Exhibit 1
COASTAL BANCORP, INC.
(A TEXAS CORPORATION)
AND
COASTAL CAPITAL TRUST I
(A DELAWARE STATUTORY BUSINESS TRUST)
$50,000,000
____% CUMULATIVE TRUST PREFERRED SECURITIES
UNDERWRITING AGREEMENT
_________________, 2002
XXXX XXXXX XXXX XXXXXX, INCORPORATED
XXXXXX, XXXXXXXX & COMPANY, INCORPORATED
As the Underwriters
c/x Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Managing Director
Ladies and Gentlemen:
Coastal Capital Trust I, a Delaware statutory business trust (the "Trust"),
and Coastal Bancorp, Inc., a Texas corporation (the "Company" and together with
the Trust, the "Offerors"), propose to issue and sell to Xxxx Xxxxx Xxxx Xxxxxx,
Incorporated ("Xxxx Xxxxx") and Xxxxxx, Xxxxxxxx & Company, Incorporated
("Xxxxxx Xxxxxxxx") (each an "Underwriter," and together, the "Underwriters"),
an aggregate of 2,000,000 ____% Cumulative Trust Preferred Securities
(liquidation amount $25 per preferred security) of the Trust (the "Preferred
Securities").
The Preferred Securities will be guaranteed by the Company, to the extent
set forth in the Prospectus (as defined below), with respect to distributions
and amounts payable upon liquidation or redemption (the "Preferred Securities
Guarantee") pursuant to the Trust Preferred Securities Guarantee Agreement (the
"Preferred Securities Guarantee Agreement") to be dated as
of the Closing Date (as defined below) executed and delivered by the Company and
The Bank of New York (the "Guarantee Trustee"), a New York banking corporation,
not in its individual capacity but solely as trustee for the benefit of the
holders from time to time of the Preferred Securities. The Company and the Trust
each understand that the Underwriters propose to make a public offering of the
Preferred Securities as soon as they deem advisable after this Agreement has
been executed and delivered, and the Declaration (as defined in this Agreement),
the Indenture (as defined in this Agreement), and the Preferred Securities
Guarantee Agreement have been qualified under the Trust Indenture Act of 1939,
as amended (the "1939 Act"). The entire proceeds from the sale of the Preferred
Securities will be combined with the entire proceeds from the sale by the Trust
to the Company of its common securities (the "Common Securities") to be dated as
of Closing Date, executed and delivered by the Company for the benefit of the
holders from time to time of the Common Securities, and will be used by the
Trust to purchase the _____% Junior Subordinated Deferrable Interest Debentures
due 2032 (the "Subordinated Debentures") issued by the Company. The Preferred
Securities and the Common Securities will be issued pursuant to the Amended and
Restated Declaration of Trust, to be dated as of Closing Date (the
"Declaration"), among the Company, as Sponsor, The Bank of New York, as property
trustee (the "Property Trustee"), The Bank of New York (Delaware), as Delaware
trustee (the "Delaware Trustee"), and Xxxxxx X. Xxxxx, Xxxxxxxxx X. Xxxxx and
Xxxxx X. Xxxxxxx, as administrative trustees (the "Administrative Trustees" and
together with the Property Trustee and the Delaware Trustee, the "Trustees"),
and the holders from time to time of undivided beneficial interests in the
assets of the Trust. The Subordinated Debentures will be issued pursuant to an
indenture, to be dated as of the Closing Date (the "Indenture"), between the
Company and The Bank of New York, as debenture trustee (the "Debenture
Trustee").
The Preferred Securities, the Preferred Securities Guarantee and the
Subordinated Debentures are collectively referred to in this Agreement as the
"Securities." The Indenture, the Declaration and this Agreement are collectively
referred to in this Agreement as the "Operative Documents." Capitalized terms
used in this Agreement without definition have the respective meanings specified
in the Prospectus.
1. REPRESENTATIONS AND WARRANTIES. The Offerors confirm as follows their
agreements with the Underwriters:
(a) The Offerors jointly and severally represent and warrant to, and
agree with, each of the Underwriters that, as of the date hereof and as of
the Closing Date:
(i) The Offerors have filed a registration statement on Form S-3
(File Nos. 333-87370 and 333-87370-01) and one or more pre-effective
amendments thereto (together, the "Initial Registration Statement")
with the Securities and Exchange Commission (the "Commission"); the
Initial Registration Statement and any post-effective amendment
thereto, each in the form heretofore delivered to you, have been
declared effective by the Commission in such form; other than a
registration statement, if any, increasing the size of the offering (a
"Rule 462(b) Registration Statement"), filed pursuant to Rule 462(b)
under the Securities Act of 1933, as amended (the "Securities Act"),
which became effective upon filing, no other document with respect to
the Initial Registration Statement has heretofore been filed with the
Commission; no stop order suspending the effectiveness of the Initial
Registration Statement, any post-effective
2
amendment thereto or the Rule 462(b) Registration Statement, if any,
has been issued, no proceeding for that purpose has been initiated or
threatened by the Commission and any request on the part of the
Commission for additional information from the Offerors has been
satisfied in all material respects; any preliminary prospectus
included in the Initial Registration Statement, as originally filed or
as part of any amendment thereto, or filed with the Commission
pursuant to Rule 424(a) of the rules and regulations of the Commission
under the Securities Act is hereinafter called a "Preliminary
Prospectus"; the various parts of the Initial Registration Statement
and the Rule 462(b) Registration Statement, if any, including all
schedules and exhibits thereto and including the information contained
in the form of final prospectus filed with the Commission pursuant to
Rule 424(b) under the Securities Act and deemed by virtue of Rule 430A
under the Securities Act to be part of the Initial Registration
Statement at the time it was declared effective or such part of the
Rule 462(b) Registration Statement, if any, became or hereafter
becomes effective, each as amended at the time such part of the
Initial Registration Statement became effective, are hereinafter
collectively called the "Registration Statement"; such final
prospectus, in the form first filed pursuant to Rule 424(b) under the
Securities Act, is hereinafter called the "Prospectus"; and all
references to the Registration Statement, any Preliminary Prospectus,
the Prospectus or any amendment or supplement to any of the foregoing
shall be deemed to include the copy filed with the Commission pursuant
to its Electronic Data Gathering, Analysis and Retrieval system
("XXXXX");
(ii) (A) at the respective times the Initial Registration
Statement, any Rule 462(b) Registration Statement and any
post-effective amendments thereto became effective and at the Closing
Date (as defined herein), the Initial Registration Statement, any Rule
462(b) Registration Statement and any amendments and supplements
thereto complied and will comply in all material respects with the
requirements of the Securities Act and the rules and regulations of
the Commission thereunder (the "Rules and Regulations") and did not
and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and (B) at the time the
Prospectus or any amendments or supplements thereto were issued and on
the Closing Date, neither the Prospectus nor any amendment or
supplement thereto included or will include an untrue statement of a
material fact or omitted or will omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided
that the representations and warranties in clauses (A) and (B) above
shall not apply (1) to statements in or omissions from the
Registration Statement or the Prospectus made in reliance upon and in
strict conformity with information furnished to the Trust or the
Company in writing by either of Xxxx Xxxxx or Xxxxxx Xxxxxxxx
expressly for use in the Registration Statement or the Prospectus, it
being understood and agreed that the only such information provided by
any Underwriter is that described as such in the Section entitled
"Underwriting" and (2) that part of the Registration Statement which
shall constitute Statements of Eligibility and Qualification (Forms
T-1) under the 1939 Act. No order preventing or suspending the use of
any Preliminary Prospectus has been issued by the Commission. No
document has been prepared or delivered in reliance on Rule 434 under
the Securities Act, but if Rule 434 is used, the Offerors will comply
with the requirements of Rule 434 and the Prospectus shall not be
"materially different," as
3
such term is used in Rule 434, from the prospectus included in the
Registration Statement at the time it became effective;
Each Preliminary Prospectus and the Prospectus filed as part of the
Initial Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the requirements of
the Securities Act and the Rules and Regulations and each Preliminary
Prospectus and the Prospectus delivered to the Underwriters for use in
connection with this offering was substantively identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S-T;
(iii) The documents incorporated or deemed to be incorporated by
reference in the Registration Statement and Prospectus at the time
they were or hereafter are filed with the Commission complied and will
comply in all material respects with the requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and
the rules and regulations of the Commission thereunder (the "1934 Act
Regulations"), and, when read together with the other information in
the Prospectus, at the time the Registration Statement became
effective, at the time the Prospectus was issued and on the Closing
Date, do not and will not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, not misleading;
(iv) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Texas, and each of the Company and Coastal Banc Holding Company,
Inc., a Delaware corporation ("HoCo") is duly registered as a savings
and loan holding company within the meaning of the Home Owners Loan
Act of 1933, with power and authority (corporate and other) to own,
lease and operate its properties and conduct its business as described
in the Prospectus and to enter into and perform its obligations under
this Agreement and under each of the Operative Documents to which it
is a party, and has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of
each other jurisdiction in which it owns or leases properties or
conducts any business so as to require such qualification, except
where the failure so to qualify or be in good standing would not have
a material adverse effect on the condition, financial or otherwise, or
on the earnings, business affairs or business prospects of the Company
and its Subsidiaries (as defined below), considered as one enterprise
(a "Material Adverse Effect");
(v) Coastal Banc ssb, a Texas-chartered state savings bank (the
"Bank"), has been duly organized and is validly existing as a state
savings bank and continues to do business as such in each jurisdiction
in which its banking business is conducted and as described in the
Prospectus;
(vi) Schedule I hereto includes a list of all direct and indirect
subsidiaries of the Company. Each subsidiary of the Company (each a
"Subsidiary" and collectively, the "Subsidiaries") has been duly
incorporated (or organized) and is validly existing as a corporation
(or other organization) in good standing under the laws of the
4
jurisdiction of its incorporation (or organization), with power and
authority to own, lease and operate its properties and conduct its
business as described in the Prospectus, and has been duly qualified
as a foreign corporation (or other organization) for the transaction
of business and is in good standing under the laws of each other
jurisdiction in which its owns or leases properties or conducts any
business so as to require such qualification, except where the failure
so to qualify or be in good standing would not have a Material Adverse
Effect; all of the issued and outstanding capital stock (or other
ownership interests) of each Subsidiary has been duly and validly
authorized and issued, is fully paid and nonassessable and is owned by
the Company, directly or through its Subsidiaries, or the Bank,
directly or through its subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity;
(vii) All of the authorized, issued and outstanding capital stock
of the Company as of March 31, 2002 is as set forth in the Prospectus
in the column entitled "Actual" under the caption "Capitalization"
(and there have not been any subsequent issuances of capital stock of
the Company except for subsequent issuances, if any, pursuant to any
dividend reinvestment plan, reservations, agreements, conversions,
stock dividends or employee or director benefit plans); the issued and
outstanding capital stock of the Company has been duly authorized and
validly issued and is fully paid and nonassessable and no shares were
issued in violation of the preemptive rights of any holder thereof.
Except in each case as disclosed in the Prospectus or issued or
issuable pursuant to compensatory plans or other programs disclosed in
the Prospectus, there are no outstanding rights, options or warrants
to acquire any securities or other ownership interests of the Company
or the Trust, and there are no outstanding instruments or securities
convertible into or exchangeable for any securities of the Company or
the Trust and no restrictions upon the voting or transfer of any
capital stock of the Company or equity securities of the Trust
pursuant to the Company's corporate charter or bylaws, the Declaration
or any agreement or other instrument to which an Offeror is a party or
by which an Offeror is bound;
(viii) The Trust has been duly created and is validly existing as
a business trust under the Delaware Business Trust Act with the power
and authority (corporate and other) to own, lease and operate its
properties and conduct its business as described in the Prospectus and
to enter into and perform its obligations under this Agreement and the
Operative Documents, as applicable, and the Common and Preferred
Securities. The Trust is not a party to or otherwise bound by any
material agreement other than those described in the Prospectus, and
the Trust is and will be, under current law, classified for United
States federal income tax purposes as a grantor trust and not as an
association taxable as a corporation;
(ix) On the Closing Date, the Common Securities will have been
duly authorized for issuance by the Trust pursuant to the Declaration
and, when issued, executed and authenticated in accordance with the
Declaration and delivered by the Trust to the Company against payment
therefor in accordance with the Common Securities Subscription
Agreement, will be validly issued and fully paid and nonassessable
undivided common beneficial interests in the assets of the Trust. The
issuance of the Common Securities is not subject to preemptive or
other similar rights; and on the
5
Closing Date all of the issued and outstanding Common Securities of
the Trust will be directly owned by the Company free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equitable right;
(x) On the Closing Date, the Preferred Securities will have been
duly authorized for issuance by the Trust pursuant to the Declaration
and, when issued, executed and authenticated in accordance with the
Declaration and delivered against payment therefor as provided in this
Agreement, will be validly issued and fully paid and nonassessable
undivided preferred beneficial interests in the assets of the Trust
and will conform in all material respects to the description thereof
in the Prospectus. The issuance of the Preferred Securities will not
be subject to preemptive or other similar rights;
(xi) This Agreement has been duly authorized, executed and
delivered by the Offerors;
(xii) The Declaration has been qualified under the 1939 Act and
has been duly authorized by the Company and, on the Closing Date, will
have been duly executed and delivered by the Company and the Trustees,
assuming due authorization, execution and delivery of the Declaration
by the Trustees, the Declaration will, on the Closing Date, be a valid
and binding agreement of the Company, enforceable against the Company
in accordance with its terms, except to the extent that enforceability
may be limited by (1) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws affecting
creditors' rights generally, and (2) general principles of equity,
regardless of whether enforceability is considered in a proceeding at
law or in equity (collectively, the "Enforceability Exceptions");
(xiii) The Preferred Securities Guarantee has been qualified
under the 1939 Act and has been duly authorized by the Company; on the
Closing Date, the Preferred Securities Guarantee will have been duly
executed and delivered by the Company and will constitute a valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except to the extent that enforceability
may be limited by any of the Enforceability Exceptions; and the
Preferred Securities Guarantee will conform in all material respects
to the description thereof in the Prospectus;
(xiv) The Indenture has been qualified under the 1939 Act and has
been duly authorized by the Company and, on the Closing Date, will
have been duly executed and delivered by the Company and, assuming due
authorization and delivery of the Indenture by the Debenture Trustee,
will constitute a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except
to the extent that enforceability thereof may be limited by any of the
Enforceability Exceptions;
(xv) The Subordinated Debentures have been duly authorized by the
Company and, on the Closing Date, the Subordinated Debentures, will
have been duly executed by the Company and, when authenticated in the
manner provided for in the Indenture and delivered by the Company to
the Trust against payment therefor as described in the Prospectus,
will constitute valid and binding obligations of the Company,
6
enforceable against the Company in accordance with their terms, except
to the extent that enforceability thereof may be limited by any of the
Enforceability Exceptions; and the Subordinated Debentures will be in
the form contemplated by, and entitled to the benefits of, the
Indenture and will conform in all material respects to the
descriptions thereof in the Prospectus and will be owned by the Trust
free and clear of any security interest, mortgage, pledge, lien,
encumbrance, restriction upon transfer, preemptive rights, claim or
equity;
(xvi) Each of the Administrative Trustees of the Trust is an
officer of the Company and has been duly authorized by the Company to
act in such capacity;
(xvii) The Operative Documents conform in all material respects
to the descriptions thereof contained in the Prospectus;
(xviii) The Trust is not in violation of the certificate of trust
of the Trust filed with the State of Delaware (the "Trust
Certificate") or the Declaration, and neither the Company nor any of
its Subsidiaries is in violation of its charter or bylaws; none of the
Trust, the Company or any of its Subsidiaries is in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or other agreement or
instrument to which it is a party or by which it or any of them may be
bound, or to which any of its property or assets is subject
(collectively, "Agreements and Instruments") except for such defaults
under Agreements and Instruments that would not result in a Material
Adverse Effect; and (1) the execution, delivery and performance of the
Operative Documents by the Trust or the Company, as the case may be,
(2) the issuance, sale and delivery of the Preferred Securities, the
Subordinated Debentures and the Preferred Securities Guarantee, (3)
the consummation of the transactions contemplated by the Operative
Documents and (4) compliance by the Offerors with the terms of the
Operative Documents to which they are a party have been duly
authorized by all necessary corporate action on the part of the
Company and, with respect to the matters described in sub-clauses (1),
(2), (3) and (4) of this Section 1(a)(xviii), on the Closing Date,
will have been duly authorized by all necessary action on the part of
the Trust, and none of the actions referred to in sub-clauses (1)
through (3) above violate, conflict with or constitute a breach of or,
default or Repayment Event (as defined below) under, and will not,
whether with or without the giving of notice or passage of time or
both, violate, conflict with or constitute a breach of, or default or
Repayment Event under, or result in the creation or imposition of any
security interest, mortgage, pledge, lien, charge, encumbrance or
equitable right upon any property or assets of the Trust, the Company
or any of the Company's subsidiaries pursuant to, the Agreements and
Instruments (except for such conflicts, violations, breaches or
defaults or liens, charges or encumbrances that would not result in a
Material Adverse Effect), nor will such action result in any violation
of the provisions of the charter or bylaws of the Company or any of
its Subsidiaries or the Declaration or the Trust Certificate or
violation by the Company or any of its Subsidiaries of any applicable
law, statute, rule, regulation, judgment, order, writ or decree of any
government, government authority, agency or instrumentality or court,
domestic or foreign, including, without limitation, the Board of
Governors of the Federal Reserve System, the Office of Thrift
Supervision, the Texas Department of Savings and Loans,
7
and the Federal Deposit Insurance Corporation (each, a "Governmental
Entity"). As used in this Agreement, a "Repayment Event" means any
event or condition which gives the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder's
behalf) the right to require the repurchase, redemption or repayment
of all or a portion of such indebtedness by the Trust, the Company or
any of the Company's Subsidiaries;
(xix) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any
Governmental Entity, other than those that have been made or obtained,
is necessary or required for the performance by the Company or the
Trust of their respective obligations under each of the Operative
Documents, as applicable, or the consummation by the Trust and the
Company of the transactions contemplated by the Operative Documents.
(xx) KPMG LLP, which has certified the Company's historical
consolidated financial statements included or incorporated by
reference in the Registration Statement and the Prospectus, are
independent public accountants as required by the Securities Act and
the Rules and Regulations. The Company's historical consolidated
financial statements, together with related schedules and notes,
included in the Registration Statement and the Prospectus comply in
all material respects with the requirements of the Securities Act and
present fairly the consolidated financial position, results of
operations and changes in financial position of the Company and the
Subsidiaries on the basis stated in the Registration Statement at the
respective dates or for the respective periods to which they apply;
such statements and related schedules and notes have been prepared in
accordance with generally accepted accounting principles in the United
States consistently applied throughout the periods involved, except as
disclosed in the notes to such financial statements; and the summary
consolidated financial data included in the Registration Statement and
Prospectus present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited financial
statements included or incorporated by reference in the Registration
Statement and the Prospectus;
(xxi) Neither the Company nor any Subsidiary has sustained since
the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus; and, since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, (1) there has not been any change in the
capital stock or long-term debt of the Company or any of the
Subsidiaries, except for the repurchase of the Company's 10% Senior
Notes due 2002, (2) there has not been any material adverse change, or
any development involving a prospective material adverse change, in or
affecting the general affairs, business, prospects, management,
financial position, stockholders' equity or results of operations of
the Company and the Subsidiaries, considered as one enterprise, (3)
there have been no transactions entered into by, and no obligations or
liabilities, contingent or otherwise, incurred by the Company or any
of the Subsidiaries, whether or not in the ordinary course of
business,
8
which are material to the Company and the Subsidiaries, considered as
one enterprise or (4) there has been no dividend or distribution of
any kind declared, paid or made by the Company, HoCo or the Bank on
any class of its capital stock, in each case, other than the regular
dividends on the Company's common stock, the Company's preferred stock
and the Bank's preferred stock;
(xxii) Neither the Company nor any of the Subsidiaries is (1) in
violation of its certificate or articles of incorporation or bylaws
(or other organization documents) or (2) in violation of any law,
ordinance, administrative or governmental rule or regulation
applicable to the Company or any of the Subsidiaries, or (3) in
violation of any decree of any court or governmental agency or body
having jurisdiction over the Company or any of the Subsidiaries, or
(4) in default in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence
of indebtedness or in any agreement, indenture, lease or other
instrument to which the Company or any of the Subsidiaries is a party
or by which any of them or any of their respective properties may be
bound, except, in the case of clauses (2), (3) and (4), where any such
violation or default, individually or in the aggregate, would not have
a Material Adverse Effect;
(xxiii) Each of the Company and each Subsidiary has good and
marketable title to all real and personal property owned by it, in
each case free and clear of all liens, encumbrances and defects except
such as are described in the Prospectus, including the documents
incorporated therein by reference, or such as do not materially affect
the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company or any Subsidiary;
and any real property and buildings held under lease by the Company or
any Subsidiary are held under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the
Company or any Subsidiary;
(xxiv) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Trust, the
Company or any of the Subsidiaries is a party or of which any property
of the Trust, the Company or any of the Subsidiaries is the subject
which, if determined adversely to the Company or any of the
Subsidiaries, individually or in the aggregate, would have or may
reasonably be expected to have a Material Adverse Effect, or would
prevent or impair the consummation of the transactions contemplated by
this Agreement and the Operative Documents, or which are required to
be described in the Registration Statement or the Prospectus; and, to
the knowledge of the Trust or the Company, no such proceedings are
threatened or contemplated by governmental authorities or others;
(xxv) The Trust, the Company and the Subsidiaries possess all
permits, licenses, approvals, consents and other authorizations
(collectively, "Permits") issued by the appropriate federal, state,
local or foreign regulatory agencies or bodies necessary to conduct
the businesses now operated by them; the Trust, the Company and the
Subsidiaries are in compliance with the terms and conditions of all
such Permits and all of the Permits are valid and in full force and
effect, except, in each case, where the failure
9
so to comply or where the invalidity of such Permits or the failure of
such Permits to be in full force and effect, individually or in the
aggregate, would not have a Material Adverse Effect; and neither the
Trust, the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or material modification of any
such Permits;
(xxvi) No labor dispute with the employees of the Company or the
Subsidiaries exists, or, to the knowledge of the Company, has been
threatened which may reasonably be expected to result in a Material
Adverse Effect;
(xxvii) The Company and the Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in
which they are engaged; neither the Company nor any Subsidiary has
been refused any insurance coverage sought or applied for; and the
Company has no reason to believe that either it or any Subsidiary will
not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not
have a Material Adverse Effect;
(xxviii) The Company and its Subsidiaries make and keep
materially accurate books and records reflecting their respective
assets and maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (1) transactions are
executed in accordance with management's general or specific
authorizations; (2) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for the
Company's assets; (3) access to assets is permitted only in accordance
with management's general or specific authorization; and (4) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences;
(xxix) All United States federal income tax returns of the
Company and the Subsidiaries required by law to be filed have been
filed and all taxes shown by such returns or otherwise assessed, which
are due and payable, have been paid, except assessments against which
appeals have been or will be promptly taken and as to which adequate
reserves have been provided. The Company and the Subsidiaries have
filed all other tax returns that are required to have been filed by
them pursuant to applicable foreign, state, local or other law, except
insofar as the failure to file such returns, individually or in the
aggregate, would not result in a Material Adverse Effect, and have
paid all taxes due pursuant to such returns or pursuant to any
assessment received by the Company or any Subsidiary except for such
taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided. The charges, accruals and
reserves on the books of the Company and the Subsidiaries in respect
of any income and corporation tax liability for any years not finally
determined are adequate to meet any assessments or re-assessments for
additional income tax for any years not finally determined;
10
(xxx) There are no agreements, documents or contracts of a
character described in Item 601 of Regulation S-K promulgated by the
Commission which are required to be described in the Registration
Statement, the Prospectus or the documents incorporated by reference
therein or to be filed as exhibits thereto which have not been so
described or filed as required;
(xxxi) The Company is not and, after giving effect to the
offering and sale of the Preferred Securities and Common Securities as
contemplated herein and the application of the net proceeds therefrom
as described in the Prospectus, will not be an "investment company",
as such term is defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act"); and
(xxxii) The Company has not distributed any offering materials in
connection with the offering and sale of the Preferred Securities,
other than the Registration Statement, any Preliminary Prospectus, the
Prospectus or any other offering materials permitted by the Securities
Act and approved by the Underwriters; and the Company has not taken
and will not take, directly or indirectly, any action designed to
cause or result in, or which constitutes or might reasonably be
expected to constitute, the stabilization or manipulation of the price
the Preferred Securities.
(xxxiii) Neither the Company nor any of its Subsidiaries is
subject or is party to, or has received any notice or advice that any
of them may become subject or party to, any cease-and-desist order,
agreement, consent agreement, memorandum of understanding or other
regulatory enforcement action, proceeding or order with or by, or is a
party to any commitment letter or similar undertaking to, or is
subject to any directive by, or has been, a recipient of any
supervisory letter from, or has adopted any board resolutions at the
request of, any Governmental Entity that currently restricts in any
material respect the conduct of their business or that in any material
manner relates to their capital adequacy, their ability to declare and
pay dividends, their credit policies, their management or their
business (each, a "Regulatory Agreement"), nor has the Company or any
of its Subsidiaries been advised by any Governmental Entity with
respect to any report or statement relating to any examinations of the
Company or any of its subsidiaries which, in the reasonable judgment
of the Company, is expected to result in a Material Adverse Effect.
(b) Any certificate signed by any Trustee of the Trust or any duly
authorized officer of the Company or any Subsidiary of the Company in such
respective person's capacity as Trustee or as such officer and delivered to
the Underwriters or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company or the Trust, as the case may
be, to the Underwriters as to the matters covered thereby.
2. SALE AND DELIVERY TO UNDERWRITERS.
(a) On the basis of the representations and warranties contained in
this Agreement and subject to the terms and conditions set forth in this
Agreement, the Trust agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to
purchase from the Trust, at the purchase price of $25 per Preferred
Security, the
11
number of Preferred Securities set forth in Schedule II opposite the name
of that Underwriter, plus any additional number of Preferred Securities
which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 9 of this Agreement, subject, in each case, to such
adjustments among the Underwriters as they in their sole discretion shall
make to eliminate any sales or purchases of fractional securities. On the
Closing Date, the Trust shall deliver 2,000,000 Preferred Securities to the
Underwriters and in consideration for such Preferred Securities, the
Underwriters agree to pay on the Closing Date to the Trust $_________ by
wire transfer of immediately available funds which represent the payment
for the Preferred Securities purchased less the Underwriting Commissions.
(b) Payment of the purchase price for, and delivery of certificates
for the Preferred Securities shall be made at the offices of Elias, Matz,
Xxxxxxx & Xxxxxxx, LLP, Washington, D.C., or at such other place as shall
be agreed upon by the Underwriters and the Offerors, at 8:30 a.m., (Central
time) on the third business day (or, if pricing occurs after 4:30 p.m.
(Eastern time) on any given day, the fourth business day) after the date of
this Agreement (unless postponed in accordance with the provisions of
Section 9 of this Agreement), or such other time not later than seven (7)
business days after such date as shall be agreed upon by the Underwriters
and the Offerors (such time and date of payment and delivery being in this
Agreement called the "Closing Date").
Payment shall be made to the Trust by wire transfer of immediately
available funds, to the order of the Trust, to a bank designated by the Company,
against delivery to the Underwriters of certificates for the Preferred
Securities to be purchased by them. It is understood that each Underwriter has
authorized Xxxx Xxxxx, for its account, to accept delivery of, receipt for, and
make payment of the Purchase Price for, the Preferred Securities which it has
agreed to purchase. Xxxx Xxxxx, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Preferred Securities to be purchased by any Underwriter whose
funds have not been received on the Closing Date, but such payment shall not
relieve such Underwriter from its obligations hereunder.
(c) The global security to be deposited by the Offerors with The
Depository Trust Company ("DTC") will be available for examination by the
Underwriters, and the list of purchasers of the Preferred Securities who
will be recorded in the DTC book entry system will be available for
examination in Washington, D.C. by the Underwriters and the Company at
least one (1) business day before the Closing Date.
3. OFFER AND SALE. It is understood that the several Underwriters propose
to offer the Preferred Securities for sale to the public upon the terms and
conditions set forth in the Prospectus.
4. COVENANTS OF THE OFFERORS. The Offerors jointly and severally covenant
and agree with each of the Underwriters as follows:
(a) The Company and the Trust, subject to Section 4(b) of this
Agreement, will comply with the requirements of Rule 430A or Rule 434, as
applicable, under the Securities Act, and will notify the Underwriters
promptly, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement shall become effective, or any
12
supplement to the Prospectus or any amended Prospectus shall have been
filed, (ii) of the receipt of any comments from the Commission, (iii) of
any request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus or for
additional information, and (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or of
any order preventing or suspending the use of any Preliminary Prospectus,
or of the suspension of the qualification of the Preferred Securities for
offering or sale in any jurisdiction, or of the initiation or threatening
of any proceedings for any of such purposes. The Company and the Trust will
promptly effect the filings necessary pursuant to Rule 424(b) under the
Securities Act and will take such steps as it deems necessary to ascertain
promptly whether the form of prospectus transmitted for filing under Rule
424(b) was received for filing by the Commission and, in the event that it
was not, it will promptly file such prospectus. The Company and the Trust
will make every reasonable effort to prevent the issuance of any stop order
and, if any stop order is issued, to obtain the lifting thereof at the
earliest possible moment.
(b) The Company and the Trust will give the Underwriters notice of
their intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b) under the Securities
Act), or any amendment, supplement or revision to the Prospectus, will
furnish the Underwriters with copies of any such documents a reasonable
amount of time prior to such proposed filing or use, as the case may be,
and will not file or use any such document to which the Underwriters or
counsel for the Underwriters shall reasonably object.
(c) The Company and the Trust will each use its best efforts to
qualify the Preferred Securities for offering and sale under the securities
laws of such jurisdictions as the Underwriters may reasonably designate and
to comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Preferred Securities; provided, however,
that nothing in this Section 4(c) shall require the Company or the Trust to
qualify as a foreign corporation in any jurisdiction in which it is not
already so qualified, to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject or to
file a general consent to service of process in any jurisdiction. The
Offerors will notify the Underwriters promptly of, and confirm in writing,
the suspension of qualification of the Preferred Securities or threat
thereof in any jurisdiction.
(d) The Offerors have furnished or will deliver to the Underwriters,
without charge, two signed copies of the Registration Statement as
originally filed, any Rule 462(b) Registration Statement and of each
amendment to each (including exhibits filed therewith) and signed copies of
all consents and certificates of experts, and will also, upon your request,
deliver to the Underwriters, without charge, a conformed copy of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits) for each of the Underwriters. The copies of the
Registration Statement and each amendment thereto furnished to the
Underwriters will be substantially identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX,
except to the extent permitted by Regulation S-T.
(e) The Offerors have delivered to each Underwriter, without charge,
as many copies of each Preliminary Prospectus as such Underwriter
reasonably requested, and the
13
Offerors hereby consent to the use of such copies for purposes permitted by
the Securities Act. The Offerors will furnish to each Underwriter, without
charge, as promptly as possible following the date of this Agreement and
from time to time thereafter during the period when the Prospectus is
required to be delivered in connection with sales of the Preferred
Securities under the Securities Act or the Exchange Act, such number of
copies of the Prospectus (as amended or supplemented) as such Underwriter
may reasonably request. The Prospectus and any amendments or supplements
thereto furnished to the Underwriters will be substantially identical to
the electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S-T.
(f) The Offerors will comply with the Securities Act and the Rules and
Regulations in all material respects so as to permit the completion of the
distribution of the Preferred Securities as contemplated in this Agreement
and in the Prospectus. If at any time when a prospectus is required to be
delivered in connection with sales of the Preferred Securities under the
Securities Act or the Exchange Act, any event shall occur or condition
shall exist as a result of which it is necessary to amend the Registration
Statement or amend or supplement the Prospectus in order that the
Prospectus will not include any untrue statements of a material fact or
omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing at the
time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of counsel for the Offerors or the Underwriters, at any such time
to amend the Registration Statement or amend or supplement the Prospectus
in order to comply with the requirements of the Securities Act or the Rules
and Regulations, the Offerors will promptly prepare and file with the
Commission, subject to Section 4(b) of this Agreement, such amendment or
supplement as may be necessary to correct such statement or omission or to
make the Registration Statement or the Prospectus comply with such
requirements, and the Offerors will furnish to the Underwriters such number
of copies of such amendment or supplement as the Underwriters may
reasonably request. The Offerors will provide the Underwriters with notice
of the occurrence of any event during the period specified above that they
believe may give rise to the need to amend or supplement the Registration
Statement or the Prospectus as provided in the preceding sentence promptly
after the occurrence of such event.
(g) The Company will make generally available (within the meaning of
Section 11(a) of the Securities Act) to its security holders and to the
Underwriters as soon as practicable, but not later than 45 days after the
end of its fiscal quarter in which the first anniversary date of the
effective date of the Registration Statement occurs, an earnings statement
(in form complying with the provisions of Rule 158 under the Securities
Act) covering a period of at least twelve consecutive months beginning
after the effective date of the Registration Statement.
(h) The Trust will use the net proceeds received by it from the sale
of the Preferred Securities, and the Company will use the net proceeds
received by it from the sale of the Subordinated Debentures, in the manners
specified in the Prospectus under the heading "Use of Proceeds."
(i) The Offerors will cooperate with the Underwriters and use their
best efforts to permit the Preferred Securities to be eligible for
clearance and settlement through the facilities of the DTC.
14
(j) The Company will use its best efforts to effect the quotation of
the Preferred Securities on the Nasdaq National Market and will file with
the Nasdaq National Market all documents and notices required by the Nasdaq
National Market of companies that have securities that are traded in the
over-the-counter market and quotations for which are reported by the Nasdaq
National Market. If the Subordinated Debentures are distributed in exchange
for the Preferred Securities, the Company will use its best efforts to
effect the quotation of the Subordinated Debentures on the Nasdaq National
Market or such other automated quotation system or national securities
exchange on which the Preferred Securities are then listed.
(k) During a period of 90 days from the date of the Prospectus,
neither the Company nor the Trust will, without the prior written consent
of Xxxx Xxxxx, (i) directly or indirectly, offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of any Preferred Securities or Subordinated
Debentures (or any equity or debt securities substantially similar to the
Preferred Securities or Subordinated Debentures, respectively), or any
securities convertible into or exercisable or exchangeable for Preferred
Securities or Subordinated Debentures (or any equity or debt securities
substantially similar to the Preferred Securities or Subordinated
Debenture, respectively) or file any registration statement under the
Securities Act with respect to any of the foregoing, or (ii) enter into any
swap or any other agreement or any transaction that transfers, in whole or
in part, directly or indirectly, the economic consequence of ownership of
Preferred Securities or Subordinated Debentures (or any equity or debt
securities substantially similar to the Preferred Securities or
Subordinated Debentures, respectively), whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by
delivery of Preferred Securities or Subordinated Debentures (or any equity
or debt securities substantially similar to the Preferred Securities or
Subordinated Debentures, respectively), in cash or otherwise. The foregoing
sentence shall not apply to the Preferred Securities or Subordinated
Debentures to be sold hereunder.
(l) The Company and the Trust, during the period when the Prospectus
is required to be delivered in connection with sales of the Preferred
Securities under the Securities Act or the Exchange Act, will file all
documents required to be filed with the Commission pursuant to Sections 13,
14 or 15 of the Exchange Act within the time periods required by the
Exchange Act and the rules and regulations of the Commission thereunder.
(m) For and during the period of three years from the effective date
of the Registration Statement, the Company will furnish to the Underwriters
copies of all reports or other communications (financial or other)
furnished to shareholders generally, and deliver to the Underwriters (i) as
soon as they are available, copies of any reports and financial statements
furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed; and
(ii) such additional information concerning the business and financial
condition of the Company as the Underwriters may from time to time
reasonably request (such financial statements to be on a consolidated basis
to the extent the accounts of the Company and the Subsidiaries are
consolidated in reports furnished to its shareholders generally or to the
Commission).
15
(n) If the Company elects to rely upon Rule 462(b) under the
Securities Act, the Company will file a Rule 462(b) Registration Statement
with the Commission in compliance with Rule 462(b) by 10:00 P.M.,
Washington, D.C. time, on the date of this Agreement, and at the time of
filing either to pay to the Commission the filing fee for the Rule 462(b)
Registration Statement or to give irrevocable instructions for the payment
of such fee pursuant to Rule 111(b) under the Securities Act.
5. PAYMENT OF EXPENSES. The Company, as borrower under the Subordinated
Debentures, covenants and agrees with the Underwriters that, whether or not the
transactions contemplated by this Agreement are consummated, the Company will
pay or cause to be paid all expenses incident to the performance of its, and the
Trust's, obligations under this Agreement, including:
(a) the fees, disbursements and expenses of the Company's counsel,
accountants and other advisors;
(b) filing fees and all other expenses in connection with the
preparation, printing and filing of the Registration Statement, each
Preliminary Prospectus and the Prospectus and amendments and supplements
thereto and the mailing and delivering of copies thereof to the
Underwriters and dealers;
(c) the cost of preparing, printing or producing this Agreement, the
Operative Documents, closing documents (including any compilations thereof)
and such other documents as may be required in connection with the
offering, purchase, sale and delivery of the Preferred Securities;
(d) all expenses in connection with the qualification of the Preferred
Securities for offering and sale under state securities laws as provided in
Section 4(c), including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky survey and any supplement
thereto;
(e) the fees and expenses of any trustee appointed under any of the
Operative Documents, including the fees and disbursements of counsel for
such trustees in connection with the Operative Documents;
(f) all fees and expenses in connection with listing the Preferred
Securities and, if applicable, the Subordinated Debentures for quotation on
NASDAQ;
(g) the filing fees incident to, and the reasonable fees and
disbursements of counsel for the Underwriters in connection with, securing
any required review by the National Association of Securities Dealers, Inc.
("NASD") of the terms of the sale of the Preferred Securities, which are
estimated not to exceed $5,000;
(h) all fees and expenses in connection with the preparation, issuance
and delivery of the certificates representing the Preferred Securities to
the Underwriters, including any stock or other transfer taxes and any stamp
or other duties payable upon the sale, issuance or delivery of the
Preferred Securities to the Underwriters;
16
(i) the fees and expenses of any transfer agent or registrar for the
Preferred Securities;
(j) the fees and expenses of the Indenture Trustee, including the fees
and disbursements of counsel for the Indenture Trustee in connection with
the Indenture and the Subordinated Debentures;
(k) the fees and expenses of the Delaware Trustee and the Property
Trustee, including the fees and disbursements of counsel for the Delaware
Trustee and Property Trustee in connection with the Declaration and the
Certificate of Trust;
(l) the fees and expenses of the Guarantee Trustee;
(m) any fees and expenses in connection with the rating of the
Preferred Securities and the Subordinated Debentures; and
(n) the cost and charges of qualifying the Preferred Securities with
the DTC.
6. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The several obligations of
the Underwriters hereunder to purchase the Preferred Securities on the Closing
Date are subject to the accuracy of the representations and warranties of the
Offerors contained in Section 1(a) of this Agreement or in certificates of any
Trustee of the Trust, officer of the Company or any of its Subsidiaries
delivered pursuant to the provisions of this Agreement, to the performance by
the Offerors of their obligations hereunder and to the following additional
conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) under the Securities Act within the applicable time period
prescribed for such filing by the Rules and Regulations and in accordance
with Section 4(a); if the Company has elected to rely upon Rule 462(b)
under the Securities Act, the Rule 462(b) Registration Statement shall have
become effective by 10:00 P.M., Washington, D.C. time, on the date of this
Agreement; no stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceeding for
that purpose shall have been initiated or threatened by the Commission or
any state securities commission; and all requests for additional
information on the part of the Commission shall have been complied with to
your reasonable satisfaction.
(b) The representations and warranties of the Offerors contained
herein are true and correct on and as of the Closing Date as if made on and
as of the Closing Date and the Offerors shall have complied with all
agreements and all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date.
(c) (i) Neither the Company nor any Subsidiary shall have sustained
since the date of the latest audited financial statements included in the
Prospectus any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus, and (ii)
since the respective dates as of which information is given in the
Registration Statement and the Prospectus, (A) there shall not have been
any change in the capital stock or long-term debt of the Company or any
Subsidiary or (B) there shall not have been any material adverse change, or
any development
17
involving a prospective material adverse change, in or affecting the
general affairs, business, prospects, management, financial position,
stockholders' equity or results of operations of the Company and the
Subsidiaries, considered as one enterprise, the effect of which, in any
such case described in clause (i) or (ii), is in the judgment of the
Underwriters so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Preferred Securities being delivered at such Closing Date on the terms and
in the manner contemplated in the Prospectus.
(d) The Underwriters shall have received on and as of the Closing
Date, a certificate of two executive officers of the Company, at least one
of whom has specific knowledge about the Company's financial matters,
satisfactory to the Underwriters, to the effect (1) set forth in Section
6(b) (with respect to the respective representations, warranties,
agreements and conditions of the Company), (2) that none of the situations
set forth in clause (i) or (ii) of Section 6(c) shall have occurred and (3)
that no stop order suspending the effectiveness of the Registration
Statement has been issued and to the knowledge of the Company, no
proceedings for that purpose have been instituted or are pending or
contemplated by the Commission.
(e) The Underwriters shall have received on and as of the Closing
Date, a certificate of an administrative trustee of the Trust satisfactory
to the Underwriters, to the effect (1) set forth in Section 6(b) (with
respect to the respective representations, warranties, agreements and
conditions of the Trust), (2) that none of the situations set forth in
clause (i) or (ii) of Section 6(c), substituting the Trust for the Company,
shall have occurred and (3) that no stop order suspending the effectiveness
of the Registration Statement has been issued and to the knowledge of the
Trust, no proceedings for that purpose have been instituted or are pending
or contemplated by the Commission.
(f) On the Closing Date, each of Elias, Matz, Xxxxxxx & Xxxxxxx,
L.L.P. and Xxxxxxxx, Xxxxxx and Finger, P.A., special counsel for the
Company, shall have furnished to the Underwriters their written opinion,
dated the Closing Date, in form and substance satisfactory to counsel for
the Underwriters. Such counsel may state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper,
upon certificates of Trustees of the Trust, officers of the Company and its
Subsidiaries and certificates of public officials.
(g) On the Closing Date, the Underwriters shall have received the
opinion, dated as of the Closing Date, of Xxxxx, Xxxxxx & Xxxxxx L.L.P.,
counsel to The Bank of New York, as Property Trustee under the Declaration,
Guarantee Trustee under the Preferred Securities Guarantee Agreement and
Debenture Trustee under the Indenture, in form and substance reasonably
satisfactory to counsel for the Underwriters.
(h) On the Closing Date, the Underwriters shall have received an
opinion, dated as of the Closing Date of Elias, Matz, Xxxxxxx & Xxxxxxx,
L.L.P., Washington, D.C., special tax counsel to the Offerors, in form and
substance reasonably satisfactory to counsel for the Underwriters and
substantially to the effect that (i) the Trust will be classified for
United States federal income tax purposes as a grantor trust and not as an
association taxable as a corporation, and (ii) the statements set forth in
the Prospectus under the caption "Certain Federal Income Tax Consequences"
constitute a fair and accurate summary of the anticipated United
18
States federal income tax consequences of the ownership and disposition of
the Preferred Securities under current law. Such opinion may be conditioned
on, among other things, the initial and continuing accuracy of the facts,
financial and other information, covenants and representations set forth in
certificates of officers of the Company and other documents deemed
necessary for such opinion.
(i) On the Closing Date, Xxxxxxxxx & Xxxxxxxxx, L.L.P., special
counsel for the Underwriters, shall have furnished to the Underwriters
their opinion dated the Closing Date in form and substance reasonably
satisfactory to the Underwriters. Such counsel may state that, insofar as
such opinion involves factual matters, they have relied, to the extent they
deem proper, upon certificates of Trustees of the Trust, officers of the
Company and its Subsidiaries and certificates of public officials.
(j) On the effective date of the Registration Statement and, if
applicable, the effective date of the most recently filed post-effective
amendment to the Registration Statement, KPMG LLP shall have furnished to
the Representatives a letter, dated the date of delivery thereof, in form
and substance satisfactory to the Underwriters, containing statements and
information of the type customarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and
the Prospectus.
(k) On the Closing Date, the Underwriters shall have received from
KPMG LLP a letter, dated the Closing Date to the effect that they reaffirm
the statements made in the letter or letters furnished pursuant to Section
6(j), except that the specified date referred to shall be a date not more
than three business days prior to the Closing Date.
(l) The Preferred Securities to be delivered on the Closing Date shall
have been approved for quotation on NASDAQ, subject to official notice of
issuance.
(m) The NASD shall have confirmed that it has not raised any objection
with respect to the fairness and reasonableness of the underwriting terms
and conditions.
(n) On or prior to the Closing Date, the Company and the Trust shall
have furnished to the Underwriters such further information, certificates
and documents as the Underwriters shall reasonably request.
If any condition specified in this Section 6 shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated, subject
to the provisions of Section 11, by the Underwriters by notice to the Offerors
at any time at or prior to the Closing Date, and such termination shall be
without liability of any party to any other party, except as provided in Section
11.
7. INDEMNIFICATION.
(a) The Offerors agree to jointly and severally indemnify and hold
harmless: (1) each of the Underwriters; (2) each person, if any, who
controls (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) any Underwriter (each such
19
person, a "controlling person"); and (3) the respective partners,
directors, officers, employees and agents of any Underwriter or any
controlling person as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment or supplement thereto), or
the omission or alleged omission therefrom of a material fact required
to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading or arising out of any untrue statement of a material
fact contained in any preliminary prospectus or Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid by each such indemnified person in settlement of any litigation,
or any 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 referred to in clause (i) of this
Section 7(a), or any such alleged untrue statement or omission
referred to in clause (i) of this Section 7(a); provided that (subject
to Section 7(c) below) any such settlement is effected with the
written consent of the Offerors; and
(iii) against any and all expense whatsoever, as incurred
(including subject to Section 7(b), the fees and disbursements of
counsel chosen by Xxxx Xxxxx), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue
statement or omission referred to in clause (i) of this Section 7(a),
or any such alleged untrue statement or omission referred to in clause
(i) of this Section 7(a), to the extent that any such expense is not
paid under (i) or (ii) above; provided, however, that the indemnity
agreement set forth in this Section 7(a) shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with written information
furnished to the Offerors by any Underwriter through Xxxx Xxxxx and
its counsel expressly for use in the Registration Statement (or any
supplement or amendment thereto), or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto). The foregoing
indemnity with respect to any untrue statement or alleged untrue
statement contained in, or omission or alleged omission from, a
preliminary prospectus shall not inure to the benefit of the
Underwriter (or any person controlling such Underwriter) from whom the
person asserting any loss, liability, claim, damage or expense
purchases any of the Preferred Securities which are the subject
thereof if (A) the Company shall sustain the burden of proving that
such person was not sent or given a copy of the Prospectus (or the
Prospectus as amended or supplemented) at or prior to the written
confirmation of the sale of such Preferred Securities to such person,
and (B) the untrue statement contained in or omission from a
preliminary prospectus was corrected in the Prospectus (or the
20
Prospectus as amended or supplemented) and the Company has previously
furnished copies thereof to such Underwriter.
(b) Each Underwriter severally and not jointly agrees to indemnify and
hold harmless the Company, its directors, officers, the Trust, each of the
Trustees and each person, if any, who controls the Trust, any of the
Trustees or the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in Section
7(a) above, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or any preliminary
prospectus, or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Offerors by such Underwriter through Xxxx Xxxxx (or its counsel) expressly
for use in the Registration Statement (or any amendment thereto) or such
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(c) Promptly after receipt by an indemnified party under Section 7(a)
or 7(b) of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such Section, notify each party against whom indemnification is
to be sought in writing of the commencement thereof (but the failure to so
notify an indemnifying party shall not relieve it from any liability which
it may have under this Section 7 to the extent it is not materially
prejudiced as a result thereof). In case any such action is brought against
any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein, and jointly with any other indemnifying party
similarly notified, to the extent it may elect by written notice delivered
to the indemnified party promptly after receiving the aforesaid notice from
such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnified
party). Notwithstanding the foregoing, the indemnified party or parties
shall have the right to employ its or their own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel
shall have been authorized in writing by one of the indemnifying parties in
connection with the defense of such action, (ii) the indemnifying parties
shall not have employed counsel to have charge of the defense of such
action within a reasonable time after notice of commencement of the action,
or (iii) such indemnified party or parties shall have received an opinion
of their counsel that there may be defenses available to it or them which
are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have
the right to direct the defense of such action on behalf of the indemnified
party or parties), in any of which events such fees and expenses shall be
borne by the indemnifying parties. In no event shall the indemnifying
parties be liable for fees and expenses of more than one counsel (in
addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, which counsel, in the event of
indemnified parties under Section 7(a), shall be selected by Xxxx Xxxxx. No
indemnifying party shall, without the written consent of the indemnified
party, effect the settlement or compromise of, or consent to the entry of
any judgment with respect to, any pending or threatened action or claim in
respect of which
21
indemnification or contribution may be sought under this Section 7 or
Section 8 of this Agreement (whether or not the indemnified party is an
actual or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the
indemnified party from all liability arising out of such action or claim
and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.
8. CONTRIBUTION. If the indemnification provided for in Section 7 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 7(a) or 7(b) in respect of any losses, liabilities, claims, damages or
expenses (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, liabilities, claims, damages or
expenses (or actions in respect thereof) in such proportion as is appropriate to
reflect the relative benefits received by the Offerors on the one hand and the
Underwriters on the other from the offering of the Preferred Securities pursuant
to this Agreement. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law, 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 Offerors on the one hand and the Underwriters
on the other in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses (or actions in respect
thereof), as well as any other relevant equitable considerations.
The relative benefits received by the Offerors on the one hand and the
Underwriters on the other in connection with the offering of the Preferred
Securities shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Offerors
and the total commissions received by the Underwriters pursuant to Section 2(a)
of this Agreement bear to the aggregate offering price of the Preferred
Securities. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Offerors 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 Offerors and the Underwriters agree that it would not be just and
equitable if contributions 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 in this Section 8. The amount paid or
payable by an indemnified party as a result of the losses, liabilities, claims,
damages or expenses (or actions in respect thereof) referred to above in this
Section 8 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim.
Notwithstanding the provisions of this Section 8, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Preferred Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.
22
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. The
Underwriters' obligations in this Section 8 to contribute are several in
proportion to their respective underwriting obligations set forth against their
respective names in Schedule I to this Agreement and not joint.
The obligations of the parties to this Agreements contained in this Section
8 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.
9. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If any Underwriter or
Underwriters default in its or their obligations to purchase Preferred
Securities hereunder on the Closing Date and the aggregate number of Preferred
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed 10% of the total number of Preferred Securities that
the Underwriters are obligated to purchase on the Closing Date, the Underwriters
may make arrangements satisfactory to the Offerors for the purchase of such
Preferred Securities by other persons, including any of the Underwriters, but if
no such arrangements are made by the Closing Date, the non-defaulting
Underwriters shall be obligated severally, in proportion to their respective
commitments hereunder, to purchase the Preferred Securities that such defaulting
Underwriters agreed but failed to purchase on the Closing Date. If any
Underwriter or Underwriters so default and the aggregate number of Preferred
Securities with respect to which such default or defaults occur exceeds 10% of
the total number of Preferred Securities that the Underwriters are obligated to
purchase on the Closing Date, and arrangements satisfactory to the Underwriters
and the Offerors for the purchase of such Preferred Securities by other persons
are not made within 36 hours after such default, this Agreement will terminate,
subject to the provisions of Section 11, without liability on the part of any
non-defaulting Underwriter or the Offerors, except as provided in Section 10.
Nothing herein will relieve a defaulting Underwriter from liability for its
default.
In the event of any such default which does not result in a termination of
this Agreement, either the Underwriters or the Offerors shall have the right to
postpone the Closing Date for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 9.
10. TERMINATION OF AGREEMENT.
(a) Notwithstanding anything herein contained, this Agreement may be
terminated, subject to the provisions of Section 11, in the absolute
discretion of the Underwriters, by notice given to the Company, if after
the execution and delivery of this Agreement and prior to the Closing Date
(a) trading generally on the American Stock Exchange or the New York Stock
Exchange or in the National Association of Securities Dealers Automated
Quotations National Market shall have been suspended or materially limited,
or minimum or maximum prices for trading have been fixed, or maximum ranges
for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the NASD or any other governmental
authority, (b) trading of any securities of or guaranteed by the Company or
any Subsidiary shall have been suspended on any exchange or in any
over-the-counter market, (c) a
23
general moratorium on commercial banking activities in New York or Texas
shall have been declared by Federal, State of New York or State of Texas
authorities or a new restriction materially adversely affecting the
distribution of the Preferred Securities shall have become effective, or
(d) there has occurred any material adverse change in the financial markets
in the United States or the international financial markets, any outbreak
of hostilities or escalation thereof or other calamity or crisis or any
change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Underwriters,
impracticable to market the Preferred Securities to be delivered on the
Closing Date or to enforce contracts for the sale of the Preferred
Securities.
(b) If this Agreement is terminated pursuant to this Section 10, such
termination will be without liability of any party to any other party
except as provided in Section 11 hereof.
11. EFFECT OF TERMINATION. The respective indemnities, agreements,
representations, warranties and other statements of the Trust or its trustees,
the Company or its officers and of the several Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of any Underwriter, the Trust, the Company or any of their respective
representatives, trustees, officers or directors or any controlling person, and
will survive delivery of and payment for the Preferred Securities. If this
Agreement is terminated pursuant to Sections 6 or 10 or if for any reason the
purchase of any of the Preferred Securities by the Underwriters is not
consummated, the Offerors shall remain responsible for the expenses to be paid
or reimbursed by them pursuant to Sections 5 and 11, and Sections 7 and 8 of
this Agreement shall remain in effect and, if any Preferred Securities have been
purchased hereunder the representations and warranties in Section 1 and all
obligations under Section 4 shall also remain in effect.
If this Agreement shall be terminated by the Underwriters, or any of them,
in accordance with Section 6, Section 10 or otherwise because of any failure or
refusal on the part of the Offerors to comply with the terms or to fulfill any
of the conditions of this Agreement, or if for any reason any of the Offerors
shall be unable to perform its obligations under this Agreement or any condition
of the Underwriters' obligations cannot be fulfilled, the Offerors agree to
reimburse the Underwriters or such Underwriters as have so terminated this
Agreement with respect to themselves, severally, for all of their accountable
out-of-pocket expenses, including all the reasonable fees and disbursements of
Xxxxxxxxx & Xxxxxxxxx, L.L.P., counsel for the Underwriters, reasonably incurred
by the Underwriters in connection with this Agreement or the offering
contemplated hereunder not to exceed $50,000.
12. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the Offerors and the Underwriters, the officers and
directors of the Company and the Trustees of the Trust referred to herein, any
controlling persons referred to herein and their respective heirs, personal
representatives, successors and assigns. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person, firm or
corporation any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision herein contained. No purchaser of Preferred
Securities from any Underwriter shall be deemed to be a successor or assign by
reason merely of such purchase.
24
13. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given upon receipt thereof by the
recipient if mailed or transmitted by any standard form of telecommunication.
Notices to the Underwriters shall be directed to Xxxx Xxxxx Xxxx Xxxxxx,
Incorporated, 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000 (facsimile
no.: 410-454-5299); Attention: Xxxx X. Xxxxxxx, Managing Director, with a copy
to Bracewell & Xxxxxxxxx, L.L.P., 000 Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxx 00000 (facsimile no.: 713-221-1212); Attention: Xxxxxxx X. Xxxxxx XX.
Notices to the Offerors shall be given to them at Coastal Bancorp, Inc., 0000
Xxxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000 (facsimile no.: 713-435-5106);
Attention: Xxxxxxxxx X. Xxxxx, Chief Financial Officer, with a copy to Elias,
Matz, Xxxxxxx & Xxxxxxx L.L.P., 000 00xx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000
(facsimile no.: 202-347-2172); Attention: Xxxxxxx X. Xxxxxxx.
14. COUNTERPARTS. This Agreement may be signed in counterparts, each of
which shall be an original and all of which together shall constitute one and
the same instrument.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO SUCH STATE'S
PRINCIPLES OF CONFLICTS OF LAWS.
16. EFFECT OF HEADINGS. The Article and Section headings in this Agreement
are for convenience only and shall not affect the construction of this
Agreement.
[Signature Page Follows]
25
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument will become a binding agreement between the Offerors and the
Underwriters in accordance with its terms.
Very truly yours,
COASTAL BANCORP, INC.
By: _________________________________
Name:
Title:
COASTAL CAPITAL TRUST I
By: __________________________________
Name: Xxxxxx X. Xxxxx
Title: Administrative Trustee
By: __________________________________
Name: Xxxxxxxxx X. Xxxxx
Title: Administrative Trustee
By: __________________________________
Name: Xxxxx X. Xxxxxxx
Title: Administrative Trustee
Accepted as of the date hereof:
XXXX XXXXX XXXX XXXXXX, INCORPORATED
For itself and as Representatives of the other
Underwriters named in Schedule II hereto
By: __________________________________
Name: Xxxx X. Xxxxxxx
Title: Managing Director
26
SCHEDULE I
LIST OF SUBSIDIARIES
Coastal Banc Holding Company, Inc.
Coastal Banc ssb
Coastal Banc Capital Corp.
Coastal Banc Insurance Agency, Inc.
Coastal Banc Financial Corp.
Coastal Banc Investment Corp. (inactive)
27
SCHEDULE II
Number of Preferred
Underwriter Securities to be Purchased
----------- --------------------------
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated......................
Xxxxxx, Xxxxxxxx & Company, Incorporated..................
Total:........................................... _______________
28
