the Underwriters.
Notice of such cancellation shall be given to the Company in writing,
or by telephone or telegraph and confirmed in writing.
7. Reimbursement of Expenses. If for any reason other than a
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default by the Underwriters in their obligations under the Agreement the sale of
the Underwritten Securities provided for herein is not consummated, the Company
will reimburse the Underwriters severally upon demand for all out-of-pocket
expenses (including reasonable fees and disbursements of counsel) that shall
have been reasonably incurred by them in connection with their investigation,
the preparation to market and the marketing of the Securities, or in
contemplation of the performance by them of their obligations under the
Agreement.
8. Indemnification and Contribution. (a) The Company indemnifies
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and holds 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 as follows:
(i) against any and all losses, claims, expenses, damages or
liabilities, joint or several, to which such Underwriter or such
controlling person may become subject under the Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Final Prospectus, or any
amendment or supplement thereto, or any related Preliminary Final
Prospectus (but only to the extent the underlying information related
to such untrue statement or alleged untrue statement arises out of or
is based upon Company Information (as defined below) that was not
superseded or corrected by delivery to the Underwriters of corrected
written or electronic information, or for which the Company provided
written notice of an error or material omission prior to the
confirmation of the sale of the applicable Underwritten Securities) or
arise out of, or are based upon, the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; and will
reimburse each Underwriter
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and each such controlling person for any legal or other expenses
reasonably incurred by such Underwriter or such controlling person in
connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred; provided,
however, that (A) the Company will not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or omission, or alleged untrue
statement or omission, made in any of such documents in reliance upon
and in conformity with written information furnished to the Company by
an Underwriter, specifically for use therein and constituting
Underwriting Information (as defined below), and (B) such indemnity
solely with respect to any Preliminary Final Prospectus shall not
inure to the benefit of any Underwriter (or any person controlling
such Underwriter) from whom the person asserting any such loss, claim,
damage or liability purchased the Securities which are the subject
thereof if such person did not receive a copy of the Final Prospectus
(or the Final Prospectus as amended or supplemented, excluding any
documents incorporated therein by reference) at or prior to the
confirmation of the sale of such Securities to such person in any case
where such delivery is required by the Act and the untrue statement or
omission of a material fact contained in such Preliminary Final
Prospectus was corrected in the Final Prospectus (or the Final
Prospectus as amended or supplemented, excluding any documents
incorporated therein by reference);
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, if such settlement is
effected with the written consent of the Company; and
(iii) against any and all expense whatsoever (including the
fees and disbursements of counsel chosen by you), reasonably incurred
in investigating, preparing or defending against any litigation, or
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above.
As used herein, (i) the term "Company Information" means the information
furnished to the Underwriters by or on behalf of the Company regarding the
Company or the Collateral and (ii) the term "Underwriting Information" means the
information in the portion of the Final Prospectus constituting the prospectus
supplement set forth under the heading "Underwriting."
This indemnity will be in addition to any liability that the Company
may otherwise have, and shall be limited to the extent provided in the Company's
certificate of incorporation.
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(b) Each Underwriter agrees to indemnify and hold harmless the
Company, each of its directors, each of the Company's officers who have
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of the Act or the Exchange Act, against any and
all losses, claims, expenses, damages or liabilities to which the Company
or any such director, officer or controlling person may become subject,
under the Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities, (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statement, the Final
Prospectus or any amendment or supplement thereto, or any related
Preliminary Final Prospectus (except to the extent the underlying
information relating to such untrue statement or alleged untrue statement
constitutes, arises out of, or is based upon Company Information), or arise
out of, or are based upon, the omission or the alleged omission to state
therein a material fact required to be stated therein 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 constituting Underwriting Information furnished to
the Company by such Underwriter specifically for use therein; and will
reimburse any legal or other expenses reasonably incurred by the Company or
any such director, officer or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or
action. This indemnity agreement will be in addition to any liability that
such Underwriter may otherwise have.
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(c) Promptly after receipt by an indemnified party under this Section
8 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 8, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not
relieve it from any liability that it may have to any indemnified party
otherwise than under this Section 8. In case any such action is brought
against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to
participate therein, and, to the extent that it may elect by written notice
delivered promptly to the indemnified party after receiving the aforesaid
notice from such indemnified party, jointly with any other indemnifying
party similarly notified, to assume (at its own expense) the defense
thereof, with counsel satisfactory to such indemnified party (who shall
not, except with the consent of the indemnified party, be counsel to the
indemnifying party) to represent the indemnified party in such action;
provided that, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party or
parties shall have concluded that there may be legal defenses available to
it or them and/or other indemnified parties which are different from or
additional to those available to the indemnified party, the indemnified
party or parties shall have the right to select separate counsel in the
defense of such action on behalf of such indemnified party or parties.
Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval
by the indemnified party of the selected counsel, and, after notice from
the indemnifying party to such indemnified party under this Section 8, such
indemnifying party shall not be liable for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation unless (i) the
indemnified party shall have employed separate legal counsel in connection
with the assertion of legal defenses in accordance with the proviso to the
next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by any indemnified party in the case of
subsection (a) above, representing the indemnified parties under such
subparagraph (a) who are parties to such action), (ii) the indemnifying
party shall not have employed counsel satisfactory to the indemnified party
to represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has authorized
the employment of counsel for the indemnified party at the expense of the
indemnifying party (it being understood that if clause (i) or (iii) is
applicable, such liability shall be only in respect of the counsel referred
to in such clause (i) or (iii)).
-16-
(d) If the indemnification provided for in this Section 8 is
unavailable to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to herein, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and the
Underwriters on the other from the offering of the Underwritten Securities
to which such loss, claim, damage or liability (or action in respect
thereof) relates. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required under subsection (c) above, then
each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not
only such relative benefits but also the relative fault of the Company on
the one hand the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on
the one hand and Underwriters on the other shall be deemed to be in the
same proportion as the total net proceeds from such offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters. The relative fault
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material facts or the omission or alleged
omission to state a material fact relates to information supplied by the
Company on the one hand or the Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation or
by any other method of allocation which does not take account of the
equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to
above in this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim subject to the
limitations set forth in subsection (c) above. Notwithstanding the
provisions of this subsection (d), the Underwriters shall not be required
to contribute any amount in excess of the amount by which the total price
at which the Underwritten Securities underwritten and distributed to the
public exceeds the amount of any damages which the Underwriters have
otherwise paid or been required or become liable to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The obligation of
any Underwriter pursuant to this subsection (d) shall be several in
proportion to its respective underwriting obligations and not joint.
-17-
9. Default by an Underwriter. If any one or more Underwriters shall
-------------------------
fail to purchase and pay for any of the Securities of any Class agreed to be
purchased by such Underwriter or Underwriters under the Agreement and such
failure to purchase shall constitute a default in the performance of its or
their obligations under the Agreement, the remaining Underwriters shall be
obligated severally to take up and pay for (in the respective proportions which
the portion of the Securities of such Class set forth opposite their names in an
attachment to the Underwriting Agreement bears to the aggregate amount of
Securities of such Class set forth opposite the names of the remaining
Underwriters) the Securities of such Class which the defaulting Underwriter or
Underwriters agreed but failed to purchase; provided, however, that in the event
that the amount of Securities of such Class which the defaulting Underwriter or
Underwriters agreed but failed to purchase shall exceed 10% of the aggregate
amount of Securities of such Class as set forth in the Final Prospectus, the
remaining Underwriters shall have the right to purchase all, but shall not be
under any obligation to purchase any, of the Securities of such Class, and if
such non-defaulting Underwriters do not purchase all the Securities of such
Class, the Agreement will terminate without liability to any non-defaulting
Underwriter or the Company. In the event of a default by any Underwriter as set
forth in this Section 9, the Closing Date for such Class of Securities shall be
postponed for such period, not exceeding seven days, as the Underwriters shall
determine in order that the required changes in the Registration Statement and
the Final Prospectus or in any other documents or arrangements may be effected.
Nothing contained in the Agreement shall relieve any defaulting Underwriter of
its liability, if any, to the Company and any non-defaulting Underwriter for
damages occasioned by its default under the Agreement.
10. Termination. This Agreement shall be subject to termination in the
-----------
absolute discretion of the Underwriters, by notice given to the Company prior to
or at delivery of and payment for all Securities if prior to such time (i)
trading in securities generally on the New York Stock Exchange shall have been
suspended or limited, or minimum prices shall have been established on such
Exchange, (ii) a banking moratorium shall have been declared by either federal
or New York State authorities or (iii) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of a
national emergency or war, if the effect of any such event specified in this
clause (iii) in the judgment of the Underwriters make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Underwritten Securities on the terms and in the manner contemplated by the
Prospectus Supplement.
11. Representations and Indemnities to Survive. The respective
------------------------------------------
agreements, representations, warranties, indemnities and other statements of the
Company and the Underwriters set forth in or made pursuant to the Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or the Company or any of the officers, directors or
controlling persons referred to in Section 8 hereof, and will survive delivery
of and payment for the Securities. The provisions of this Section 11 and
Sections 5(a)(v), 7 and 8 hereof shall survive the termination or cancellation
of the Agreement.
12. Notices. All communications under the Agreement will be in writing
-------
and effective only on receipt and, if sent to the Underwriters, will be mailed,
delivered or telegraphed and confirmed to it at the office or offices set forth
in the Underwriting Agreement; or, if sent to the
-18-
Company, will be mailed, delivered or telegraphed and confirmed to it at 000
Xxxx Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000, Attention: President.
13. Successors. The Agreement will inure to the benefit of and be
----------
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and their
successors and assigns, and no other person will have any right or obligation
under the Agreement.
14. Applicable Law. The Agreement will be governed by and construed
--------------
in accordance with the laws of the jurisdiction as may be specified in the
Underwriting Agreement. The Agreement may be executed in any number of
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall together constitute but one and the same instrument.
15. Miscellaneous. Time shall be of the essence of the Agreement. The
-------------
Agreement supersedes all prior or contemporaneous agreements and understandings
relating to the subject matter of the Agreement. Neither the Agreement nor any
term of the Agreement may be changed, waived, discharged or terminated except by
a writing signed by the party against whom enforcement of such change, waiver,
discharge or termination is sought.
-19-
NATIONAL FINANCIAL SECURITIES CORPORATION
TRUST CERTIFICATES
2000-__ TERMS AGREEMENT
Dated: ________ __, 2000
To: National Financial Securities Corporation (the "Company")
Re: Underwriting Agreement Standard Provisions dated
May 2000 (the "Standard Provisions")
Series Designation: Trust Certificates, Series 2000-__ (the "Underwritten
Certificates")
Underwriting Agreement: Subject to the terms and conditions set forth
herein and to the terms of the Standard Provisions, which are incorporated by
reference herein, the Company hereby agrees to issue and sell to
_____________________ (the "Underwriters"), and the Underwriters hereby agree to
purchase from the Company, on ________ __, 2000, the aggregate outstanding
principal amount of the Underwritten Certificates set forth in Schedule A hereto
at the purchase price and on the terms set forth below; provided, however, that
-------- -------
the obligations of the Underwriters are subject to receipt by the Underwriters
of the Trust Agreement (as defined below), being in form and substance
satisfactory to the Underwriters.
The Underwritten Certificates will be issued by a trust (the "Trust") to be
established by the Company pursuant to a Trust Agreement, to be dated as of
_________ __, 2000 among the Company and _________________________, as trustee
(the "Trustee"), which incorporates by reference the Company's Standard Terms to
Trust Agreement (May 2000 Edition) (collectively, the "Trust Agreement"). The
Underwritten Certificates will represent in the aggregate the entire beneficial
ownership interest in the assets of the Trust which will consist of [UNDERLYING
SECURITIES] having the characteristics described in the Prospectus Supplement,
dated ________ ___, 2000, relating to the Underwritten Certificates (the
"Prospectus Supplement"). The Company specifically covenant to make available on
the Closing Date for sale, transfer and assignment to the Trust, [UNDERLYING
SECURITIES].
Registration Statement: References in the Standard Provisions to the
Registration Statement shall be deemed to include registration statement No.
333-_____.
-20-
Terms of the Underwritten Certificates: The Trust will issue $__,___,___
Trust Certificates, principal amount $__ per Trust Certificate. The [sole] asset
of the Trust will be [UNDERLYING SECURITIES], exclusive of interest accrued
thereon from and including ________ __, 2000 to but excluding the Closing Date.
[Coupon]
Distribution Dates: Each Distribution Date shall be the 15th day of
___________ and ____________, or if such day is not a business day, on the next
succeeding business day, commencing in ____________, 2000.
Purchase Price: The Underwriters have severally agreed to purchase the
Underwritten Certificates from the Company for the purchase price of ______% of
the principal balance of the Trust Certificates. Payment of the purchase price
for the Underwritten Certificates shall be made to the Company in federal or
similar immediately available funds payable to the order of the Company.
Denominations: The Underwritten Certificates will be issued in book-entry
form in denominations of $__ per Trust Certificate.
Closing Date and Location: 10:00 a.m. Eastern Time on ________ __, 2000, at
the offices of Hunton & Xxxxxxxx, Riverfront Plaza, East Tower, 000 Xxxx Xxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000-0000. The Company will deliver the Underwritten
Certificates to the Underwriters in book-entry form only, through the same-day
funds settlement system of The Depository Trust Company on the Closing Date.
Due Diligence: At any time prior to the Closing Date, the Underwriters have
the right to inspect the [UNDERLYING SECURITIES] to ensure conformity with the
Prospectus and the Prospectus Supplement.
Controlling Agreement: This Terms Agreement sets forth the complete
agreement among the Company and the Underwriters and fully supersedes all prior
agreements, both written and oral, relating to the issuance of the Underwritten
Certificates and all matters set forth herein. Capitalized terms used herein and
not otherwise defined herein shall have the meanings assigned to such terms in
the Trust Agreement or the Prospectus Supplement.
Information Provided by the Underwriters: It is understood and agreed that
the information set forth under the heading "Underwriting" in the Prospectus
Supplement is the only information furnished by the Underwriters for inclusion
in the Registration Statement and the Prospectus.
Trustee: ________________________________________, will act as Trustee of
the Trust.
-21-
Blue Sky Qualifications: The Underwriters specify _____________. The
Company has agreed to pay all costs and expenses incurred in connection with the
preparation of a blue sky survey to be delivered on or prior to the Closing
Date.
State Tax Opinions: The Company shall deliver to the Underwriters an
opinion of counsel pursuant to Section 6(e)(i) of the Standard Provisions with
respect to the State of _________.
Blackout Period: None.
Applicable Law: THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Notices: All communications hereunder will be in writing and effective only
upon receipt and will be mailed, delivered or telegraphed and confirmed to the
parties at:
National Financial Securities Corporation
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: President
[UNDERWRITERS]
Request for Opinions: (a) The Company hereby requests and authorizes
____________________, as their counsel in this transaction, to issue on behalf
of the Company such legal opinions to the Underwriters, their counsel, the
Trustee and the Rating Agencies as may be required by any and all documents,
certificates or agreements executed in connection with this Agreement.
(b) Each Underwriter hereby requests and authorizes _______________, as
their special counsel in this transaction, to issue to the Underwriters such
legal opinions as they may require, and the Company shall have furnished to
__________________ such documents as they may request for the purpose of
enabling them to pass upon such matters.
-22-
Each Underwriter agrees, subject to the terms and provisions of the Trust
Agreement, a copy of which is attached hereto, and which is incorporated by
reference herein in its entirety and made a part hereof to the same extent as if
such provisions had been set forth in full herein, to purchase the Underwritten
Certificates.
[UNDERWRITER]
By:
Name:
Title:
Accepted and acknowledged
As of the Date First
Above Written:
NATIONAL FINANCIAL SECURITIES CORPORATION
By:
Name:
Title:
-23-
