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EXHIBIT 1.4
UNDERWRITING AGREEMENT
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800,000 Shares
XXXXXXXXX MORTGAGE ASSET CORPORATION
Common Stock
UNDERWRITING AGREEMENT
May 14, 1997
SUTRO & CO. INCORPORATED
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Xxxxxxxxx Mortgage Asset Corporation, a Maryland corporation
(the "Company") proposes to sell an aggregate of 800,000 shares (the "Firm
Shares") of the Company's Common Stock, $0.01 par value per share (the "Common
Stock"), to you (hereinafter, the "Underwriter"). The Company has also agreed
to grant to the Underwriter an option (the "Option") to purchase up to an
additional 120,000 shares of Common Stock (the "Option Shares") on the terms
and for the purposes set forth in Section 1(b). The Firm Shares and the Option
Shares are hereinafter collectively referred to as the "Shares."
The initial public offering price per share for the Shares and
the purchase price per share for the Shares to be paid by the Underwriter shall
be agreed upon by the Company and the Underwriter, and such agreement shall be
set forth in a separate written instrument substantially in the form of Exhibit
A hereto (the "Price Determination Agreement"). The Price Determination
Agreement may take the form of an exchange of any standard form of written
telecommunication among the Company and the Underwriter and shall specify such
applicable information as is indicated in Exhibit A hereto. The offering of
the Shares will be governed by this Agreement, as supplemented by the Price
Determination Agreement. From and after the date of the execution and delivery
of the Price Determination Agreement, this Agreement shall be deemed to
incorporate, and, unless the context otherwise indicates, all references
contained herein to "this Agreement" and to the phrase "herein" shall be deemed
to include the Price Determination Agreement.
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The Company confirms its agreement with the Underwriter as
follows:
1. Agreement to Sell and Purchase.
(a) On the basis of the representations,
warranties and agreements of the Company herein contained and subject to all
the terms and conditions of this Agreement, (i) the Company agrees to sell to
the Underwriter and (ii) the Underwriter agrees to purchase from the Company,
at the purchase price per share for the Firm Shares to be agreed upon by the
Underwriter and the Company in accordance with Section 1(c) and set forth in
the Price Determination Agreement, the Firm Shares.
(b) Subject to all the terms and conditions of
this Agreement, the Company grants the Option to the Underwriter to purchase up
to 120,000 Option Shares from the Company at the same price per share as the
Underwriter shall pay for the Firm Shares. The option may be exercised only to
cover overallotments in the sale of the Firm Shares by the Underwriter and may
be exercised in whole or in part at any time (but not more than once) on or
before the 30th day after the date of this Agreement (or, if the Company has
elected to rely on Rule 430A, on or before the 30th day after the date of the
Price Determination Agreement), upon written or telegraphic notice (the "Option
Shares Notice") by the Underwriter to the Company no later than 12:00 noon, New
York City time, at least two and no more than five business days before the
date specified for closing in the Option Shares Notice (the "Option Closing
Date") setting forth the aggregate number of Option Shares to be purchased and
the time and date for such purchase. On the Option Closing Date, the Company
will issue and sell to the Underwriter the number of Option Shares set forth in
the Option Shares Notice.
(c) The initial public offering price per share
for the Firm Shares and the purchase price per share for the Firm Shares to be
paid by the Underwriter shall be agreed upon and set forth in the Price
Determination Agreement. In the event such price has not been agreed upon and
the Price Determination Agreement has not been executed by the close of
business on the fourteenth business day following the date of this Agreement,
this Agreement shall terminate forthwith, without liability of any party to any
other party except that Section 6 shall remain in effect.
2. Delivery and Payment.
Delivery of the Firm Shares shall be made to the Underwriter
against payment of the purchase price by federal wire transfer to the Company.
Such payments shall be made on the third business day (or, if the Firm Shares
are priced as contemplated by Rule 15c6-1(c) of the Securities Exchange Act of
1934 (the "Exchange Act") after 4:30 p.m., New York City time,
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the fourth business day) following the date of this Agreement or, if the
Company has elected to rely on Rule 430A, the third or fourth business day, as
applicable, after the date on which the first bona fide offering of the Shares
to the public is made by the Underwriter or at such time on such other date as
may be agreed upon by the Company and the Underwriter, but in no event later
than 10 days after such date (such date is hereinafter referred to as the
"Closing Date").
To the extent the Option is exercised, delivery of the Option
Shares against payment by the Underwriter (in the manner specified above) will
take place at the offices specified above for the Closing Date at the time and
date (which may be the Closing Date) specified in the Option Shares Notice.
If the Underwriter requests that the Shares be delivered in
certificated form, then certificates representing the Shares shall be in
definitive form and shall be registered in such names and in such denominations
as the Underwriter shall request at least two business days prior to the
Closing Date or the Option Closing Date, as the case may be, by written notice
to the Company. For the purpose of expediting the checking and packaging of
certificates for the Shares, the Company agrees to make such certificates
available for inspection at least 24 hours prior to the Closing Date or the
Option Closing Date, as the case may be.
The cost of original issue tax stamps, if any, in connection
with the issuance and delivery of the Firm Shares and Option Shares by the
Company to the Underwriter shall be borne by the Company. The Company will pay
and save the Underwriter and any subsequent holder of the Shares harmless from
any and all liabilities with respect to or resulting from any failure or delay
in paying Federal and state stamp and other transfer taxes, if any, which may
be payable or determined to be payable in connection with the original issuance
or sale to the Underwriter of the Firm Shares and Option Shares.
3. Representations and Warranties of the Company and the
Manager.
The Company and, where applicable, the Manager, represents,
warrants and covenants to each Underwriter that:
(a) The Company meets the requirements for use of
Form S-3 and a registration statement (Registration No. 333- 16799) on Form S-3
relating to the Shares, including a preliminary prospectus (the "Base
Prospectus") and such amendments to such registration statement as may have
been required to the date of this Agreement, has been prepared by the Company
under the provisions of the Securities Act of 1933, as amended (the "Act"), and
the rules and regulations (collectively referred to as the "Rules and
Regulations") of the Securities and
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Exchange Commission (the "Commission") thereunder, and has been filed with the
Commission and has become effective. Copies of such registration statement and
amendments and of each related Base Prospectus have been delivered to the
Underwriter. The term "Registration Statement" means the registration
statement as amended at the time it became effective (the "Effective Date"),
including financial statements and all exhibits and any information deemed to
be included by Rule 430 or Rule 430A of the Rules and Regulations ("Rule 430A")
or Rule 434 of the Rules and Regulations. The term "Prospectus" means
collectively the Base Prospectus together with any preliminary prospectus
supplement or prospectus supplement (the "Prospectus Supplement") as first
filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations.
Any reference herein to the Registration Statement, the Base Prospectus, any
prospectus supplement or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Item 12 of Form S-3
which were filed under the Exchange Act on or before the Effective Date or the
date of such Base Prospectus, any prospectus supplement or the Prospectus, as
the case may be. Any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Registration Statement, the Base Prospectus,
any prospectus supplement or the Prospectus shall be deemed to refer to and
include the filing of any document under the Exchange Act after the Effective
Date, or the date of any Base Prospectus, any prospectus supplement or the
Prospectus, as the case may be, and deemed to be incorporated therein by
reference.
(b) On the Effective Date, the date the
Prospectus is first filed with the Commission pursuant to Rule 424(b) (if
required), at all times subsequent to and including the Closing Date and, if
later, the Option Closing Date and when any post-effective amendment to the
Registration Statement becomes effective or any amendment or supplement to the
Prospectus is filed with the Commission, the Registration Statement and the
Prospectus (as amended or as supplemented if the Company shall have filed with
the Commission any amendment or supplement thereto), including the financial
statements included or incorporated by reference in the Prospectus, did or will
comply with all applicable provisions of the Act, the Exchange Act, the rules
and regulations thereunder (the "Exchange Act Rules and Regulations") and the
Rules and Regulations and will contain all statements required to be stated
therein in accordance with the Act, the Exchange Act, the Exchange Act Rules
and Regulations and the Rules and Regulations. On the Effective Date and when
any post-effective amendment to the Registration Statement becomes effective,
no part of the Registration Statement or any such amendment did or will contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. At the Effective Date, the date the Prospectus or any
amendment or supplement to the
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Prospectus is filed with the Commission and at the Closing Date and, if later,
the Option Closing Date, the Prospectus did not or will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading. The foregoing representations and warranties in this
Section 3(b) do not apply to any statements or omissions made in reliance on
and in conformity with information relating to the Underwriter furnished in
writing to the Company by the Underwriter specifically for inclusion in the
Registration Statement or Prospectus or any amendment or supplement thereto.
For all purposes of this Agreement, the amounts of the selling concession and
reallowance set forth in the Prospectus constitute the only information
relating to the Underwriter furnished in writing to the Company by the
Underwriter specifically for inclusion in the Prospectus Supplement or the
Registration Statement. The Company has not distributed any offering material
in connection with the offering or sale of the Shares other than the
Registration Statement, the preliminary prospectus, the Prospectus, the
preliminary prospectus supplement, the prospectus supplement or any other
materials, if any, permitted by the Act.
(c) The documents which are incorporated by
reference in the preliminary prospectus and the Prospectus or from which
information is so incorporated by reference, when they become effective or were
filed with the Commission, as the case may be, complied in all material
respects with the requirements of the Act or the Exchange Act, as applicable,
the Exchange Act Rules and Regulations and the Rules and Regulations; and any
documents so filed and incorporated by reference subsequent to the Effective
Date shall, when they are filed with the Commission, conform in all material
respects with the requirements of the Act and the Exchange Act, as applicable,
the Exchange Act Rules and Regulations and the Rules and Regulations.
(d) The Company and Xxxxxxxxx Mortgage Advisory
Corporation (the "Manager") are, and at the Closing Date will be, corporations
duly organized, validly existing and in good standing under the laws of their
jurisdiction of incorporation. The Company and the Manager have, and at the
Closing Date will have, full power and authority to conduct all the activities
conducted by them, to own or lease all the assets owned or leased by them and
to conduct their businesses as described in the Registration Statement and the
Prospectus. The Company and the Manager are, and at the Closing Date will be,
duly licensed or qualified to do business and in good standing as foreign
corporations in all jurisdictions in which the nature of the activities
conducted by them or the character of the assets owned or leased by them make
such licensing or qualification necessary. Except as disclosed in the
Registration Statement, the Company and the Manager have no subsidiaries and do
not own, and at the Closing Date will not own, directly or indirectly, any
shares of stock or any other equity or long-term debt securities of any
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corporation or have any equity interest in any firm, partnership, joint
venture, association or other entity. Complete and correct copies of the
certificates of incorporation and of the by-laws of the Company and the Manager
and all amendments thereto have been delivered to the Underwriter, and no
changes therein will be made subsequent to the date hereof and prior to the
Closing Date or, if later, the Option Closing Date.
(e) The outstanding shares of Common Stock have
been, and the Shares to be issued and sold by the Company upon such issuance
will be, duly authorized, validly issued, fully paid and nonassessable and will
not be subject to any preemptive or similar right. The description of the
Common Stock in the Registration Statement and the Prospectus is, and at the
Closing Date will be, complete and accurate in all respects. Except as set
forth in the Prospectus, the Company does not have outstanding, and at the
Closing Date will not have outstanding, any options to purchase, or any rights
or warrants to subscribe for, or any securities or obligations convertible
into, or any contracts or commitments to issue or sell, any shares of Common
Stock, any shares of capital stock of any Subsidiary or any such warrants,
convertible securities or obligations.
(f) The financial statements and schedules
included or incorporated by reference in the Registration Statement or the
Prospectus present fairly the financial condition of the Company as of the
respective dates thereof and the results of operations and cash flows of the
Company for the respective periods covered thereby, all in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the entire period involved, except as otherwise disclosed in the
Prospectus. Any pro forma financial statements and any other pro forma
financial information included in the Registration Statement or the Prospectus
(i) present fairly in all material respects the information shown therein, (ii)
have been prepared in accordance with the Commission's rules and guidelines
with respect to pro forma financial statements and (iii) have been properly
computed on the bases described therein. The assumptions used in the
preparation of the pro forma financial statements and other pro forma financial
information incorporated by reference in the Registration Statement or the
Prospectus are reasonable and the adjustments used therein are appropriate to
give effect to the transactions or circumstances referred to therein. No other
financial statements or schedules of the Company are required by the Act, the
Exchange Act or the Rules and Regulations to be incorporated by reference in
the Registration Statement or the Prospectus. McGladrey & Xxxxxx, LLP (the
"Accountants) who have reported on such financial statements and schedules, are
independent accountants with respect to the Company as required by the Act and
the Rules and Regulations. The statements included in the Registration
Statement with respect to the Accountants pursuant to Rule 509 of Regulation
S-K of the Rules and Regulations are true and correct
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in all material respects. The selected financial data set forth in the
Prospectus under the captions "Capitalization," and "Selected Financial Data"
fairly present the information set forth therein on the basis stated in the
Registration Statement.
(g) The Company and the Manager maintain a system
of internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access
to assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(h) Subsequent to the respective dates as of
which information is given in the Registration Statement and the Prospectus and
prior to the Closing Date, except as set forth in or contemplated by the
Registration Statement and the Prospectus: (i) there has not been and will not
have been any change in the capitalization of the Company or the Manager, or in
the business, properties, business prospects, condition (financial or
otherwise) or results of operations of the Company or the Manager, arising for
any reason whatsoever; (ii) the Company and the Manager have not incurred nor
will they incur any material liabilities or obligations, direct or contingent,
nor have they entered into nor will they enter into any material verbal or
written agreements or other transactions other than pursuant to this Agreement
and the transactions referred to herein; (iii) the Company and the Manager have
not and will not have paid or declared any dividends or other distributions of
any kind on any class of capital stock, and the Company and the Manager are not
in default in the payment of principal or interest on any outstanding debt
obligations; (iv) the Company and the Manager have not sustained any material
loss or interference with its business or properties from fire, flood,
windstorm, accident or other calamity, whether or not covered by insurance; and
(v) there have not been any material adverse change in the condition (financial
or otherwise), business, properties, results of operations or prospects of the
Company or the Manager.
(i) The Company is not an "investment company" or
an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act
of 1940, as amended.
(j) Except as set forth in the Registration
Statement and the Prospectus, there are no legal or governmental actions, suits
or proceedings pending or threatened against or affecting the Company, the
Manager or the officers of the Company
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or the Manager in their capacity as such, or of which property owned or leased
by the Company or the Manager is or may be the subject, or related to
environmental or discrimination matters, which actions, suits or proceedings
might, individually or in the aggregate, prevent or adversely affect the
transactions contemplated by this Agreement or result in a material adverse
change in the condition (financial or otherwise), properties, business, results
of operations or prospects of the Company or the Manager; and no labor
disturbance by the employees of the Company or the Manager exists or is
imminent which might be expected to affect adversely such condition,
properties, business, results of operations or prospects. The Company and the
Manager are not a party or subject to the provisions of any material
injunction, judgment, decree or order of any court, regulatory body,
administrative agency or other governmental body.
(k) The Company and the Manager have, and at the
Closing Date will have, (i) all governmental licenses, permits, consents,
orders, approvals and other authorizations necessary to carry on their business
as contemplated in the Prospectus, (ii) complied in all respects with all laws,
regulations and orders applicable to it or its business and (iii) performed all
the obligations required to be performed by them, and are not, and at the
Closing Date will not be, in default, under any indenture, mortgage, deed of
trust, voting trust agreement, loan agreement, bond, debenture, note agreement,
lease, contract or other agreement or instrument (collectively, a "contract or
other agreement") to which they are a party or by which their property is bound
or affected. To the best knowledge of the Company and the Manager, no other
party under any contract or other agreement to which they are a party is in
default in any respect thereunder. The Company and the Manager are not, nor at
the Closing Date will be, in violation of any provision of their certificate of
incorporation or by-laws.
(l) The Company and the Manager are in compliance
with all applicable laws, rules and regulations of the jurisdictions in which
they are conducting business, including, without limitation, all applicable
local, state and federal environmental laws and regulations; except where
failure to be so in compliance would not materially adversely affect the
condition (financial or otherwise), business, results of operations or
prospects of the Company or the Manager.
(m) No consent, approval, authorization or order
of, or any filing or declaration with, any court or governmental agency or body
is required in connection with the authorization, issuance, transfer, sale or
delivery of the Shares by the Company, in connection with the execution,
delivery and performance of this Agreement by the Company or in connection with
the taking by the Company of any action contemplated hereby, except such as
have been obtained under the Act or the Rules and
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Regulations and such as may be required under state securities or Blue Sky laws
or the bylaws and rules of the National Association of Securities Dealers, Inc.
(the "NASD") in connection with the purchase and distribution by the
Underwriter of the Shares to be sold by the Company.
(n) The Company has full corporate power and
authority to enter into this Agreement. This Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid and
binding agreement of the Company and is enforceable against the Company in
accordance with the terms hereof. The performance of this Agreement and the
consummation of the transactions contemplated hereby and the application of the
net proceeds from the offering and sale of the Shares to be sold by the Company
in the manner set forth in the Prospectus under "Use of Proceeds" will not
result in the creation or imposition of any lien, charge or encumbrance upon
any of the assets of the Company pursuant to the terms or provisions of, or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, or give any other party a right to terminate any of
its obligations under, or result in the acceleration of any obligation under,
the certificate of incorporation or by-laws of the Company, any contract or
other agreement to which the Company is a party or by which the Company or any
of its properties is bound or affected, or violate or conflict with any
judgment, ruling, decree, order, statute, rule or regulation of any court or
other governmental agency or body applicable to the business or properties of
the Company.
(o) The Company owns no real property. The
Company has good and marketable title to all the properties and assets
reflected as owned in the financial statements hereinafter described (or
elsewhere in the Prospectus), subject to no lien, mortgage, pledge, charge or
encumbrance of any kind except (i) those, if any, reflected in such financial
statements (or elsewhere in the Prospectus), or (ii) those which are not
material in amount and do not adversely affect the use made and proposed to be
made of such property by the Company. The Company holds its leased properties
under valid and binding leases, with such exceptions as are not materially
significant in relation to the business of the Company. Except as disclosed in
the Prospectus, the Company owns or leases all such properties as are necessary
to its operations as now conducted or as proposed to be conducted.
(p) There is no document or contract of a
character required to be described or incorporated by reference in the
Registration Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement which is not described, filed or incorporated by
reference as required. All such contracts to which the Company or the Manager
is a party have been duly authorized, executed and delivered by the Company or
the Manager, constitute valid and binding agreements of the
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Company or the Manager and are enforceable against the Company or the Manager
in accordance with the terms thereof.
(q) No statement, representation, warranty or
covenant made by the Company in this Agreement or made in any certificate or
document required by this Agreement to be delivered to the Representatives was
or will be, when made, inaccurate, untrue or incorrect.
(r) Neither the Company, the Manager nor any of
their directors, officers or controlling persons have taken, directly or
indirectly, any action intended, or which might reasonably be expected, to
cause or result, under the Act or otherwise, in, or which has constituted,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
(s) No holder of securities of the Company has
rights to the registration of any securities of the Company because of the
filing of the Registration Statement.
(t) Prior to the Closing Date, the Shares will be
duly authorized for listing, subject to official notice of issuance, on the New
York Stock Exchange.
(u) The Company has all necessary trademarks,
trade names, patent rights, mask works, copyrights, licenses, approvals and
governmental authorizations to conduct its business as now conducted or
proposed to be conducted; the expiration of any trademarks, trade names, patent
rights, mask works, copyrights, licenses, approvals or governmental
authorizations would not have a material adverse effect on the condition
(financial or otherwise), business, results of operations or prospects of the
Company; and the Company has no knowledge of any material infringement by it of
trademark, trade name rights, patent rights, mask works, copyrights, licenses,
trade secret or other similar rights of others, and there is no claim being
made against the Company regarding trademark, trade name, patent, mask work,
copyright, license, trade secret or other infringement which could have a
material adverse effect on the condition (financial or otherwise), business,
results of operations or prospects of the Company.
(v) Neither the Company, the Manager nor, to the
Company's or Manager's knowledge, any employee or agent of the Company or
Manager have made any payment of funds of the Company or Manager or received or
retained any funds in violation of any law, rule or regulation or of a
character required to be disclosed in the Prospectus.
(w) The Company and the Manager have filed all
necessary federal, state and foreign income and franchise tax returns and has
paid all taxes shown as due thereon; and the
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Company and the Manager have no knowledge of any tax deficiency which has been
or might be asserted or threatened against the Company or the Manager which
could materially and adversely affect the business, operations or properties of
the Company or the Manager.
(x) Neither the Company, the Manager nor to the
knowledge of the Company or the Manager any officers, directors, employees or
agents acting on behalf of the Company has at any time (i) made any
contributions to any candidate for political office in violation of law, or
failed to disclose fully any contributions to any candidate for political
office in accordance with any applicable statute, rule, regulation or ordinance
requiring such disclosure, (ii) made any payment to any local, state, federal
or foreign governmental officer or official, or other person charged with
similar public or quasi-public duties, other than payments required or allowed
by applicable law, (iii) made any payment outside the ordinary course of
business to any purchasing or selling agent or person charged with similar
duties of any entity to which the Company sells or from which the Company buys
products for the purpose of influencing such agent or person to buy products
from or sell products to the Company, or (iv) except as described in the
Prospectus, engaged in any transaction, maintained any bank account or used any
corporate funds except for transactions, bank accounts and funds which have
been and are reflected in the normally maintained books and records of the
Company.
(y) As of the Closing Date and, if later, the
Option Closing Date, the Company and the Manager shall be insured by insurers
of recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the business in which they propose
to engage as described in the Prospectus; the Company and the Manager have not
been refused any insurance coverage sought or applied for; and the Company and
the Manager have no reason to believe that they will not be able to renew their
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue their
proposed business at a cost that would not result in a material adverse effect.
(z) As of the Closing Date and, if later, the
Option Closing Date, the Company shall be qualified as a real estate investment
trust ("REIT") under Sections 856 through 860 of the Internal Revenue Code of
1986, as amended (the "Code"), and intends to operate in a manner so as to
continue to remain so qualified.
(aa) Neither the Company nor the Manager will be a
"broker" within the meaning of Section 3(a)(4) of the Exchange Act or a
"dealer" within the meaning of Section 3(a)(5) of the Exchange Act or required
to be registered pursuant to Section 15(a) of the Exchange Act.
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4. Covenants and Agreements of the Company.
The Company covenants and agrees with the Underwriter
as follows:
(a) The Company will cause the Prospectus to be
filed as required by Section 3(a) hereof (but only if the Underwriter has not
reasonably objected thereto by notice to the Company after having been
furnished a copy a reasonable time prior to filing) and will notify the
Underwriter promptly of such filing; it will notify the Underwriter promptly of
the time when any subsequent amendment to the Registration Statement has become
effective or any supplement to the Prospectus has been filed and of any request
by the Commission for any amendment or supplement to the Registration Statement
or Prospectus or for additional information; it will prepare and file with the
Commission, promptly upon the Underwriter's request, any amendments or
supplements to the Registration Statement or Prospectus that, in the
Representatives' opinion, may be necessary or advisable in connection with the
distribution of the Shares by the Underwriter; and it will file no amendment or
supplement to the Registration Statement or Prospectus to which the Underwriter
shall reasonably object by notice to the Company after having been furnished a
copy at a reasonable time prior to the filing.
(b) The Company will advise the Underwriter,
promptly after it shall receive notice or obtain knowledge thereof, of the
issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement, of the suspension of the qualification of the
Shares for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceeding for any purpose; and it will promptly use its
best efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such a stop order should be issued.
(c) Within the time during which a Prospectus
relating to the Shares is required to be delivered under the Act, the Company
will comply with all requirements imposed upon it by the Act and by the Rules
and Regulations, as from time to time in force, so far as necessary to permit
the continuance of sales of or dealings in the Shares as contemplated by the
provisions hereof and the Prospectus. If during such period any event occurs
as a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances then
existing, not misleading, or if during such period it is necessary to amend or
supplement the Registration Statement or Prospectus to comply with the Act, the
Company will promptly notify the Underwriter and will amend or supplement the
Registration Statement or Prospectus (at the expense of the Company) so as to
correct such statement or omission or effect such compliance.
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(d) The Company will furnish to the Underwriter,
without charge, two signed copies of the Registration Statement and of any
post-effective amendment thereto, including financial statements and schedules,
and all exhibits thereto (including any document filed under the Exchange Act
and deemed to be incorporated by reference into the Prospectus).
(e) The Company will comply with all the
provisions of any undertakings contained in the Registration Statement.
(f) As soon after the execution and delivery of
this Agreement as possible and thereafter from time to time, the Company will
deliver to the Underwriter, without charge, as many copies of the Prospectus or
any amendment or supplement thereto as the Underwriter may reasonably request.
The Company consents to the use of the Prospectus or any amendment or
supplement thereto by the Underwriter and by all dealers to whom the Shares may
be sold, both in connection with the offering or sale of the Shares and for any
period of time thereafter during which the Prospectus is required by law to be
delivered in connection therewith. If at any time within the nine-month period
referred to in Section 10(a)(3) of the Act during which a prospectus relating
to the Shares is required to be delivered under the Act any event shall occur
which in the judgment of the Company or counsel to the Underwriter should be
set forth in the Prospectus in order to make any statement therein, in the
light of the circumstances under which it was made, not misleading, or if it is
necessary to supplement or amend the Prospectus to comply with law, the Company
will promptly advise the Underwriter thereof and will forthwith prepare and
duly file with the Commission an appropriate supplement or amendment thereto,
and will deliver to the Underwriter, without charge, such number of copies
thereof as the Underwriter may reasonably request. In the event that the
Underwriter is required to deliver a Prospectus after such nine-month period,
the Company upon request, but at the expense of the Underwriter, will promptly
prepare such amendment or amendments to the Registration Statement and such
Prospectus or Prospectuses as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Act. The Company shall not file any
document under the Exchange Act before the termination of the offering of the
Shares by the Underwriter if such document would be deemed to be incorporated
by reference into the Prospectus which is not approved by the Underwriter after
reasonable notice thereof.
(g) Prior to any public offering of the Shares by
the Underwriter, the Company shall cooperate with the Underwriter and its
counsel in order to qualify or register the Shares for sale under (or obtain
exemptions from the application of) the Blue Sky laws of such jurisdictions as
the representatives designate, will comply with such laws and will continue
such qualifications, registrations and exemptions in effect so long as
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reasonably required for the distribution of the Shares. The Company shall not
be required to qualify as a foreign corporation or to file a general consent to
service of process in any such jurisdiction where it is not presently qualified
or where it would be subject to taxation as a foreign corporation. The Company
will advise the Underwriter promptly of the suspension of the qualification or
registration of (or any such exemption relating to) the Shares for offering;
sale or trading in any jurisdiction or any initiation or threat of any
proceeding for any such purpose, and in the event of the issuance of any order
suspending such qualification, registration or exemption, the Company, with the
cooperation of the Underwriter, will use its best efforts to obtain the
withdrawal thereof.
(h) During the period of five years hereafter,
the Company will furnish to the Underwriter: (i) as soon as practicable after
the end of each fiscal year, copies of the Annual Report of the Company
containing the balance sheet of the Company as of the close of such fiscal year
and statements of income, stockholders' equity and cash flows for the year then
ended and the opinion thereon of the Company's independent public accountants;
(ii) as soon as practicable after the filing thereof, copies of each proxy
statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Report on
Form 8-K or other report filed by the Company with the Commission, the NASD or
any securities exchange; and (iii) as soon as available, copies of any report
or communication of the Company mailed generally to holders of its Common
Stock.
(i) The Company will make generally available to
holders of its securities as soon as may be practicable but in no event later
than the last day of the fifteenth full calendar month following the calendar
quarter in which the effective date falls, an earnings statement (which need
not be audited but shall be in reasonable detail) for a period of 12 months
ended commencing after the effective date, and satisfying the provisions of
Section 11(a) of the Act (including Rule 158 of the Rules and Regulations).
"Effective date" for purposes of this Section 4(i) shall be as defined in
Section 158 of the Rules and Regulations.
(j) Whether or not the transactions contemplated
by this Agreement are consummated or this Agreement is terminated, the Company
will pay, or reimburse if paid by the Underwriter, all costs and expenses
incident to the performance of the obligations of the Company under this
Agreement, including but not limited to costs and expenses of or relating to
(1) the preparation, printing and filing of the Registration Statement and
exhibits to it, each preliminary prospectus, the Prospectus and any amendment
or supplement to the Registration Statement or the Prospectus, (2) the
preparation and delivery of certificates representing the Shares, (3) the
printing of this Agreement, the Agreement Among Underwriters, any Dealer
Agreements and any
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Underwriters Questionnaire, (4) furnishing (including costs of shipping,
mailing and courier) such copies of the Registration Statement, the Prospectus
and any preliminary prospectus, and all amendments and supplements thereto, as
may be requested for use in connection with the offering and sale of the Shares
by the Underwriter or by dealers to whom Shares may be sold, (5) the listing of
the Shares on the New York Stock Exchange, (6) any filings required to be made
by the Underwriter with the NASD, and the fees, disbursements and other charges
of counsel for the Underwriter in connection therewith, (7) the registration or
qualification of the Shares for offer and sale under the securities or Blue Sky
laws of such jurisdictions designated pursuant to Section 4(f), including the
fees, disbursements and other charges of counsel to the Underwriter in
connection therewith, and the preparation and printing of preliminary,
supplemental and final Blue Sky memoranda, (8) counsel to the Company, (9) the
transfer agent for the Shares and (10) the Accountants.
(k) If this Agreement shall be terminated by the
Company pursuant to any of the provisions hereof or if for any reason the
Company shall be unable to perform its obligations hereunder, the Company will
reimburse the Underwriter for all out-of-pocket expenses (including the fees,
disbursements and other charges of counsel to the Underwriter) reasonably
incurred in connection herewith.
(l) The Company will not at any time, directly or
indirectly, take any action intended, or which might reasonably be expected, to
cause or result in, or which will constitute, stabilization of the price of the
shares of Common Stock to facilitate the sale or resale of any of the Shares.
(m) The Company will apply the net proceeds from
the offering and sale of the Shares to be sold by the Company in the manner set
forth in the Prospectus under "Use of Proceeds". The Company will not use the
proceeds of the sale of the Shares in such a manner as to require the Company
to be registered under the Investment Company Act.
(n) The Company will not, and will cause each of
its executive officers, directors and each beneficial owner of more than 5% of
the outstanding shares of Common Stock to enter into agreements with the
Underwriter in the form set forth in Exhibit B hereto to the effect that they
will not, for a period of 90 days after the commencement of the public offering
of the Shares, without the prior written consent of the Underwriter, sell,
contract to sell or otherwise dispose of any shares of Common Stock or rights
to acquire such shares (other than pursuant to employee stock option plans or
in connection with other employee incentive compensation arrangements).
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(o) The Company will use its best efforts to
list, subject to official notice of issuance, on the New York Stock Exchange,
the Shares to be issued and sold by the Company.
(p) The Company will not invest in futures
contracts, options on futures contracts or options on commodities unless the
Company and Manager (as defined in the Prospectus) are exempt from the
registration requirements of the Commodity Exchange Act, as amended, or
otherwise comply with the Commodity Exchange Act, as amended. Additionally,
neither the Company nor the Manager will engage in any activities bearing on
the Commodity Exchange Act, as amended, except as described in the Lord Day &
Lord, Xxxxxxx Xxxxx opinion dated June 21, 1993, unless such activities are
exempt from the Commodity Exchange Act, as amended, or otherwise comply with
the Commodity Exchange Act, as amended.
(q) The Company will not permit Manager (for so
long as it is the Manager) to engage in any activity which would cause Manager
to register as an investment advisor under the Investment Advisors Act or 1940.
Without limitation, the Company will not permit Manager to (i) render
investment advice to more than fifteen clients, (ii) hold itself out generally
to the public as an investment advisor, or (iii) act as an investment advisor
to any investment company that is registered under the Investment Company Act.
The Underwriter may, in its sole discretion, waive in
writing the performance by the Company of any one or more of the foregoing
covenants or extend the time for their performance.
5. Conditions of the Obligations of the Underwriter.
In addition to the execution and delivery of the
Price Determination Agreement, the obligations of the Underwriter hereunder are
subject to the following conditions:
(a) The Prospectus shall have been filed as
required by Section 3(a) hereof and (i) no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall be pending or threatened by the Commission,
(ii) no order suspending the effectiveness of the Registration Statement or the
qualification or registration of the Shares under the securities or Blue Sky
laws of any jurisdiction shall be in effect and no proceeding for such purpose
shall be pending before or threatened or contemplated by the Commission or the
authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any such authorities
shall have been complied with to the satisfaction of the staff of the
Commission or such authorities and (iv) after the date hereof no amendment or
supplement to the Registration Statement or the Prospectus shall have been
filed unless a copy thereof was first
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submitted to the Underwriter and the Underwriter did not object thereto in good
faith, and the Underwriter shall have received certificates dated the Closing
Date and the Option Closing Date and signed by the Chairman of the Board of
Directors or President of the Company and the Chief Financial Officer of the
Company (who may, as to proceedings threatened, rely upon the best of their
information and belief), to the effect of clauses (i), (ii) and (iii).
(b) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, (i)
there shall not have been a material adverse change in the general affairs,
business, business prospects, properties, management, condition (financial or
otherwise) or results of operations of the Company, whether or not arising from
transactions in the ordinary course of business, in each case other than as set
forth in or contemplated by the Registration Statement and the Prospectus and
(ii) the Company has not sustained any material loss or interference with its
business or properties from fire, explosion, flood or other casualty, whether
or not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree, which is not set
forth in the Registration Statement and the Prospectus, if in the judgment of
the Underwriter any such development makes it impracticable or inadvisable to
consummate the sale and delivery of the Shares by the Underwriter at the
initial public offering price.
(c) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, there
shall have been no litigation or other proceeding instituted against the
Company or any of its respective officers or directors in their capacities as
such, before or by any Federal, state or local court, commission, regulatory
body, administrative agency or other governmental body, domestic or foreign, in
which litigation or proceeding an unfavorable ruling, decision or finding would
materially and adversely affect the business, properties, business prospects,
condition (financial or otherwise) or results of operations of the Company.
(d) Each of the representations and warranties of
the Company contained herein shall be true and correct in all material respects
at the Closing Date and, with respect to the Option Shares at the Option
Closing Date, as if made at the Closing Date and, with respect to the Option
Shares, at the Option Closing Date, and all covenants and agreements herein
contained to be performed on the part of the Company and all conditions herein
contained to be fulfilled or complied with by the Company at or prior to the
Closing Date and, with respect to the Option Shares, at or prior to the Option
Closing Date, shall have been duly performed, fulfilled or complied with.
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(e) The Underwriter shall have received an
opinion, dated the Closing Date and the Option Closing Date, and satisfactory
in form and substance to counsel for the Underwriter, from Jeffers, Wilson,
Xxxxx & Xxxx, LLP, counsel to the Company, to the effect set forth in Exhibit C
hereto.
(f) The Underwriter shall have received an
opinion of O'Melveny & Xxxxx LLP, counsel to the Underwriter, dated the Closing
Date and the Option Closing Date, as the case may be, with respect to the
Registration Statement, the Prospectus and this Agreement, which opinion shall
be satisfactory in all respects to the Underwriter.
(g) The Underwriter shall have received on the
date before this Agreement is executed and also on the Closing Date and the
Option Closing Date a letter from the Accountants, the first one to be dated
the day before the date of this Agreement, the second one to be dated the
Closing Date and the third one (in the event of an Option Closing) to be dated
the Option Closing Date, to the effect that:
(1) They are independent accountants
with respect to the Company within the meaning of the
Act and the applicable rules and regulations
thereunder;
(2) In their opinion, the financial
statements examined by them and contained in the
Registration Statement or incorporated by reference
therein and the Prospectus comply in form in all
material respects with the applicable accounting
requirements of the Act and the related published
rules and regulations;
(3) On the basis of a reading of the
latest available interim unaudited financial
statement of the Company, carrying out certain
specified procedures (which do not constitute an
examination made in accordance with generally
accepted auditing standards) that would not
necessarily reveal matters of significance with
respect to the comments set forth in this paragraph
(3), a reading of the minute books of the
stockholders, the board of directors and any
committees thereof of the Company, and inquiries of
certain officials of the Company who have
responsibility for financial and accounting matters,
nothing came to their attention that caused them to
believe that as of a date not more than five days
prior to the date of such letter, there were any
changes in the capital stock or long-term debt of the
Company or any decreases in net current assets or
stockholders' equity of the Company in each case
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compared with amounts shown on the balance sheet
included in the Registration Statement and the
Prospectus; and
(4) they have carried out certain
specified procedures, not constituting an audit, with
respect to any pro forma financial information,
amounts, percentages and other financial information
that are derived from the general accounting records
of the Company and are included in the Registration
Statement and the Prospectus as marked on the copy of
the Prospectus attached to such letter, and have
compared such amounts, percentages and financial
information with such records of the Company and with
information derived from such records and have found
them to be in agreement, excluding any questions of
legal interpretation.
(h) At the Closing Date and, as to the Option
Shares, the Option Closing Date, there shall be furnished to the Underwriter an
accurate certificate, dated the date of its delivery, signed by each of the
Chairman of the Board or President and the Chief Financial Officer of the
Company, in form and substance satisfactory to the Underwriter, to the effect
that:
(1) Each of the respective signers of
the certificate has carefully examined the
Registration Statement and the Prospectus (including
any documents filed under the Exchange Act and deemed
to be incorporated by reference into the Prospectus);
in his opinion and to the best of his knowledge, such
documents and any amendments or supplements thereto
contain all statements required to be stated therein
regarding the Company; and neither the Registration
Statement nor the Prospectus nor any amendment or
supplement thereto includes any untrue statement of a
material fact or omits to state any material fact
required to be stated therein or necessary to make
the statements therein not misleading;
(2) Each of the representations and
warranties of the Company contained in this Agreement
are true and correct as of the date of this Agreement
and as of the Closing Date or the Option Closing
Date, as the case may be;
(3) The Commission has not issued any
order preventing or suspending the use of the
Prospectus or any preliminary prospectus filed as a
part of the Registration Statement or any amendment
thereto; no stop order suspending the
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effectiveness of the Registration Statement has been
issued; and to the best of the knowledge of the
respective signers, no proceedings for that purpose
have been instituted or are pending or contemplated
under the Act;
(4) Since the initial date on which the
Registration Statement was filed, no agreement,
written or oral, transaction or event has occurred
which should have been set forth in an amendment to
the Registration Statement or in a supplement to or
amendment of any prospectus which has not been
disclosed in such a supplement or amendment;
(5) Since the respective dates as of
which information is given in the Registration
Statement and the Prospectus, and except as disclosed
in or contemplated by the Prospectus, there has not
been any material adverse change or a development
involving a material adverse change in the condition
(financial or otherwise), business, properties,
results of operations, management or prospects of the
Company; and no legal or governmental action, suit or
proceeding is pending or threatened against the
Company which is material to the Company, whether or
not arising from transactions in the ordinary course
of business, or which may adversely affect the
transactions contemplated by this Agreement; since
such dates and except as so disclosed, the Company
has not entered into any verbal or written agreement
or other transaction which is not in the ordinary
course of business or which could result in a
material reduction in the future earnings of the
Company or incurred any material liability or
obligation, direct, contingent or indirect, made any
change in its capital stock, made any material change
in its short-term debt or funded debt or repurchased
or otherwise acquired any of the Company's capital
stock; and the Company has not declared or paid any
dividend, or made any other distribution, upon its
outstanding capital stock payable to stockholders of
record on a date prior to the Closing Date or the
Option Closing Date; and
(6) Each of the covenants required
herein to be performed by the Company on or prior to
the date of such certificate has been duly, timely
and fully performed and each condition herein
required to be complied with by the Company on or
prior to the delivery of such certificate has been
duly, timely and fully complied with.
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(i) On or prior to the Closing Date, the
Underwriter shall have received the executed agreements referred to in Section
4(n) hereof.
(j) The Shares shall be qualified for sale in
such states as the Underwriter may reasonably request, each such qualification
shall be in effect and not subject to any stop order or other proceeding on the
Closing Date and the Option Closing Date.
(k) Prior to the Closing Date, the Shares shall
have been duly authorized for listing by the New York Stock Exchange upon
official notice of issuance.
(l) The Company shall have furnished to the
Underwriter such certificates, in addition to those specifically mentioned
herein, as the Underwriter may have reasonably requested as to the accuracy and
completeness at the Closing Date and the Option Closing Date of any statement
in the Registration Statement or the Prospectus or any documents filed under
the Exchange Act and deemed to be incorporated by reference into the
Prospectus, as to the accuracy at the Closing Date and the Option Closing Date
of the representations and warranties of the Company herein, as to the
performance by the Company of its respective obligations hereunder, or as to
the fulfillment of the conditions concurrent and precedent to the obligations
hereunder of the Underwriter.
All such opinions, certificates, letters and
documents shall be in compliance with the provisions hereof only if they are
satisfactory to the Underwriter and to O'Melveny & Xxxxx LLP, counsel to the
Underwriter. The Company shall furnish the Underwriter with such manually
signed or conformed copies of such opinions, certificates, letters and
documents as requested by the Underwriter. Any certificate signed by any
officer of the Company and delivered to the Underwriter or its counsel shall be
deemed to be a representation and warranty by the Company to the Underwriter as
to the statements made therein.
If any condition to the Underwriter's obligations
under this Agreement to be satisfied prior to or at the Closing Date is not so
satisfied, this Agreement will terminate at the election of and upon
notification by the Underwriter without liability on the part of the Company
except for the expenses to be paid or reimbursed by the Company pursuant to
Sections 4(j) and 4(k) hereof and except to the extent provided in Section 6
hereof.
6. Indemnification.
(a) The Company will indemnify and hold harmless the
Underwriter, the directors, officers, employees and agents of
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the Underwriter and each person, if any, who controls the Underwriter within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act from and
against any and all losses, claims, liabilities, expenses and damages
(including, but not limited to, any and all investigative, legal and other
expenses reasonably incurred in connection with, and any and all amounts paid
in settlement of, any action, suit or proceeding between any of the indemnified
parties and any indemnifying parties or between any indemnified party and any
third party, or otherwise, or any claim asserted), as and when incurred, to
which the Underwriter, or any such person may become subject under the Act, the
Exchange Act or other Federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, liabilities, expenses or
damages arise out of or are based on (i) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment or supplement to the
Registration Statement or the Prospectus or in any documents filed under the
Exchange Act and deemed to be incorporated by reference into the Prospectus, or
in any application or other document executed by or on behalf of the Company or
based on written information furnished by or on behalf of the Company filed in
any jurisdiction in order to qualify the Shares under the Securities Laws
thereof or filed with the Commission, (ii) the omission or alleged omission to
state in such document a material fact required to be stated in it or necessary
to make the statements in it not misleading or (iii) any act or failure to act
or any alleged act or failure to act by the Underwriter in connection with, or
relating in any manner to, the Shares or the offering contemplated hereby, and
which is included as part of or referred to in any loss, claim, liability,
expense or damage arising out of or based upon matters covered by clause (i) or
(ii) above (provided that the Company shall not be liable under this clause
(iii) to the extent it is finally judicially determined by a court of competent
jurisdiction that such loss, claim, liability, expense or damage resulted
directly from any such acts or failures to act undertaken or omitted to be
taken by the Underwriter through its gross negligence or willful misconduct);
provided that the Company will not be liable to the extent that such loss,
claim, liability, expense or damage arises from the sale of the Shares in the
public offering to any person by the Underwriter and is based on an untrue
statement or omission or alleged untrue statement or omission made in reliance
on and in conformity with information relating to the Underwriter furnished in
writing to the Company by the Underwriter expressly for inclusion in the
Registration Statement, any preliminary prospectus or the Prospectus. This
indemnity agreement will be in addition to any liability that the Company might
otherwise have.
(b) The Underwriter will indemnify and hold harmless the
Company, each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the
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Exchange Act, each director of the Company and each officer of the Company who
signs the Registration Statement to the same extent as the foregoing indemnity
from the Company to the Underwriter, but only insofar as losses, claims,
liabilities, expenses or damages arise out of or are based on any untrue
statement or omission or alleged untrue statement or omission made in reliance
on and in conformity with information relating to the Underwriter furnished in
writing to the Company by the Underwriter expressly for use in the Registration
Statement, the Preliminary Prospectus or the Prospectus. This indemnity will
be in addition to any liability that the Underwriter might otherwise have;
provided, however, that in no case shall the Underwriter be liable or
responsible for any amount in excess of the underwriting discounts and
commissions received by the Underwriter.
(c) Any party that proposes to assert the right to be
indemnified under this Section 6 will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section 6, notify
each such indemnifying party of the commencement of such action, enclosing a
copy of all papers served, but the omission so to notify such indemnifying
party will not relieve it from any liability that it may have to any
indemnified party under the foregoing provisions of this Section 6 unless, and
only to the extent that, such omission results in the forfeiture of substantive
rights or defenses by the indemnifying party. If any such action is brought
against any indemnified party and it notifies the indemnifying party of its
commencement, the indemnifying party will be entitled to participate in and, to
the extent that it elects by delivering written notice to the indemnified party
promptly after receiving notice of the commencement of the action from the
indemnified party, jointly with any other indemnifying party similarly
notified, to assume the defense of the action, with counsel satisfactory to the
indemnified party, and after notice from the indemnifying party to the
indemnified party of its election to assume the defense, the indemnifying party
will not be liable to the indemnified party for any legal or other expenses
except as provided below and except for the reasonable costs of investigation
subsequently incurred by the indemnified party in connection with the defense.
The indemnified party will have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel will be at the
expense of such indemnified party unless (1) the employment of counsel by the
indemnified party has been authorized in writing by the indemnifying party, (2)
the indemnified party has reasonably concluded (based on advice of counsel)
that there may be legal defenses available to it or other indemnified parties
that are different from or in addition to those available to the indemnifying
party, (3) a conflict or potential conflict exists (based on advice of counsel
to the indemnified party) between the indemnified party and the indemnifying
party (in which case the
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indemnifying party will not have the right to direct the defense of such action
on behalf of the indemnified party) or (4) the indemnifying party has not in
fact employed counsel to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be
at the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable
fees, disbursements and other charges of more than one separate firm admitted
to practice in such jurisdiction at any one time for all such indemnified party
or parties. All such fees, disbursements and other charges will be reimbursed
by the indemnifying party promptly as they are incurred. An indemnifying
party will not be liable for any settlement of any action or claim effected
without its written consent (which consent will not be unreasonably withheld).
No indemnifying party shall, without the prior written consent of each
indemnified party, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action or proceeding relating to the
matters contemplated by this Section 6 (whether or not any indemnified party is
a party thereto), unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising or
that may arise out of such claim, action or proceeding. Notwithstanding any
other provision of this Section 6(c), if at any time an indemnified party shall
have requested an indemnifying party to reimburse the indemnified party for
fees and expenses of counsel, such indemnifying party agrees that it shall be
liable for any settlement effected without its written consent if (i) such
settlement is entered into more than 45 days after receipt by such indemnifying
party of the aforesaid request, (ii) such indemnifying party shall have
received notice of the terms of such settlement at least 30 days prior to such
settlement being entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request prior to the
date of such settlement.
(d) In order to provide for just and equitable contribution
in which the indemnification provided for in the foregoing paragraphs of this
Section 6 is applicable in accordance with its terms but for any reason is held
to be unavailable from the Company or the Underwriter, the Company and the
Underwriter will contribute to the total losses, claims, liabilities, expenses
and damages (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted, but after deducting any contribution
received by the Company from persons other than the Underwriter, such as
persons who control the Company within the meaning of the Act, officers of the
Company who signed the Registration Statement and directors of the Company, who
also may
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be liable for contribution) to which the Company and the Underwriter may be
subject in such proportion as shall be appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriter on the
other. The relative benefits received by the Company on the one hand and the
Underwriter on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by
the Company bear to the total underwriting discounts and commissions received
by the Underwriter, in each case as set forth in the table on the cover page of
the Prospectus. If, but only if, the allocation provided by the foregoing
sentence is not permitted by applicable law, the allocation of contribution
shall be made in such proportion as is appropriate to reflect not only the
relative benefits referred to in the foregoing sentence but also the relative
fault of the Company, on the one hand, and the Underwriter, on the other, with
respect to the statements or omissions which resulted in such loss, claim,
liability, expense or damage, or action in respect thereof, as well as any
other relevant equitable considerations with respect to such offering. Such
relative fault shall be determined by reference to whether the untrue or
alleged untrue statement or a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or the
Underwriter, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriter agree that it would not be just and equitable
if contributions pursuant to this Section 6(d) were to be determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, liability,
expense or damage, or action in respect thereof, referred to above in this
Section 6(d) shall be deemed to include, for purpose of this Section 6(d), 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 6(d), the Underwriter shall not
be required to contribute any amount in excess of the underwriting discounts
and commissions received by it and no person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) will be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 6(d), any person who controls
a party to this Agreement within the meaning of the Act will have the same
rights to contribution as that party, and each officer of the Company who
signed the Registration Statement will have the same rights to contribution as
the Company, subject in each case to the provisions hereof. Any party entitled
to contribution, promptly after receipt of notice of commencement of any action
against such party in respect of which a claim for contribution may be made
under this Section 6(d), will notify any such party or parties from whom
contribution may be sought, but the omission so
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to notify will not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have under this Section 6(d).
Except for a settlement entered into pursuant to the last sentence of Section
6(c) hereof, no party will be liable for contribution with respect to any
action or claim settled without its written consent (which consent will not be
unreasonably withheld).
(e) The indemnity and contribution agreements contained in
this Section 6 and the representations and warranties of the Company contained
in this Agreement shall remain operative and in full force and effect
regardless of (i) any investigation made by or on behalf of the Underwriter,
(ii) acceptance of the Shares and payment therefore or (iii) any termination of
this Agreement.
7. Termination.
Without limiting the right to terminate this
Agreement pursuant to any other provision hereof, the obligations of the
Underwriter under this Agreement may be terminated at any time prior to the
Closing Date (or, with respect to the Option Shares, on or prior to the Option
Closing Date), by notice to the Company from the Underwriter, without liability
on the part of the Underwriter to the Company if, prior to delivery and payment
for the Shares (or the Option Shares, as the case may be), in the sole judgment
of the Underwriter, (i) trading in any of the equity securities of the Company
shall have been suspended by the Commission, by an exchange that lists the
Shares or by the NASDAQ Stock Market, (ii) trading in securities generally on
the New York Stock Exchange shall have been suspended or limited or minimum or
maximum prices shall have been generally established on such exchange, or
additional material governmental restrictions, not in force on the date of this
Agreement, shall have been imposed upon trading in securities generally by such
exchange or by order of the Commission or any court or other governmental
authority, (iii) a general banking moratorium shall have been declared by
either Federal or New York State authorities or (iv) any material adverse
change in the financial or securities markets in the United States or in
political, financial or economic conditions in the United States or any
outbreak or material escalation of hostilities or declaration by the United
States of a national emergency or war or other calamity or crisis shall have
occurred, the effect of any of which is such as to make it, in the sole
judgment of the Underwriter, impracticable or inadvisable to market the Shares
on the terms and in the manner contemplated by the Prospectus.
8. Representations of the Underwriter.
The Underwriter represents and warrants to the
Company that the information set forth (i) on the cover page of
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the Prospectus Supplement with respect to price, underwriting discounts and
commissions and terms of offering and (ii) under "Underwriting" in the
Prospectus Supplement was furnished to the Company by and on behalf of the
Underwriter for use in connection with the preparation of the Prospectus
Supplement with respect to price, underwriting discounts and commissions and
terms of offering and is correct in all material respects.
9. Miscellaneous.
(a) Notice given pursuant to any of the provisions
of this Agreement shall be in writing and unless otherwise specified, shall be
mailed or delivered (a) if to the Company, at the office of the Company, 000
Xxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxx Xx, Xxx Xxxxxx 00000, Attention: Xxxxx X.
Xxxxxxxxx, or (b) if to the Underwriter, at the offices of Sutro & Co.
Incorporated, 00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, XX 00000,
Attention: Xxxxx X. Xxxxxxxx. Any such notice shall be effective only upon
receipt. Any notice under Section 6 or 8 may be made by telex or telephone,
but if so made shall be subsequently confirmed in writing.
(b) This Agreement has been and is made solely for
the benefit of the Underwriter, the Company and of the controlling persons,
directors and officers referred to in Section 6 hereof, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns" as used
in this Agreement shall not include a purchaser, as such purchaser, of Shares
from the Underwriter.
(c) The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
(d) THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAWS PERTAINING TO
CONFLICTS OF LAWS) OF THE STATE OF NEW YORK.
(f) The Company and the Underwriter each hereby
irrevocably waive any right they may have to a trial by jury in respect of any
claim based upon or arising out of this Agreement or the transactions
contemplated hereby.
(g) This Agreement may not be amended or otherwise
modified or any provision hereof waived except by an instrument in writing
signed by the Underwriter and the Company.
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(h) This Agreement constitutes the entire agreement
of the parties to this Agreement and supersedes all prior written or oral and
all contemporaneous oral agreements, understandings and negotiations with
respect to the subject matter hereof. This Agreement may be executed in
several counterparts, each one of which shall be an original, and all of which
shall constitute one and the same document.
(i) In this Agreement, the masculine, feminine and
neuter genders and the singular and the plural include one another. The
section headings in this Agreement are for the convenience of the parties only
and will not affect the construction or interpretation of this Agreement.
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us the enclosed copies hereof,
whereupon it will become a binding agreement between the Company and you, as
the Underwriter, all in accordance with its terms.
Very truly yours,
XXXXXXXXX MORTGAGE ASSET CORPORATION
By: _______________________________
President
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Confirmed as of the date first above mentioned
By: SUTRO & CO. INCORPORATED
By:_______________________
Its:______________________
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EXHIBIT A
XXXXXXXXX MORTGAGE ASSET CORPORATION
PRICE DETERMINATION AGREEMENT
May 14, 1997
SUTRO & CO. INCORPORATED
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated May
14, 1997 (the "Underwriting Agreement"), between Xxxxxxxxx Mortgage Asset
Corporation, a Maryland corporation (the "Company"), and you (hereinafter the
"Underwriter"). The Underwriting Agreement provides for the purchase by the
Underwriter from the Company, subject to the terms and conditions set forth
therein, of an aggregate of 800,000 shares (the "Firm Shares") of the Company's
common stock, par value $0.01 per share. This Agreement is the Price
Determination Agreement referred to in the Underwriting Agreement.
Pursuant to Section 1 of the Underwriting Agreement, the
undersigned agrees with the Underwriter as follows:
1. The initial public offering price per share for the
Firm Shares shall be $19.50.
2. The purchase price per share for the Firm Shares to
be paid by the Underwriter shall be $18.8662, representing an amount equal to
the initial public offering price set forth above, less $0.6338 (approximately
3.25%) per share.
3. The Company represents and warrants to the
Underwriter that the representations and warranties of the Company set forth in
Section 3 of the Underwriting Agreement are accurate as though expressly made
at and as of the date hereof.
4. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAWS PERTAINING TO CONFLICTS OF
LAWS) OF THE STATE OF NEW YORK.
If the foregoing is in accordance with your understanding of
the agreement between the Underwriter and the
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Company, please sign and return to the Company a counterpart hereof, whereupon
this instrument along with all counterparts and together with the Underwriting
Agreement shall be a binding agreement among the Underwriter and the Company in
accordance with its terms and the terms of the Underwriting Agreement.
Very truly yours,
XXXXXXXXX MORTGAGE ASSET CORPORATION
By:__________________________________
President
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33
Confirmed as of the date first above mentioned:
By: SUTRO & CO. INCORPORATED
By:_______________________
Its:______________________
3
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EXHIBIT B
May 14, 1997
LOCK-UP AGREEMENT
SUTRO & CO. INCORPORATED
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
In consideration of the proposed public offering (the
"Offering") of up to 920,000 shares (including 120,000 option shares to cover
over-allotments) of Common Stock, par value $.01 per share, (the "Common
Stock") of Xxxxxxxxx Mortgage Asset Corporation, a Maryland corporation, as
contemplated by a registration statement with respect to such shares filed with
the Securities and Exchange Commission on Form S-3 (Registration No.
333-16799), the undersigned hereby agrees that the undersigned will not, for a
period of 90 days after the commencement of the public offering of such shares,
without the prior written consent of Sutro & Co. Incorporated, offer to sell,
sell, contract to sell, grant any option to sell, or otherwise dispose of, or
require the Company to file with the Securities and Exchange Commission a
registration statement under the Securities Act of 1933 to register, any shares
of Common Stock or securities convertible into or exchangeable for Common Stock
or warrants or other rights to acquire shares of Common Stock of which the
undersigned is now, or may in the future become, the beneficial owner (within
the meaning of Rule 13d-3 under the Securities and Exchange Act of 1934) (other
than pursuant to the Sales Agency Agreement dated October 9, 1995 by and
between PaineWebber Incorporated and the Company, employee stock option plans,
in connection with other employee incentive compensation arrangements or the
Dividend Reinvestment and Stock Purchase Plan).
Very truly yours,
By:______________________________
Name:____________________________
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EXHIBIT C
Form of Opinion of
Jeffers, Wilson, Xxxxx & Xxxx, LLP
Counsel to the Company and the Manager
May 20, 1997
SUTRO & CO. INCORPORATED
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
We have acted as special corporate counsel to Xxxxxxxxx
Mortgage Asset Corporation, a Maryland corporation (the "Company") and
Xxxxxxxxx Mortgage Advisory Corporation, a Delaware corporation (the "Manager")
in connection with the issuance and sale by the Company of (i) 800,000 shares
(the "Firm Shares") of the Company's Common Stock, par value $0.01 per share
(the "Common Stock") and (ii) up to 120,000 additional shares of Common Stock
(the "Option Shares") pursuant to that certain Underwriting Agreement dated May
14, 1997 (the "Underwriting Agreement"), between the Company and you
(hereinafter the "Underwriter"). The shares of Common Stock being issued and
sold pursuant to the Underwriting Agreement are hereinafter referred to as the
"Shares." This opinion is being rendered to you pursuant to Section 5(e) of
the Underwriting Agreement. Capitalized terms used herein without definition
shall have the meanings given such terms in the Underwriting Agreement.
In our capacity as counsel to the Company and the Manager, we
have examined originals, or copies identified to our satisfaction as being true
copies, of such documents as we have deemed advisable or necessary for the
purpose of rendering this opinion, including among other things the following:
1. The Registration Statement on Form S-3 (File No.
333-16799) initially filed by the Company with the Securities and Exchange
Commission (the "Commission") on November 26, 1996, as amended, for the purpose
of registering securities of the Company, including the Shares, under the
Securities Act of 1933, as amended (the "Act"); and a representation from the
Company, satisfactory to us, that it has not been advised of any stop
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Sutro & Co. Incorporated, May 20, 1997 - Page 2
order suspending the effectiveness of the Registration Statement or that any
proceedings for that purpose have been instituted or are pending or
contemplated by the Commission under the Act. Such Registration Statement
(including all exhibits thereto) and documents incorporated by reference
therein is hereinafter referred to as the "Registration Statement," and the
final form of prospectus filed with the Commission is hereinafter referred to
as the "Prospectus;"
2. The Articles of Incorporation of the Company and the
Manager, as amended to date;
3. The Bylaws of the Company and the Manager, as amended
to date;
4. Resolutions of the Board of Directors of the Company
adopted on [DATE] authorizing the sale of the Shares, the preparation of the
Registration Statement, the execution and delivery of the Underwriting
Agreement and other actions with respect thereto;
5. Executed counterparts of the Underwriting Agreement;
and
6. The Certificates of the Company's Chairman of the
Board, President and Chief Financial Officer, dated the date hereof, copies of
which are attached hereto.
In addition to such examination, we have obtained and relied
upon, with your consent, such other certificates and assurances from public
officials as we consider necessary for the purposes of this opinion. We have
been furnished with, and with your consent have relied upon, certificates of
officers of the Company and the Manager with respect to certain factual matters
bearing on the opinions expressed herein. We have not independently
investigated any of such factual matters. We have assumed the genuineness of
all signatures (other than the signatures of the officers of the Company and
the Manager) and the authenticity of all documents submitted to us as originals
and the conformity with originals of all documents submitted to us as copies.
All capitalized terms used herein without definition shall have the same
meanings as defined in the Underwriting Agreement unless otherwise indicated.
All references in this opinion to the Underwriting Agreement shall include the
Price Determination Agreement.
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Sutro & Co. Incorporated, May 20, 1997 - Page 3
On the basis of the foregoing and in reliance thereon, and
subject to the exceptions set forth herein, we are of the opinion that:
1. The Company and the Manager are corporations duly
organized, validly existing and in good standing under the laws of their
jurisdiction of incorporation, are duly licensed or qualified to do business
and in good standing as foreign corporations in all jurisdictions where the
nature and conduct of the Company's or the Manager's business makes such
qualification and licensing necessary, and have full corporate power and
authority to conduct all the activities conducted by them, to own or lease all
the assets owned or leased by them and to conduct their business as described
in the Registration Statement and the Prospectus.
2. All of the outstanding shares of Common Stock are,
and the Shares to be paid for by the Underwriter in accordance with the terms
of the Underwriting Agreement will be, duly authorized, validly issued, fully
paid and nonassessable and will not be subject to any preemptive or similar
right under (i) the statutes, judicial and administrative decisions and the
rules and regulations of the governmental agencies of the State of Maryland
(ii) the Company's certificate of incorporation or by-laws or (iii) any
instrument, document, contract or other agreement referred to in the
Registration Statement or any instrument, document, contract or agreement filed
as an exhibit to, or incorporated as an exhibit by reference in, the
Registration Statement. Except as described in the Registration Statement or
the Prospectus, to the best of our knowledge, there is no commitment or
arrangement to issue, and there are no outstanding options, warrants or other
rights calling for the issuance of, any share of capital stock of the Company
to any person or any security or other instrument that by its terms is
convertible into, exercisable for or exchangeable for capital stock of the
Company.
3. No consent, approval, authorization or order of, or
any filing or declaration with, any court or governmental agency or body is
required in connection with the authorization, issuance, transfer, sale or
delivery of the Shares by the Company, in connection with the execution,
delivery and performance of each of the Underwriting Agreement and the Sales
Agency Agreement by the Company or in connection with the taking by the Company
of any action contemplated thereby have been obtained and are in full force and
effect, except such as have been obtained under the Act and the Rules and
Regulations and such as may be required under state securities or "Blue Sky,"
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Sutro & Co. Incorporated, May 20, 1997 - Page 4
laws or by the by-laws and rules of the NASD in connection with the purchase
and distribution by the Underwriter of the Shares to be sold by the Company.
4. The authorized, issued and outstanding capital stock
of the Company is as set forth in the Registration Statement and the Prospectus
Supplement under the caption "Capitalization." The description of the Common
Stock contained in the Prospectus is complete and accurate in all material
respects. The form of certificate used to evidence the Common Stock is in due
and proper form and complies with all applicable statutory requirements.
5. The Registration Statement and the Prospectus,
including any documents incorporated by reference into the Prospectus at the
time they were filed and on the Closing Date comply (or complied) in all
material respects as to form with the requirements of the Act, the Exchange
Act, the Exchange Act Rules and Regulations and the Rules and Regulations,
including, without limitation, Item 503 of Regulation S-K (except that we
express no opinion as to financial statements schedules and other financial
data contained in the Registration Statement or the Prospectus or incorporated
by reference therein).
6. To the best of our knowledge, any instrument,
document, lease, license, contract or other agreement (collectively,
"Documents") required to be described or referred to in the Registration
Statement or the Prospectus has been properly described or referred to therein
and any Document required to be filed as an exhibit to the Registration
Statement has been filed as an exhibit thereto or has been incorporated as an
exhibit it by reference in the Registration Statement; and no default exists in
the due performance or observance of any material obligation, agreement,
covenant or condition contained in any Document filed or required to be filed
as an exhibit to the Registration Statement.
7. To the best of our knowledge, except as disclosed in
the Registration Statement or the Prospectus, no person or entity has the right
to require the registration under the Act of shares of Common Stock or other
securities of the Company by reason of the filing or effectiveness of the
Registration Statement.
8. To the best of our knowledge, neither the Company nor
the Manager is in violation of, or in default with respect to, any law, rule,
regulation, order, judgment or decree, except as may be described in the
Prospectus or such as in the aggregate
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Sutro & Co. Incorporated, May 20, 1997 - Page 5
do not now have and will not in the future have a material adverse effect upon
the operations, business or assets of the Company or the Manager.
9. All descriptions in the Prospectus of statutes,
regulations or legal or governmental proceedings are accurate and fairly
present the information required to be shown, including those contained in the
Prospectus under the captions "Description of Securities," "Federal Income Tax
Considerations," and "ERISA Investors."
10. The Company has full corporate power and authority to
enter into the Underwriting Agreement and the Underwriting Agreement has been
duly authorized, executed and delivered by the Company, is a valid and binding
agreement of the Company and, except for the indemnification and contribution
provisions thereof, as to which we express no opinion, is enforceable against
the Company in accordance with the terms thereof.
11. The execution and delivery by the Company of, and the
performance by the Company of its agreements in, the Underwriting Agreement do
not and will not (i) violate the certificate of incorporation or by-laws of the
Company, (ii) breach or result in a default under, cause the time for
performance of any obligation to be accelerated under, or result in the
creation or imposition of any lien, charge or encumbrance upon any of the
assets of the Company pursuant to the terms of, (x) any indenture, mortgage,
deed of trust, loan agreement, bond, debenture, note agreement, capital lease
or other evidence of indebtedness of which we have knowledge, (y) any voting
trust arrangement or any contract or other agreement to which the Company is a
party that restricts the ability of the Company to issue securities and of
which we have knowledge or (z) any Document filed as an exhibit to, or
incorporated as an exhibit by reference in, the Registration Statement, (iii)
breach or otherwise violate any existing obligation of the Company under any
court or administrative order, judgment or decree of which we have knowledge or
(iv) violate applicable provisions of any statute or regulation in the State of
Maryland, State of New Mexico or of the United States.
12. Delivery of certificates for the Shares will transfer
valid and marketable title thereto to each Underwriter that has purchased such
Shares in good faith and without any notice of any adverse claim with respect
thereto.
13. The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter"
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Sutro & Co. Incorporated, May 20, 1997 - Page 6
for, an "investment company," as such terms are defined in the investment
Company Act of 1940, as amended, or a "broker" within the meaning of Section
3(a)(4) of the Exchange Act or a "dealer" within the meaning of Section 3(a)(5)
of the Exchange Act or required to be registered pursuant to Section 15(a) of
the Exchange Act.
14. The Shares have been duly authorized for listing by
the New York Stock Exchange upon official notice of issuance.
15. For all applicable tax years as to which the
Company's tax returns are subject to audit and the Company is subject to
assessment for taxes reportable therein, the Company has continuously been
organized and operated in conformity with the requirements for qualification as
a real estate investment trust under the Internal Revenue Code of 1986, as
amended (the "Code"). The Company's method of operation will permit it to
continue to meet the requirements for taxation as a "real estate investment
trust" under the Code.
We hereby confirm to you that the Registration Statement has
become effective under the Act, the Prospectus Supplement has been filed as
required by Section 3.a of the Underwriting Agreement, and that no order
suspending the effectiveness of the Registration Statement has been issued and
no proceeding for that purpose has been instituted or is threatened, pending or
contemplated.
We hereby further confirm to you that there are no actions,
suits, proceedings or investigations pending or, to our knowledge, overtly
threatened in writing against the Company or any of their respective officers
or directors in their capacities as such, before or by any court, governmental
agency or arbitrator which (i) seek to challenge the legality or enforceability
of the Underwriting Agreement, (ii) seek to challenge the legality or
enforceability of any of the Documents filed, or required to be filed, or
incorporated by reference as exhibits to the Registration Statement, (iii) seek
damages or other remedies with respect to any of the Documents filed, or
required to be filed, as exhibits to the Registration Statement, (iv) except as
set forth in or contemplated by the Registration Statement and the Prospectus,
seek money damages or seek to impose criminal penalties upon the Company or any
of their respective officers or directors in their capacities as such and of
which we have knowledge or (v) seek to enjoin any of the business activities of
the Company or the transactions described in the Prospectus and of which we
have knowledge.
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Sutro & Co. Incorporated, May 20, 1997 - Page 7
We have participated in the preparation of the Registration
Statement and the Prospectus and, without assuming any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus or in any amendment or supplement
thereto or in any document incorporated by reference into the Prospectus,
nothing has come to our attention that causes us to believe that, both as of
the Effective Date and as of the Closing Date and the Option Closing Date, the
Registration Statement, or any amendment thereto contained or contains any
untrue statement of a material fact or omitted or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or that any Prospectus or any amendment or supplement thereto
including any documents incorporated by reference into the Prospectus, at the
time such Prospectus was issued, at the time any such amended or supplemented
Prospectus was issued, at the Closing Date and the Option Closing Date,
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances in which they were made, not
misleading (except that we express no opinion as to financial statements,
schedules and other financial data contained in this Registration Statement or
the Prospectus or incorporated by reference therein).
The foregoing opinion is subject to the qualification that the
enforceability of the Underwriting Agreement may be: (i) subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally; and (ii) subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding at law or in
equity), including principles of commercial reasonableness or conscionability
and an implied covenant of good faith and fair dealing.
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Sutro & Co. Incorporated, May 20, 1997 - Page 8
This letter is furnished by us solely for your benefit in
connection with the transactions referred to in the Underwriting Agreement and
may not be circulated to, or relied upon by, any other person, except that this
letter may be relied upon by your counsel, O'Melveny & Xxxxx LLP, in connection
with the opinion letter to be delivered to you pursuant to Section 5(e) of the
Underwriting Agreement.
Respectfully submitted,
_____________________________
[In rendering the foregoing opinion, counsel may rely, to the
extent they deem such reliance proper, on the opinions (in form and substance
reasonably satisfactory to Underwriter's counsel) of other counsel reasonably
acceptable to Underwriter's counsel as to matters governed by the laws of
jurisdictions other than the United States and the States of California,
Maryland and Delaware, and as to matters of fact, upon certificates of officers
of the Company and of government officials; provided that such counsel shall
state that the opinion of any other counsel is in form satisfactory to such
counsel. Copies of all such opinions and certificates shall be furnished to
counsel to the Underwriter on the Closing Date.]
