1,000,000 Shares
AUTOBOND ACCEPTANCE CORPORATION
Common Stock
UNDERWRITING AGREEMENT
November__, 1996
THE BOSTON GROUP, L.P.
As Representative of the several Underwriters
named in Schedule A hereto
The Boston Group, L.P.
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
The undersigned, AutoBond Acceptance Corporation (the "Company"),
a Texas corporation, and the persons listed on Schedule B annexed hereto (the
"Selling Shareholders") hereby confirm their agreement with you and the other
underwriters named in Schedule A annexed hereto.
Section 1. Underwriters and Representative. The term
"Underwriters," as used herein, will mean and refer collectively to you and the
other underwriters named in Schedule A annexed hereto and the term
"Representative" will refer to you in your capacity as the representative of the
Underwriters. Except as may be expressly set forth below, any reference to "you"
in this Agreement shall be solely in your capacity as the Representative.
Section 2. Shares Offered. The Company proposes to issue and sell
to the Underwriters an aggregate of 750,000 shares of its authorized and
unissued common stock, no par value per share (the "Common Stock"), and the
Selling Shareholders propose to sell to the Underwriters an aggregate of 250,000
issued and outstanding shares of Common Stock (collectively, the "Firm Shares").
The Company also proposes to grant to the Underwriters an Option (hereinafter
defined) to purchase up to an additional aggregate of 150,000 shares (the
"Option Shares") of its authorized and unissued Common Stock on the terms and
for the purposes set forth in Section 4(b) hereof. The Firm Shares and the
Option Shares are hereinafter sometimes together called the "Shares."
Section 3. Representations and Warranties. (a) The Company
represents and warrants to each Underwriter that:
(i) A registration statement (File No. 333-05359) on Form S-1
relating to the Shares, including a preliminary prospectus, has
been carefully prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the
"Act"), and the rules, regulations and instructions (the "Rules
and Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder and has been filed by the Company with
the Commission. One or more amendments to such registration
statement, including in each case a revised preliminary
prospectus, have been so prepared and filed. If such registration
statement has not become effective as of the execution and
delivery of this Agreement, and the filing of a further amendment
(the "Final Amendment") to such registration statement is
necessary to permit such registration statement to become
effective, such amendment will promptly be filed by the Company
with the Commission. If such registration statement has become
effective and any post-effective amendment has been filed with
the Commission prior to the execution and delivery of this
Agreement, the most recent such amendment has been declared
effective by the Commission. If such registration statement has
become effective, either (A) if the Company relies on Rule 434
under the Act, a Term Sheet (hereinafter defined) relating to the
Shares, that shall identify the preliminary prospectus
(hereinafter defined) that it supplements containing such
information as is required or permitted by Rules 434, 430A and
424(b) under the Act, will be promptly filed with the Commission
by the Company or (B) if the Company does not rely on Rule 434
under the Act, a final prospectus (the "Rule 430A Prospectus")
containing information permitted to be omitted at the time of
effectiveness by Rule 430A of the Rules and Regulations will
promptly be filed by the Company pursuant to Rule 424(b) of the
Rules and Regulations. The term "preliminary prospectus" as used
herein means each prospectus subject to completion included at
any time as part of such registration statement or any amendment
thereto or filed with the Commission pursuant to Rule 424(a) of
the Rules and Regulations; such registration statement, as
amended at the time that it becomes or became effective, or, if
applicable, as amended at the time the most recent post-effective
amendment to such registration statement filed with the
Commission prior to the execution and delivery of this Agreement
became effective, including financial statements and all exhibits
and information deemed to be a part thereof at such time pursuant
to Rule 430A of the Rules and Regulations is herein called the
"Registration Statement"; the term "Term Sheet" as used herein
means any term sheet that satisfies the requirements of Rule 434
under the Act; and the term "Prospectus" as used herein means (x)
if the Company relies on Rule 434 under the Act, the Term Sheet
relating to the Shares that is first filed pursuant to
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Rule 424(b)(7) under the Act, together with the preliminary
prospectus identified therein that such Term Sheet supplements;
(y) if the Company does not rely on Rule 434 under the Act, the
final prospectus relating to the Shares in the form first filed
with the Commission pursuant to Rule 424(b)(1) or (4) of the
Rules and Regulations; or (z) if no such filing is required, the
form of final prospectus included in the Registration Statement
at the Effective Date (as hereinafter defined). The date on which
the Registration Statement becomes effective is hereinafter
called the "Effective Date." Any reference herein to the "date"
of a Prospectus that includes a Term Sheet shall mean the date of
such Term Sheet.
(ii) When the Registration Statement becomes effective, and at
all subsequent times to and including the Closing Time
(hereinafter defined), and at each Option Exercise Time
(hereinafter defined), or for such longer period as the
Prospectus may be required to be delivered in connection with
sales of the Shares by the Underwriters or a dealer, the
Registration Statement and the Prospectus, including any Term
Sheet that is a part thereof (as amended or as supplemented if
the Company shall have filed with the Commission any amendment
thereof or supplement thereto; provided, that no amendment or
supplement to the Registration Statement or the Prospectus,
including as a result of the filing of a Term Sheet, shall be
made without prior consultation with you, and your approval),
will comply with the requirements of the Act and the Rules and
Regulations, will contain all statements required to be stated
therein in accordance with the Act and the Rules and Regulations,
will not contain an untrue statement of a material fact and will
not omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in
this subsection (ii) do not apply to statements or omissions in
the Registration Statement or the Prospectus based upon and made
in conformity with written information furnished to the Company
by or on behalf of any Underwriter specifically for inclusion
therein.
(iii) The Commission has not issued an order preventing or
suspending the use of any preliminary prospectus with respect to
the Shares and has not instituted or threatened to institute any
proceedings with respect to such an order. Each preliminary
prospectus, when filed with the Commission, conformed in all
material respects with the requirements of the Act and the Rules
and Regulations and, as of its date, did not include any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light
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of the circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in
this sentence do not apply to statements or omissions in each
such preliminary prospectus based upon and made in conformity
with written information furnished to the Company through the
Representative by or on behalf of any Underwriter specifically
for inclusion therein.
(iv) The Company is, and at the Closing Time, and at each
Option Exercise Time will be, a corporation duly organized,
validly existing and in good standing under the laws of the State
of Texas. Each of the corporations identified in Exhibit 21.1 to
the Registration Statement (collectively, the "Subsidiaries" and
individually, a "Subsidiary") is, and at the Closing Time, and at
each Option Exercise Time will be, a corporation duly organized,
validly existing and in good standing under the laws of the State
of its incorporation. The Company owns, free and clear of all
mortgages, pledges, liens, security interests, conditional sale
agreements, charges, encumbrances and restrictions of every
nature, all of the outstanding shares of the capital stock of
each Subsidiary, and all of such shares have been duly and
validly authorized and issued and are fully paid and
non-assessable. Each of the Company and the Subsidiaries has, and
at the Closing Time and at each Option Exercise Time will have,
the power and authority (corporate, governmental, regulatory and
otherwise) and all necessary approvals, orders, licenses,
certificates, permits and other governmental authorizations to
conduct all of the activities conducted by it, to own or lease
all of the assets owned or leased by it and to conduct its
business as described in the Registration Statement and the
Prospectus; and is, and at the Closing Time and at each Option
Exercise Time will be, duly licensed or qualified to do business
and in good standing as a foreign corporation in all
jurisdictions in which the nature of the activities conducted by
it and/or the character of the assets owned and leased by it
makes such license or qualification necessary, or in which the
failure to so qualify would have a material adverse effect on the
business, results of operations or financial condition of the
Company. Except for the shares of the stock of each Subsidiary
owned by the Company and retained interests in certain
securitization trusts owned by the related Subsidiaries, neither
the Company nor any Subsidiary owns, and at the Closing Time and
at each Option Exercise Time neither the Company nor any
Subsidiary will own, any shares of stock or any other securities
of any corporation or have any equity interest in any firm,
partnership, association or other entity; provided, however, that
the foregoing representation shall not be applicable to the
investment of the net proceeds from the sale of the Shares in
short-term
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interest bearing notes or money market instruments defined as
"Eligible Investments" in subsection (a)(xiii) of Section 6
hereof. A complete and correct copy of the amended certificate of
incorporation of the Company, the certificate of incorporation of
each Subsidiary, the amended by-laws of the Company and the
by-laws of each Subsidiary as currently in effect have been
delivered to you and no changes therein will be made subsequent
to the date hereof and prior to the Closing Time or each Option
Exercise Time.
(v) The Company is, and at the Closing Time and at each
Option Exercise Time will be, authorized to issue only 25,000,000
shares of Common Stock and 5,000,000 shares of preferred stock,
no par value (the "Preferred Stock"), and has heretofore validly
issued, and has outstanding, and at the Closing Time and at each
Option Exercise Time will have outstanding, fully paid and
nonassessable, 5,687,500 shares of the Common Stock, without
giving effect to the issuance of Shares by the Company pursuant
to this Agreement, and has no shares of Preferred Stock
outstanding. The Company has, and at the Closing Time and at each
Option Exercise Time will have, reserved for issuance (A) 515,000
shares of Common Stock under the Company's 1996 Stock Option
Plan, of which options to purchase 300,000 shares may be
outstanding or will be outstanding at the Closing Time or at each
Option Exercise Time; (B) 12,000 shares received pursuant to
grants to the Company's outside directors; (C) 100,000 shares
reserved pursuant to the Warrant; and (D) 18,811 shares of Common
Stock pursuant to a Warrant issued on March 12, 1996. Subsequent
to the date hereof and prior to the Closing Time and each Option
Exercise Time, the Company will not issue or acquire any shares
of Common Stock, Preferred Stock or any securities convertible
into shares of Common Stock or Preferred Stock. Except the
Warrants (as hereinafter defined) and as otherwise set forth in
this subsection (v), the Company does not have outstanding, and
at the Closing Time and at each Option Exercise Time the Company
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 shares of capital stock or any warrants, convertible
securities or obligations.
(vi) The consolidated financial statements of the Company and
its Subsidiaries (including the footnotes thereto) filed with and
as part of the Registration Statement and the Prospectus present
fairly the financial position and results of operations of the
Company and the Subsidiaries as of the respective dates thereof
and for the respective periods covered thereby, all in conformity
with generally accepted
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accounting principles applied on a consistent basis. Coopers &
Xxxxxxx L.L.P. (the "Company's accountants"), who have reported
on such financial statements, are independent accountants with
respect to the Company as required by the Act and the Rules and
Regulations. No other financial statements are required to be
included in the Registration Statement and the Prospectus.
(vii) The Company has a duly authorized and outstanding
capitalization as disclosed in the Prospectus under
"Capitalization" and will have the adjusted capitalization set
forth therein at the Closing Time (based on the assumptions set
forth therein). The financial and numerical information and data
set forth in the Prospectus under "Prospectus Summary," "Risk
Factors," "Use of Proceeds," "Dilution," "Capitalization,"
"Dividend Policy," "Selected Consolidated Financial and Operating
Data," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Business," "Management,"
"Principal and Selling Shareholders," "Certain Transactions,"
"Description of Capital Stock" and "Shares Eligible for Future
Sale" are fairly presented and prepared on a basis consistent
with the audited financial statements of the Company.
(viii) Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus and prior to the Closing Time and to each Option
Exercise Time, except as set forth in or contemplated by the
Registration Statement and the Prospectus, (A) each of the
Company and the Subsidiaries has and will have conducted its
business in substantially the same manner as on June 30, 1996;
(B) neither the Company nor any Subsidiary has incurred or will
have incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions not in the
ordinary course of business; (C) the Company has not paid or
declared nor will it pay or declare any dividends or other
distributions on its capital stock; and (D) there has not been
and will not have been any adverse change in the capitalization
of the Company or, except in connection with securitizations, any
Subsidiary or any material adverse change in the business,
business prospects, financial condition or results of operations
of the Company and the Subsidiaries taken as a whole or in the
condition of the Company and the Subsidiaries taken as a whole or
in the value of the assets of the Company and the Subsidiaries
taken as a whole arising for any reason whatsoever.
(ix) Except as set forth in or contemplated by the
Registration Statement and the Prospectus, neither the Company
nor any Subsidiary
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has, nor at the Closing Time and at each Option Exercise Time
will have, any material contingent obligations.
(x) There are no actions, suits or proceedings at law or in
equity pending, or to the knowledge of the Company, threatened,
against the Company or any Subsidiary, any of their respective
assets or any of their respective officers or directors, which
have not been disclosed to you, before or by any federal, state,
county or local commission, regulatory body, administrative
agency or other governmental body, domestic or foreign, wherein
an unfavorable ruling, decision or finding would adversely affect
the Company or any Subsidiary, or their respective businesses,
business prospects, financial conditions, results of operations
or properties. Neither the Company nor any Subsidiary is involved
in any labor dispute nor, to their knowledge, is any such dispute
threatened, which dispute would have a material adverse effect
upon the properties, business, financial condition or results of
operations of the Company and its Subsidiaries.
(xi) Each of the Company and the Subsidiaries has, and at the
Closing Time and at each Option Exercise Time will have, complied
in all respects with all laws, regulations and orders applicable
to it or its business, the violation of which would have a
material adverse effect upon its legal existence or its business,
business prospects, financial condition, results of operations,
earnings or properties. Each of the Company and the Subsidiaries
has, and at the Closing Time and at each Option Exercise Time
will have, in all respects performed all of the obligations
required to be performed by it, and is not, and at the Closing
Time and at each Option Exercise Time will not be, in default
under (there being no existing state of facts which with notice
or lapse of time or both would constitute a default under) any
indenture, mortgage, deed of trust, voting trust agreement, loan
agreement, letter of credit agreement, bond, debenture, note
agreement or other evidence of indebtedness, lease, contract or
other agreement or instrument to which it is a party or by which
it or any of its property is bound, and, to the knowledge of the
Company, no other party under any such agreement or instrument to
which the Company or any Subsidiary is a party is in default in
any respect thereunder.
(xii) The Company (i) keeps books, records and accounts that,
in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the Company and
its Subsidiaries and (ii) maintains a system of internal
accounting controls sufficient to provide reasonable assurances
that (A) transactions are executed in accordance with
management's general or specific authorization, (B) transactions
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are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting
principles and to maintain accountability for assets, (C) access
to assets is permitted only in accordance with management's
general or specific authorization and (D) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect
to any differences.
(xiii) Neither the Company nor any Subsidiary is in violation
of its certificate of incorporation or by-laws, in each case as
amended as of the date hereof.
(xiv) The outstanding shares of the Common Stock (including
the Shares to be sold by the Selling Shareholders) have been, and
all of the Shares, and the shares of Common Stock issuable upon
exercise of the Warrants, will, upon issuance and payment
therefor, be, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights or similar
contractual rights to purchase securities issued by the Company.
The shares of Common Stock issuable upon exercise of the Warrants
have been duly and validly reserved for issuance. The holders of
shares of the Common Stock will not be subject to personal
liability for the obligations of the Company solely by reason of
being such holders. The Common Stock and the Shares conform, and
when the Registration Statement becomes effective and at the
Closing Time and at each Option Exercise Time will conform, to
all statements with regard thereto contained in the Registration
Statement and the Prospectus; and the issuance and sale of the
Shares to be issued and sold by the Company have been duly and
validly authorized.
(xv) This Agreement has been duly authorized, executed and
delivered by the Company; the performance of this Agreement and
the consummation of the transactions contemplated hereby will not
conflict with or result in a breach or violation of any of the
terms and provisions of, or constitute a default under (there
being no existing state of events which with notice or lapse of
time or both would constitute a default) or result (or with the
giving of notice or lapse of time or both will result) in the
creation or imposition of any lien, charge, or encumbrance upon
the assets or properties of the Company or any Subsidiary,
pursuant to any indenture, mortgage, deed of trust, voting trust
agreement, loan agreement, letter of credit agreement, bond,
debenture, note agreement or other evidence of indebtedness,
lease, contract or other agreement or instrument to which the
Company or any Subsidiary is a party or by which the Company or
any
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Subsidiary or any of their respective properties is bound, or
under the certificate of incorporation or by-laws of the Company
or any Subsidiary or under any statute or under any order, rule
or regulation applicable to the Company or any Subsidiary or
their respective businesses or properties or of any court or
other governmental body; and no consent, approval, authorization
or order of any court or governmental agency or body is required
for the consummation by the Company of the transactions on its
part herein contemplated, except such as may be required under
the Act or under state securities or blue sky laws.
(xvi) Each of the Company and the Subsidiaries has good and
marketable title to all properties and assets owned by it, free
and clear of all liens, charges, encumbrances or restrictions,
except such as are described in or referred to in the Prospectus
or are not significant or important in relation to the business
of the Company or any Subsidiary. Each of the Company and the
Subsidiaries has valid, subsisting and enforceable leases for the
properties described in the Prospectus as leased by it, with such
exceptions as are not material and do not interfere with the use
made, and proposed to be made, of such properties by it.
(xvii) There is no document or contract of a character
required to be described in the Prospectus or to be filed as an
exhibit to the Registration Statement which is not described or
filed as required; and no statement, representation, warranty or
covenant made by the Company in this Agreement or in any
certificate or document required by this Agreement to be
delivered to you is, was when made, or as of the Closing Time or
any Option Exercise Time will be, inaccurate, untrue or
incorrect. No transaction has occurred between or among the
Company and any of its Subsidiaries and any of their officers,
directors or shareholders or any affiliate of any such officer,
director or shareholder that is required to be described in and
is not described in the Registration Statement and the
Prospectus.
(xviii) Each of the Company and the Subsidiaries has
sufficient trademarks, trade names, registered service marks,
patents, patent applications, patent rights, licenses, permits,
copyright protection and governmental or other authorizations
currently required for the conduct of its business, and each of
the Company and the Subsidiaries is in all material respects
complying therewith, and the products and services, and the marks
associated therewith, used by the Company and each Subsidiary do
not violate or infringe any trademarks, trade names, registered
service marks, patents, patent rights, licenses, permits or
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copyrights held or owned by any other party. Neither the Company
nor any Subsidiary has received any notice of violation or
infringement of or conflict with asserted rights of others with
respect to any trademarks, trade names, registered service marks,
patents, patent rights, licenses, permits, copyrights or
authorizations owned or used by the Company, any Subsidiary or
any other person. Other than as disclosed in the Prospectus, the
expiration of any such trademarks, trade names, registered
service marks, patents, patent rights, licenses, permits,
copyrights and governmental or other authorizations would not
materially adversely affect the condition (financial or
otherwise), business, results of operations or prospects of the
Company or any Subsidiary.
(xix) The Company intends to apply its proceeds from the sale
of the Shares for the purposes set forth in the Prospectus under
"Use of Proceeds."
(xx) The Company is not, and does not intend to conduct its
business in a manner in which it would become, an "investment
company" as defined in Section 3(a) of the Investment Company Act
of 1940 as amended (the "Investment Company Act").
(xxi) All issuances and sales of securities by the Company
prior to the Closing Time were exempt from registration under the
Act and complied in all respects with the provisions of all
applicable federal and state securities laws. No holder of any
securities of the Company has the right to require registration
of shares of the Common Stock or other securities of the Company
because of the filing or effectiveness of the Registration
Statement.
(xxii) Neither the Company nor any of its officers or
directors or affiliates (as defined in the Rules and Regulations)
has taken or will take, directly or indirectly, any action
designed to stabilize or manipulate the price of any security of
the Company, or which has constituted or which might reasonably
be expected to cause or result in stabilization or manipulation
of the price of any security of the Company, to facilitate the
sale or resale of any of the Shares, other than those actions
permitted by applicable law.
(xxiii) The Company has not, and at the Closing Time and at
each Option Exercise Time will not have, incurred any liability
for finder's or brokerage fees or agent's commissions in
connection with the offer and sale of the Shares or this
Agreement, except for the Underwriters' discounts and commissions
provided for in this Agreement.
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(xxiv) The Company and each Subsidiary have filed all federal,
state and local income and franchise tax returns required to be
filed through the date hereof and have paid all taxes due
thereon, and no tax deficiency has been, nor does the Company
have any knowledge of any tax deficiency which might be, asserted
against the Company or any Subsidiary which could materially
adversely affect the earnings, assets, affairs, business
prospects or condition (financial or other) of the Company or any
Subsidiary.
(xxv) None of the ratings of the Company's securitization
transactions have been lowered, or to the best of the Company's
knowledge, have the Company's securitization transactions been
put on credit watch with negative implications by the rating
agencies rating the Company's securitization transactions.
(xxvi) The Company has the power and authority to execute and
deliver the Warrants and the Warrant Agreement (as hereinafter
defined) on the terms and conditions set forth herein and in the
Warrants and Warrant Agreement, and has taken all corporate
action necessary therefor; no consent, approval, authorization or
other order of any regulatory agency is required for such
execution or delivery except as may be required under the Act;
and when executed and delivered pursuant to the provisions of
this Agreement, the Warrants and Warrant Agreement will
constitute the valid, binding and legally enforceable obligation
of the Company.
(b) Each of the Selling Shareholders, severally and not jointly,
represents and warrants to each Underwriter that:
(i) Such Selling Shareholder (A) has the power and authority
to execute and deliver this Agreement and the Power of Attorney
Agreement (hereinafter defined) on the terms and conditions set
forth herein and therein; (B) is, and when the Registration
Statement shall become effective and at the Closing Time will be,
the owner of the Shares to be sold by such Selling Shareholder to
the respective Underwriters pursuant to the terms hereof, in each
case free and clear of all liens, charges, encumbrances and
restrictions; (C) has paid to the Company the full purchase price
required to be paid for such Shares; and (D) has, and when the
Registration Statement shall become effective and at the Closing
Time will have, the power and authority to convey good and valid
title to such Shares, in each case free and clear of all liens,
charges, encumbrances and restrictions.
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(ii) Such Selling Shareholder has executed an agreement and
power of attorney (the "Power of Attorney Agreement") with
_________________________ or _______________________ as
attorney-in-fact, and has delivered to such attorney-in-fact,
pursuant to the Power of Attorney Agreement, certificates in
negotiable form for the Shares to be sold by such Selling
Shareholder. Copies of each Power of Attorney Agreement have been
delivered to you. Such certificates and the Shares represented
thereby are subject to the rights of the Underwriters hereunder
and, to such extent, the Power of Attorney granted by such
Selling Shareholder to such attorney-in-fact is irrevocable and
shall not be terminated by law or upon the occurrence of any
event. If any such event shall occur, with or without notice to
such attorney-in-fact, such attorney-in-fact shall deliver such
certificates in accordance with the terms and provisions of this
Agreement as if such event had not occurred.
(iii) The Power of Attorney Agreement has been duly
authorized, executed and delivered by such Selling Shareholder,
and this Agreement has been duly authorized, executed and
delivered by such Selling Shareholder or by his or her
attorney-in-fact pursuant to the Power of Attorney Agreement.
(iv) Neither the execution and delivery or performance of this
Agreement or the Power of Attorney Agreement or the consummation
of the transactions herein or therein contemplated nor the
compliance with the terms hereof or thereof by such Selling
Shareholder will conflict with, or result in a breach of any of
the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, guaranty, purchase agreement
or other agreement or instrument to which such Selling
Shareholder or any of such Selling Shareholder's property is
bound, or under any statute or under any order, rule or
regulation applicable to such Selling Shareholder or any of such
Selling Shareholder's property of any court or other governmental
agency; and no consent, approval, authorization or order of any
court or governmental agency or body is required for the
consummation by such Selling Shareholder of the transactions on
such Selling Shareholder's part herein or therein contemplated,
except such as may be required under the Act or under state
securities or blue sky laws.
(v) At the Closing Time, all stock transfer or other taxes
(other than income taxes) which are required to be paid in
connection with the sale and transfer of the Shares to be sold by
the Selling Shareholders to the several Underwriters hereunder
will have been
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fully paid or provided for by the Selling Shareholders and all
laws imposing such taxes will have been fully complied with.
(vi) Such Selling Shareholder has not, and at the Closing Time
will not have, taken, directly or indirectly, any action to cause
or result in, or which has constituted, or might reasonably be
expected to constitute, the stabilization or manipulation of the
price of the shares of the Common Stock to facilitate the sale or
the resale of any of the Shares.
Section 4. (a) Purchase, Sale and Delivery of the Firm Shares;
Closing Time; Warrants. (i) On the basis of the representations and warranties
contained in this Agreement, and subject to the terms and conditions herein set
forth, (A) the Company agrees to sell to the Underwriters, and the Underwriters
agree to purchase from the Company, 750,000 Shares at and for a price of $___
per Share; and (B) each of the Selling Shareholders agree, severally and not
jointly, to sell to the Underwriters the number of Shares set forth opposite the
name of such Selling Shareholder on Schedule B hereof, and the Underwriters
agree to purchase from the Selling Shareholders, such Shares at and for a price
of $____ per Share. The number of Shares to be purchased from the Company and
the number of Shares to be purchased from the Selling Shareholders, respectively
(as adjusted by the Representative to eliminate fractions), by each of the
Underwriters shall be determined by multiplying the aggregate number of such
Shares to be sold by the Company or the Selling Shareholders, as the case may
be, as set forth above and in Schedule B, by a fraction, the numerator of which
is the total number of Firm Shares set forth opposite the name of such
Underwriter in Schedule A hereto and the denominator of which is the aggregate
number of Firm Shares set forth in Schedule A hereto. The obligations of the
Underwriters under this Agreement are several and not joint.
(ii) Delivery of the Firm Shares shall be made to you for the
accounts of the respective Underwriters, at your offices at 2049 Century Park
East, 30th Floor, Los Angeles, California, or such other location in the Los
Angeles metropolitan area as you shall advise the Company by at least one full
business day's notice in writing, against payment by you on behalf of the
respective Underwriters of the purchase price therefor to the Company and the
attorney-in-fact for the Selling Shareholders, by delivery via wire transfer in
immediately available funds to the Company or the Selling Shareholders of the
respective amounts to which they are entitled, at 10:00 a.m., Austin, Texas
Time, on ____________ 1996, or on such other time and business day (Saturdays,
Sundays and legal holidays in the City of Los Angeles or State of California not
being considered business days for the purposes of this Agreement), as the
Representative and the Company may agree upon or as the Representative may
determine pursuant to Section 11 hereof, which time and date are herein called
the "Closing Time." Delivery of the Firm Shares shall be made in registered form
in such name or names and in such denominations as you shall request by at least
two full
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business days' notice in writing. The cost of original issue tax stamps and
transfer stamps, if any, in connection with the issuance and delivery or sale of
the Firm Shares by the Company to the respective Underwriters shall be borne by
the Company; the cost of transfer stamps, if any, in connection with the sale of
the Firm Shares by the Selling Shareholders to the respective Underwriters shall
be borne by the Selling Shareholders. The Company will pay and save each
Underwriter or its nominees, and any subsequent holder of the Firm Shares,
harmless from any and all liabilities with respect to or resulting from any
failure or delay in paying federal or state stamp and other transfer taxes, if
any, which may be payable or determined to be payable in connection with the
sale by the Company or the Selling Shareholders to such Underwriter of the Firm
Shares or any portion thereof.
(iii) The Company and the Selling Shareholders will make the
certificates for the Firm Shares available to you for examination at your
offices at 2049 Century Park East, 30th Floor, Los Angeles, California, or at
such other place as you shall request, not later than 2:00 p.m., Austin, Texas
Time, on the business day next preceding the Closing Time.
(b) Purchase, Sale and Delivery of the Option Shares. (i) The
Company hereby grants to the respective Underwriters an option (the "Option") to
purchase from the Company up to 150,000 Option Shares, in the same proportion as
each Underwriter has agreed to purchase the Firm Shares, at and for a price of
$______ for each Option Share; provided, however, that the Option may be
exercised only for the purpose of covering any over-allotments which may be made
by you in connection with the distribution and sale of the Firm Shares.
(ii) The Option is exercisable by you in whole or in part at any
time or times on or before 12:00 noon, Austin, Texas Time, on the day prior to
the Closing Time, and at any time or times thereafter during the period ending
30 days after the date of the Prospectus (or if such thirtieth day shall be a
Saturday, Sunday or holiday, on the next business day thereafter when the New
York Stock Exchange is open for trading), in each case by giving notice to the
Company in the manner provided in Section 12 hereof, setting forth the number of
Option Shares as to which the Option is being exercised, the name or names in
which the certificates for such Option Shares are to be registered, the
denominations of such certificates and the date of delivery of such Option
Shares, which date, if not the Closing Time, shall not be less than two nor more
than three business days after such notice.
(iii) Upon each exercise of the Option, the Company shall sell to
the respective Underwriters the aggregate number of Option Shares specified in
the notice exercising the Option and the Underwriters, on the basis of the
representations and warranties of the Company contained herein and in each
certificate and document contemplated under this Agreement to be delivered to
you, but subject to
-14-
the terms and conditions of this Agreement, shall purchase from the Company the
aggregate number of Option Shares specified in such notice.
(iv) Delivery of the Option Shares with respect to which the
Option shall have been exercised shall be made to you for the account of the
respective Underwriters, at your offices at 2049 Century Park East, 30th Floor,
Los Angeles, California, or such other location in the Los Angeles metropolitan
area as you shall determine and advise the Company, against payment by you, on
behalf of the respective Underwriters, of the purchase price therefor to the
Company by certified or bank cashier's check or checks payable by wire transfer
in immediately available funds to the Company in the amount to which the Company
is entitled, at 10:00 a.m., Austin, Texas Time, on the date designated in the
notice given by you as above provided for, unless some other place, time and
date is agreed upon (such time and date being herein called an "Option Exercise
Time"). The cost of original issue tax stamps or transfer stamps, if any, in
connection with each issuance and delivery of the Option Shares by the Company
to the respective Underwriters shall be borne by the Company. The Company will
pay and save each Underwriter, and any subsequent holder of Option Shares,
harmless from any and all liabilities with respect to or resulting from any
failure or delay in paying federal and state stamp taxes, if any, which may be
payable or determined to be payable as a result of the sale by the Company to
such Underwriter of the Option Shares or any portion thereof.
(v) The Company will make the certificates for the Option Shares
to be purchased at each Option Exercise Time available to you for examination at
your offices at 2049 Century Park East, 30th Floor, Los Angeles, California, or
such other place as you shall request, not later than 2:00 p.m., Austin, Texas
Time, on the business day next preceding each Option Exercise Time.
(vi) The obligation of the respective Underwriters to purchase
and pay for Option Shares at each Option Exercise Time shall be subject to
compliance as of such date with all the conditions specified in Section 8 hereof
and the delivery to you of opinions, certificates and letters, each dated the
respective Option Exercise Time, substantially similar in scope to those
specified in Section 8 hereof, and to the absence of any occurrence referred to
in Section 10 hereof.
(c) Warrants. In order to induce you to enter into this
Agreement, the Company shall execute and deliver to you, in your individual
capacity and not as the Representative, for an aggregate purchase price of $50,
five-year warrants (the "Warrants") pursuant to a warrant agreement (the
"Warrant Agreement"), to purchase an aggregate of 100,000 shares of the Common
Stock at an exercise price per share equal to 120% of the initial public
offering price per share set forth on the cover page of the Prospectus. The
Warrants shall be exercisable beginning one year from the date of the
Prospectus. The Warrants and Warrant Agreement shall be in the form of Exhibit
1.2 to the Registration Statement. Execution and delivery of
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Warrants, registered in your name or the names of such of your officers as you
shall notify the Company in writing, shall be made to you, The Boston Group,
L.P., 0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx, at the
Closing Time. The cost of original issue tax stamps, if any, in connection with
the execution and delivery of the Warrants shall be borne by the Company.
Section 5. Registration Statement and Prospectus. (a) The Company
will deliver to you, without charge, four fully signed copies of the
Registration Statement and of each amendment thereto, including all financial
statements and exhibits, and to each Underwriter the number of conformed copies
of the Registration Statement and of each amendment thereto, including all
financial statements, but excluding exhibits, as each Underwriter may reasonably
request.
(b) The Company has delivered to each Underwriter, and each of
the Selected Dealers (hereinafter defined), without charge, as many copies as
you have requested of each preliminary prospectus heretofore filed with the
Commission and will deliver to each Underwriter and to others whose names and
addresses are furnished by such Underwriter or a Selected Dealer, without
charge, on the Effective Date, and thereafter from time to time during the
period in which the Prospectus is required by law to be delivered in connection
with sales of Shares by an Underwriter or a dealer, as many copies of the
Prospectus (and, in the event of any amendment of or supplement to the
Prospectus, of such amended or supplemented Prospectus) as you may request;
without limiting the application of this Section 5(b), the Company, not later
than (i) 6:00 p.m., Austin, Texas time, on the date of determination of the
public offering price, if such determination occurred at or prior to 12:00 Noon,
Austin, Texas time, on such date or (ii) 6:00 p.m., Austin, Texas Time, on the
business day following the date of determination of the public offering price,
if such determination occurred after 12:00 Noon, Austin, Texas Time, on such
date, will deliver to the Representative, without charge, as many copies of the
Prospectus and any amendment or supplement thereto as the Representative may
reasonably request for purposes of confirming orders that are expected to settle
at the Closing Time.
(c) The Company has authorized the Underwriters to use, and make
available for use by prospective dealers, the preliminary prospectuses, and
authorizes each Underwriter, all dealers (the "Selected Dealers") selected by
you in connection with the distribution of the Shares and all dealers to whom
any of such Shares may be sold by the Underwriters or by any Selected Dealer, to
use the Prospectus, as from time to time amended or supplemented, in connection
with the sale of the Shares in accordance with the applicable provisions of the
Act, the applicable Rules and Regulations and applicable state law until
completion of the public offering of the Shares and for such longer period as
you may request if the Prospectus is required to be delivered in connection with
sales of the Shares by an Underwriter or a dealer.
-16-
Section 6. Covenants. (a) The Company covenants and agrees with
each Underwriter that:
(i) After the execution and delivery of this Agreement, the
Company will not, at any time, whether before or after the
Effective Date, file any Term Sheet or any amendment of or
supplement to the Registration Statement or the Prospectus of
which you shall not previously have been advised and furnished
with a copy, or which you or Fulbright & Xxxxxxxx L.L.P.
("counsel for the Underwriters") shall not have approved, or
which is not in compliance with the Act or the Rules and
Regulations.
(ii) If the Registration Statement has not become effective,
the Company will promptly file the Final Amendment with the
Commission and will use its best efforts to cause the
Registration Statement to become effective. If the Registration
Statement has become effective, the Company will file the Rule
430A Prospectus or other Prospectus or any Term Sheet that
constitutes a part thereof with the Commission as promptly as
practicable, but in no event later than that permitted by Rules
434 and 424(b). The Company will promptly advise you (A) when the
Registration Statement, or any post effective amendment thereto,
shall have become effective, or any Term Sheet or any amendments
or supplements to the Prospectus shall have been filed with the
Commission; (B) of any request of the Commission or any state or
other regulatory body for any amendment or supplement of the
Registration Statement or the Prospectus or for additional
information and the nature and substance thereof; (C) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus or
prohibiting the offer or sale of any of the Shares or of the
initiation of any proceedings for such purpose; (D) of any
receipt by the Company of any notification with respect to the
suspension of qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding
for such purpose; and (E) of the happening of any event during
the periods in which the Prospectus is to be used in conjunction
with the offer or sale of Shares which makes any statement made
in the Registration Statement or the Prospectus untrue or which
requires the making of any changes in the Registration Statement
or the Prospectus in order to make the statements therein not
misleading. The Company will use its best efforts to prevent the
issuance of any stop order or any order preventing or suspending
the use of the Registration Statement or Prospectus and, if such
order is issued, to obtain the lifting thereof as promptly as
possible.
-17-
(iii) The Company will prepare and file with the Commission,
upon your request, any such amendments of or supplements to the
Registration Statement or the Prospectus, in form and substance
reasonably satisfactory to the Company, as in the opinion of the
Underwriters may be necessary or advisable in connection with the
distribution of the Shares or any change in the price at which,
or the terms upon which, the Shares may be offered by you, and
will use its best efforts to cause the same to become effective
as promptly as possible.
(iv) The Company will comply with the Act and the Rules and
Regulations and the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and the rules and regulations thereunder so
as to permit the continuance of sales of and dealings in the
Shares under the Act and the Exchange Act. If at any time when a
prospectus is required to be delivered under the Act an event
shall have occurred as a result of which it is necessary to amend
or supplement the Prospectus in order to make the statements
therein not untrue or misleading or to make the Prospectus comply
with the Act, the Company will notify you promptly thereof and
will, subject to the provisions of Section 6(a)(i) hereof,
furnish to you an amendment or supplement which will correct such
statement in accordance with the requirements of Section 10 of
the Act.
(v) The Company will comply with all of the provisions of any
undertakings contained in the Registration Statement.
(vi) The Company will take all reasonably necessary actions to
furnish to whomever you direct, when and as requested by you, all
reasonably necessary documents, exhibits, information,
applications, instruments and papers as may be required or, in
the opinion of counsel for the Underwriters, desirable in order
to permit or facilitate the sale of the Shares. The Company will
use its best efforts to qualify or register the Shares for sale
under the so-called blue sky laws of such jurisdictions as you
shall request, to make such applications, file such documents and
furnish such information as may be required for such purpose and
to comply with such laws so as to continue such qualification in
effect so long as required for the purposes of the distribution
of the Shares; provided, however, that the Company shall not be
required to qualify as a foreign corporation in any jurisdiction
or to file a consent to service of process in any jurisdiction in
any action other than one arising out of the offering or sale of
the Shares.
-18-
(vii) During the period of three years commencing on the
Effective Date, the Company will furnish to each Underwriter, (A)
within 120 days after the end of each fiscal year of the Company,
either (1) a consolidated balance sheet of the Company and its
then consolidated subsidiaries, and a separate balance sheet of
each subsidiary if any, of the Company the accounts of which are
not included in such consolidated balance sheet, as of the end of
such fiscal year, and consolidated statements of income and
shareholders' equity of the Company and its consolidated
subsidiaries, and separate statements of income and shareholders'
equity of each of the subsidiaries, if any, of the Company the
accounts of which are not included in such consolidated
statements, for the fiscal year then ended, all in reasonable
detail, prepared in accordance with generally accepted accounting
principles, consistently applied, and all certified by
independent accountants (within the meaning of the Act and the
Rules and Regulations), or (2) the Company's Form 10-K for such
fiscal year as filed with the Commission in accordance with the
Exchange Act; (B) within 60 days after the end of each of the
first three fiscal quarters of each fiscal year, either (1)
similar balance sheets as of the end of such fiscal quarter and
similar statements of income and shareholders' equity for the
fiscal quarter then ended, all in reasonable detail, and all
certified by the Company's principal financial officer or the
Company's principal accounting officer as having been prepared in
accordance with generally accepted accounting principles,
consistently applied, or (2) the Company's Form 10-Q for such
fiscal quarter as filed with the Commission in accordance with
the Exchange Act; (C) as soon as available, each report furnished
to or filed with the Commission or any securities exchange and
each report and financial statement furnished to the Company's
shareholders generally; and (D) as soon as available, such other
material as such Underwriter may from time to time reasonably
request regarding the financial condition and operations of the
Company and its subsidiaries.
(viii) The Company will make generally available to its
security holders and to the Representative as soon as
practicable, but not later than 45 days after the end of the
12-month period beginning at the end of the fiscal quarter of the
Company during which the Effective Date occurs (or 90 days, if
such 12-month period coincides with the Company's fiscal year),
an earnings statement of the Company, which will be in reasonable
detail, but need not be audited, and will cover a period of
twelve months commencing after the Effective Date. Such earnings
statement shall comply with the requirements of Section 11(a) of
the Act or Rule 158 of the Rules and Regulations. During the
period of three years commencing on the Effective Date, the
Company
-19-
will furnish to its shareholders (A) within 75 days after the end
of the first three fiscal quarters of each fiscal year, quarterly
reports containing unaudited financial information, and (B)
within 120 days after the end of each fiscal year, an annual
report containing audited financial information.
(ix) Counsel for the Company, the Company's accountants and
the officers of the Company will respectively furnish the
opinions, the letters and the certificates referred to in
subsections (e), (f), (g), (h) and (i) of Section 8 hereof, and,
in the event that the Company shall file any amendment to the
Registration Statement relating to the offering of the Shares or
any amendment or supplement to the Prospectus relating to the
offering of the Shares subsequent to the Effective Date, whether
pursuant to subsection (iii) of this Section 6(a) or otherwise,
such counsel, such accountants and such officers will, at the
time of such filing or at such subsequent time as you shall
specify, respectively, furnish to you such opinions, letters and
certificates, each dated the date of its delivery, of the same
nature as the opinions, the letters and the certificates referred
to in said subsections (e), (f), (g), (h) and (i) respectively,
as you may reasonably request, or, if any such opinion, letter or
certificate cannot be furnished by reason of the fact that such
counsel or such accountants or any such officer believes that the
same would be inaccurate, such counsel or such accountants or any
such officer will furnish an accurate opinion, letter or
certificate with respect to the same subject matter.
(x) Prior to the later to occur of the termination of the
Option and the Option Exercise Time, the Company will not issue,
directly or indirectly, without your prior consent and that of
counsel for the Underwriters, any press release or other
communication or hold any press conference with respect to the
Company or its activities or this offering.
(xi) The Company will not, without your prior written consent,
sell, contract to sell or otherwise dispose of any equity
securities, including shares of Common Stock, except the sale of
the Shares, the issuance of employee and director stock options
or issuance of the Warrants as described in the Prospectus, for a
period of 180 days after the date of this Agreement; and the
Company has caused each of its officers, directors, the Selling
Shareholders and all holders of the Common Stock, including any
holder of a warrant, option or other security convertible into
Common Stock, and any affiliate thereof, to deliver to you on or
before the date of this Agreement an agreement, satisfactory in
form and substance to you and counsel for the Underwriters,
-20-
whereby each agrees, for a period of 180 days after the date of
this Agreement, not to offer, (pledge, except in the case of
Xxxxxxx X. Xxxxxxxx) sell or contract to sell, transfer or
otherwise dispose of any shares of Common Stock, directly or
indirectly, without your prior written consent, except for the
sale of Shares to the Underwriters pursuant to this Agreement.
(xii) The Company will not at any time, directly or
indirectly, take any action designed to or which will constitute
or which might reasonably be expected to cause or result in the
stabilization of the price of the Shares to facilitate the sale
or resale of any of the Shares, other than those actions
permitted by applicable law.
(xiii) The Company will apply the net proceeds from the sale
of the Shares in the manner set forth under "Use of Proceeds" in
the Prospectus. The Company will prepare and file with the
Commission a report (on Form S-R) of Sales of Securities and Use
of Proceeds Therefrom in accordance with Rule 463 of the Rules
and Regulations and promptly will deliver a copy thereof to the
Representative. Prior to the application of such net proceeds,
the Company will invest or reinvest such proceeds only in
Eligible Investments (hereinafter defined). "Eligible
Investments" shall mean the following investments so long as they
have maturities of one year or less: (A) obligations issued or
guaranteed by the United States or by any person controlled or
supervised by or acting as an instrumentality of the United
States pursuant to authority granted by Congress; (B) obligations
issued or guaranteed by any state or political subdivision
thereof rated either Aa or higher, or MIG 1 or higher, by Xxxxx'x
Investors Service, Inc. or AA or higher, or an equivalent, by
Standard & Poor's Corporation, both of New York, New York, or
their successors; (C) commercial or finance paper which is rated
either Prime-1 or higher or an equivalent by Xxxxx'x Investors
Service, Inc. or A-1 or higher or an equivalent by Standard &
Poor's Corporation, both of New York, New York, or their
successors; and (D) certificates of deposit or time deposits of
banks or trust companies, organized under the laws of the United
States, having a minimum equity of $500,000,000.
(xiv) During the period of 180 days commencing on the date
hereof, the Company will not, without the prior written consent
of the Representative, grant options to purchase shares at a
price less than the fair market value thereof.
-21-
(xv) The Company has caused the Common Stock to be duly
included for quotation on the Nasdaq Stock Market's National
Market (the "National Market").
(xvi) The Company will immediately notify the Representative
in writing if, prior to the Closing Time (i) any of the ratings
of the Company's securitization transactions are lowered, (ii)
any of the ratings of the Company's securitization transactions
are put under surveillance or review by the rating agencies
rating the Company's securitization transactions, and (iii) if
the Company suspects that (a) any of the ratings of the Company's
securitization transactions may be put under surveillance or
review by the rating agencies rating the Company's securitization
transactions, or (b) any of the ratings of the Company's
securitization transactions may be lowered.
(b) Each of Selling Shareholders, severally and not jointly,
covenants and agrees with each Underwriter that:
(i) Such Selling Shareholder will not, directly or indirectly,
take any action designed to or which will constitute or which
might reasonably be expected to cause or result in the
stabilization of the price of the Shares to facilitate the sale
or the resale of any of the Shares.
(ii) If, during such period as the Prospectus may be required
to be delivered in connection with the sales of the Shares by the
Underwriters or a dealer, such Selling Shareholder shall believe
or have any reasonable grounds to believe that the Prospectus (as
amended or as supplemented if the Company shall have filed with
the Commission any amendment thereof or supplement thereto)
contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, or that
any of the representations and warranties of the Company or such
Selling Shareholder contained herein or in any certificate or
document contemplated under this Agreement to be delivered to you
are false, such Selling Shareholder will immediately notify you,
as the Representative, to such effect.
(iii) Such Selling Shareholder will not, without your prior
written consent, directly or indirectly, offer, sell, contract to
sell, transfer or otherwise dispose of any shares of Common Stock
or any securities convertible into or exchangeable for shares of
Common Stock owned by or held of record in its name, except the
sale of Shares to the
-22-
Underwriters pursuant to this Agreement, for a period of 180 days
after the Effective Date.
(iv) Such Selling Shareholder will furnish the certificates
referred to in subsections (h) and (i) of Section 8 hereof.
Section 7. Expenses. The Company will pay and bear all costs,
fees, taxes and expenses incident to the performance of the obligations of the
Company and the Selling Shareholders under this Agreement, including, but not
limited to: (a) the costs incident to the issuance, sale and delivery to the
Underwriters of the Shares (except that the Company will not be responsible for
the underwriting discounts and commissions with respect to shares of Common
Stock being sold by the Selling Shareholders); (b) the costs incident to the
preparation, printing and filing under the Act of each preliminary prospectus,
the Prospectus, the Registration Statement and any amendments or supplements
thereof and exhibits thereto; (c) the costs of distributing the Registration
Statement and any post-effective amendments thereto; (d) the costs of printing
and distributing to the Representative, the other Underwriters and any Selected
Dealers copies of any preliminary prospectus, the Prospectus, the Registration
Statement and any amendment or supplement to the Prospectus or Registration
Statement required by this Agreement or the Act; (e) the costs of preparation,
printing, mailing, delivery, filing and distribution of preliminary and final
blue sky memoranda, Underwriter's Questionnaires and Powers of Attorney, letters
to prospective Underwriters, the Agreement Among Underwriters, the Selling
Agreement, this Agreement and all documents related thereto; (f) the filing fees
of the Commission; (g) the costs of qualification or registration of the Shares
in the jurisdictions referred to in subsection (a)(vi) of Section 6 hereof,
including the legal fees and expenses of counsel for the Underwriters in
connection therewith, and all filing fees in connection therewith; (h) the cost
of preparation, including the legal fees and expenses of counsel for the
Underwriters in connection therewith, of all filings with the National
Association of Securities Dealers, Inc. ("NASD") and all filing fees in
connection therewith; (i) fees and expenses of counsel for the Company, the
Company's accountants and the Company's consultants; (j) fees in connection with
the quotation of the Common Stock on the National Market; and (k) all other
costs and expenses incurred or to be incurred by the Company in connection with
the transactions contemplated by this Agreement. The Company further agrees
that, in addition to the expenses payable as described above, it will pay to the
Representative a non-accountable expense allowance equal to one and one-half
percent of the aggregate proceeds of the offering. The Company shall pay such
amount on the Closing Time by certified or bank cashier's check or, at the
election of the Representative, by deduction from the proceeds of the offering
contemplated herein. If the Firm Shares are not sold to the Underwriters for any
reason whatsoever, other than as a result of the Underwriters without cause
under this Agreement refusing to proceed with the purchase of the Firm Shares,
the Company will pay all accountable out-of-pocket expenses which you may incur
in connection with this Agreement and
-23-
the transactions hereby contemplated, including all fees and expenses of counsel
for the Underwriters in connection therewith. The provisions of this Section 7
are intended to relieve the Underwriters from payment of the costs and expenses
which the Company hereby agrees to pay and shall not effect any agreement
between the Company and the Selling Shareholders for the sharing of such costs
and expenses.
Section 8. Conditions of the Underwriters' Obligations. The
Underwriters' obligations hereunder to purchase and pay for the Shares are
subject (as of the date hereof, the Closing Time and each Option Exercise Time)
to the accuracy of and compliance with the representations and warranties of the
Company and the Selling Shareholders herein and in each certificate and document
contemplated under this Agreement to be delivered, to the accuracy of the
statements of the Company, each of the Selling Shareholders and of the officers
of the Company made pursuant to the provisions hereof, to the performance by the
Company and each of the Selling Shareholders of their respective covenants and
agreements hereunder and under each such certificate and document, and to the
following additional conditions:
(a) (i) The Registration Statement shall have become
effective not later than 5:00 p.m., New York City Time, on the date of this
Agreement, or at such later time or on such later date as you may agree to in
writing; (ii) if required, the Prospectus or any Term Sheet that constitutes a
part thereof shall have been filed with the Commission pursuant to Rules 434 and
424(b)(1) or (4) of the Rules and Regulations within the applicable time period
prescribed for such filing thereunder and in accordance with the provisions of
Section 6(a)(ii) hereof; (iii) at or prior to the Closing Time, no stop order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Shares under the blue sky laws of any jurisdiction
(whether or not a jurisdiction which you shall have specified) shall have been
issued and no proceeding for that purpose shall have been initiated or shall be
threatened or contemplated by the Commission or the authorities of any such
jurisdiction; (iv) any request for additional information on the part of the
Commission or any such authorities shall have been complied with to the
satisfaction of the Commission or such authorities and counsel for the
Underwriters; (v) the NASD, upon review of the terms of the public offering of
Shares, shall not have objected to such offering, such terms, or the
Underwriters' participation in the same; and (vi) after the date hereof, no
amendment or supplement to the Registration Statement or the Prospectus shall
have been filed without your prior consent.
(b) You shall not have advised the Company, and none of
the Selling Shareholders shall have advised any Underwriter or the Company, that
the Registration Statement or the Prospectus or any amendment thereof or
supplement thereto contains an untrue statement of a fact which is material, or
omits to state a fact which is material and is required to be stated therein or
is necessary to make the
-24-
statements therein, in light of the circumstances under which they were made,
not misleading.
(c) Between the time of the execution and delivery of this
Agreement and the Closing Time, there shall be no litigation instituted against
the Company or any Subsidiary or any of their respective officers or directors,
and between such dates there shall be no proceeding instituted or threatened
against the Company or any Subsidiary or any of their respective officers or
directors before or by any federal, state, county or local 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 adversely affect the Company or any Subsidiary or their
respective businesses, business prospects or properties, or materially adversely
affect the financial condition or results of operations of the Company or any
Subsidiary.
(d) Each of the representations and warranties of the
Company and each of the Selling Shareholders contained herein and in each
certificate and document contemplated under this Agreement to be delivered shall
be true and correct at the Closing Time as if made at the Closing Time, and all
covenants and agreements contained herein, and in each such certificate and
document, to be performed on the part of the Company or each of the Selling
Shareholders and all conditions contained herein and in each such certificate
and document to be fulfilled or complied with by the Company or each of the
Selling Shareholders at or prior to the Closing Time shall have been duly
performed, fulfilled or complied with.
(e) Concurrently with the execution and delivery of this
Agreement and at the Closing Time, counsel for the Company shall and the Selling
Shareholders furnish to you an opinion, in form and substance satisfactory to
you, dated as of the date of its delivery, to the effect that:
(i) The Company and each Subsidiary is a
corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation.
Each of the Company and the Subsidiaries has the corporate
power and authority to conduct all of the activities
conducted by it, own or lease all of the assets owned or
leased by it, and conduct its business as described in the
Registration Statement and the Prospectus; and is duly
licensed or qualified to do business and in good standing
in the State of Texas.
(ii) No authorization, approval, consent or license
of any governmental or regulatory body, except as may be
required under the Act or the blue sky laws of the various
jurisdictions, is required in connection with the (A)
authorization, issuance,
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transfer, sale or delivery of the Shares to be sold by the
Company; (B) transfer, sale or delivery of the Shares to
be sold by the Selling Shareholders; (C) authorization,
issuance or delivery of the Warrants, the Warrant
Agreement or issuance of the shares of Common Stock upon
exercise of the Warrants; or (D) execution, delivery and
performance of this Agreement by the Company or any
Selling Shareholder or of the Power of Attorney Agreement
by any Selling Shareholder, or if so required all such
authorizations, approvals, consents and licenses,
specifying the same, have been obtained and are in full
force and effect.
(iii) The Company has an authorized and outstanding
capital stock, stock options and warrants as set forth in
the Registration Statement and the Prospectus. The
outstanding shares of the Common Stock (including the
Shares to be sold by the Selling Shareholders) have been,
and all of the Shares will, upon sale or issuance, and
payment therefor, be, duly authorized, validly issued,
fully paid and nonassessable, are not subject to
preemptive rights and have not been issued in violation of
any statutory preemptive rights. The Common Stock has been
duly authorized for quotation on the National Market. All
issuances of securities by the Company prior to the
Closing Time were exempt from, or complied in all respects
with, the provisions of all applicable federal securities
laws. Such opinion delivered at the Closing Time shall
state that each of the Shares is duly and validly issued,
fully paid and nonassessable and not subject to preemptive
rights.
(iv) All of the issued and outstanding shares of
the capital stock of each Subsidiary are validly issued,
fully paid and nonassessable and all of the issued and
outstanding shares of stock of each Subsidiary are owned
of record by the Company.
(v) The description of the Common Stock and the
Shares contained in the Registration Statement and the
Prospectus conforms to the rights set forth in the
instruments defining the same.
(vi) The Company is not an "investment company" as
defined in Section 3(a) of the Investment Company Act and,
if the Company conducts its business as set forth in the
Registration Statement and the Prospectus, will not become
an
-26-
"investment company" and will not be required to register
under the Investment Company Act; the Company has not been
required to make any filings pursuant to the Exchange Act.
(vii) The Company has full corporate power and
authority to enter into this Agreement, the Warrant
Agreement and the Warrants, and this Agreement and the
Warrants have been duly authorized, executed and delivered
by the Company and, with respect to this Agreement, each
Selling Shareholder or his or her duly authorized
attorney-in-fact. The Power of Attorney Agreement has been
duly authorized, executed and delivered by each Selling
Shareholder.
(viii) The Registration Statement and the
Prospectus, and each amendment thereof or supplement
thereto, comply as to form with, and appear on their face
to be appropriately responsive in all material respects,
to the requirements of the Act and the Rules and
Regulations, including such requirements as to the filing
of exhibits (except that no opinion need be expressed as
to financial statements and other financial or statistical
data contained in the Registration Statement or the
Prospectus).
(ix) [Omitted]
(x) The Registration Statement has become effective
under the Act, and, to the knowledge of such counsel, no
stop order suspending the effectiveness of the
Registration Statement or use of the Prospectus has been
issued and no proceedings for that purpose have been
instituted or are threatened, pending or contemplated.
(xi) The execution and delivery of this Agreement
by the Company and the Selling Shareholders, the Power of
Attorney Agreement by the Selling Shareholders, the
Warrants and the Warrant Agreement by the Company, the
consummation by the Company and the Selling Shareholders
of the transactions herein or therein contemplated and the
compliance with the terms of this Agreement, the Warrants,
the Warrant Agreement and the Power of Attorney Agreement
do not and will not
-27-
conflict with or result in a breach of any of the terms or
provisions of or violate or constitute a default under,
the certificate of incorporation or by-laws of the Company
or any Subsidiary, or any indenture, mortgage or other
agreement or instrument known to such counsel to which the
Company, any Subsidiary or any Selling Shareholder is a
party or by which the Company, any Subsidiary or any
Selling Shareholder or any of their respective properties
is bound, or any existing statute, rule or regulation, or
any judgment, order or decree known to such counsel, of
any government, governmental instrumentality or court,
having jurisdiction over the Company, any Subsidiary or
any Selling Shareholder or any of their respective
properties.
(xii) This Agreement and the Power-of-Attorney
Agreement have been duly executed and delivered by each
Selling Shareholder.
(xiii) The delivery in the State of New York by
each of the Selling Shareholders to the several
Underwriters of certificates for the Shares being sold
hereunder by each Selling Shareholder against payment
therefor as provided herein, will convey all such Selling
Shareholders' right, title and interest to such Shares to
the several Underwriters. Assuming the several
Underwriters acquire such Shares in good faith and without
notice of any adverse claims, and that appropriate entries
to the accounts of the several Underwriters are made on
the books of the Depositary Trust Company, the
Underwriters will take their interest in such Shares
free of all adverse claims (as defined in Section 8-302 of
the Uniform Commercial Code).
(xiv) The sale of the Shares to the Underwriters by
the Selling Shareholders pursuant to this Agreement, the
compliance by the Selling Shareholders with the other
provisions of this Agreement, the Power-of-Attorney
Agreement and the consummation of the other transactions
herein contemplated do not require the consent, approval,
authorization, registration or qualification of or with
any governmental authority, except such as have been
obtained and such as may be required under state
securities or blue sky laws (as to which such counsel need
not express any opinion).
(xv) The shares of Common Stock required to be sold
or issued by the Company upon exercise of the Warrants
have been duly authorized and reserved for sale or
issuance, and,
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when sold or issued and delivered upon payment of the
exercise price therefor as provided in the Warrants and
the Warrant Agreement, will be duly and validly issued,
fully paid and nonassessable.
Such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the Company, the
Subsidiary and representatives of the independent public accountants for the
Company and the Subsidiary, at which conferences such counsel made inquiries of
such officers, representatives and accountants and discussed the contents of the
preliminary prospectus, the Registration Statement, the Prospectus, and related
matters and, although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and Prospectus (other than as otherwise
expressly provided in the opinion), on the basis of the foregoing, nothing has
come to the attention of such counsel which lead them to believe that either the
Registration Statement or any amendment thereto, at the time such Registration
Statement or amendment became effective or the Prospectus or any amendment or
supplement thereto, as of its date or the date of such opinion 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, in light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no opinion with
respect to the financial statements and schedules and other financial,
statistical and accounting data included in the Registration Statement or
Prospectus).
In rendering the opinions set forth above, such counsel
may rely upon certificates of the Selling Shareholders, officers of the Company
and public officials as to matters of fact. In rendering such opinion, such
counsel may rely as to all matters of law other than the law of the United
States or of the State of New York upon opinions of counsel satisfactory to you,
in which case the opinion shall state that they have no reason to believe that
you and they are not entitled so to rely.
(f) Concurrently with the execution and delivery of this
Agreement and at the Closing Time, the Company's accountants shall have
furnished to you a letter, dated as of the date of its delivery, addressed to
you and in form and substance satisfactory to you, to the effect that:
(i) Such accountants are independent certified
public accountants with respect to the Company and the
Subsidiaries as required by the Act and the Rules and
Regulations, and the answer to Item 10 of the Registration
Statement is correct insofar as it relates to them.
-29-
(ii) In their opinion the consolidated financial
statements and schedules and notes examined by them and
included in the Registration Statement and the Prospectus
comply as to form in all material respects with the
applicable accounting requirements of the Act and the
Rules and Regulations with respect to registration
statements on Form S-1.
(iii) On the basis of inquiries and procedures
conducted by them, including a reading of the latest
available unaudited interim financial statements of the
Company and the Subsidiaries, inquiries of officials of
the Company and the Subsidiaries responsible for
operational, financial and accounting matters, a reading
of the minute books of the Company and each of the
Subsidiaries and other specified procedures and inquiries,
nothing has come to their attention that caused them to
believe that (A) any unaudited financial statements of the
Company and the Subsidiaries set forth in the Registration
Statement and the Prospectus do not comply as to form in
all material respects with the applicable accounting
requirements of the Act and the Rules and Regulations or
are not fairly presented in conformity with generally
accepted accounting principles applied on a basis
consistent with that of the audited financial statements;
and (B) during the period from July 1, 1996 to a specified
date not more than five days prior to the date of such
letter there was any change in the consolidated capital
stock or consolidated debt of the Company and its
Subsidiaries, or any decrease in the consolidated net
assets or consolidated total assets of the Company and
its Subsidiaries, each as compared with the amounts shown
in the balance sheet as of June 30, 1996 included in the
Registration Statement, or for the period from July 1,
1996 to September 30, 1996 there were any decreases, as
compared with the corresponding period in 1995, in total
revenues, net income or net income per common share,
except in all instances for changes, decreases or
increases which the Registration Statement and the
Prospectus disclose have occurred or may occur and except
for such other changes, decreases or increases which you
shall in your sole discretion accept.
(iv) In addition to their examination referred to
in their reports included in the Registration Statement
and the Prospectus and the inquiries and limited
procedures referred to in clause (iii) above, they have
performed other procedures, not
-30-
constituting an audit, with respect to certain numerical
data and financial information appearing in the
Registration Statement and the Prospectus, requested by
you and specified in such letter and have compared such
data and information with the accounting records of the
Company and found them to be in agreement.
(g) Concurrently with the execution and delivery of this
Agreement and at the Closing Time, there shall be furnished to you, on behalf of
the Company, an accurate certificate, dated the date of its delivery, signed by
each of the chief executive officer and the chief operating officer of the
Company, in form and substance satisfactory to you, to the effect that:
(i) Each signer of such certificate has carefully
examined the Registration Statement and the Prospectus and
(A) to his knowledge, as of the date of such certificate,
the statements in the Registration Statement and the
Prospectus are and were true and correct and neither the
Registration Statement nor the Prospectus omits to state a
material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(B) in the case of a certificate delivered after the date
of this Agreement, since the Effective Date, no event has
occurred of which he has knowledge and which was required
by the Act or the Rules and Regulations to be set forth in
a supplement to or amendment of the Prospectus but which
has not been so set forth; and (C) since the dates as of
which and the periods for which information is given in
the Registration Statement and the Prospectus, there has
not been to his knowledge any adverse change, financial or
otherwise, in the condition or business prospects of the
Company from that set forth in the Registration Statement
and the Prospectus, other than changes which the
Registration Statement and the Prospectus specifically
disclose have occurred or may occur subsequent to the
Effective Date.
(ii) No stop order suspending the effectiveness of
the Registration Statement has been issued, and no
proceedings for such purpose have been commenced or are,
to the knowledge of each signer of such certificate,
threatened or contemplated by the Commission.
(iii) No stop order suspending the qualification or
registration of any of the Shares under the blue sky laws
of any
-31-
jurisdiction (whether or not a jurisdiction you shall have
specified) has been issued, and no proceedings for such
purpose have been commenced or are, to the knowledge of
each signer of such certificate, threatened or
contemplated by any jurisdiction.
(iv) The conditions, separately set forth in such
certificate, contained in subsections (a), (c) and (j) of
this Section 8 have been complied with.
(v) There has been no breach of any of the terms or
provisions of the agreements referred to in Section
6(a)(xi) and 6(b)(iii) hereof.
(vi) Each of the representations and warranties of
the Company contained in this Agreement and in each
certificate and document contemplated under this Agreement
to be delivered to you was, when originally made and is,
at the time such certificate is dated, true and correct.
(vii) 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 date of such certificate has
been duly, timely and fully complied with by the Company.
(h) The Selling Shareholders shall have performed all of
the covenants contained herein and in any certificate or document contemplated
under this Agreement to be delivered to you and required to be performed by the
Selling Shareholders at or prior to the Closing Time, and you shall have
received at the Closing Time a certificate of each of the Selling Shareholders,
dated as of the Closing Time, to the effect that the representations and
warranties of such Selling Shareholder contained in this Agreement and in each
such certificate and document are true and correct in all respects on and as of
the date of such certificate as if made on and as of such date, and each of the
covenants and conditions required to be performed or complied with by such
Selling Shareholder on or prior to the date of such certificate has been duly,
timely and fully performed or complied with.
(i) The Company and each of the Selling Shareholders shall
have furnished to you such certificates, in addition to those specifically
mentioned herein, as you may have reasonably requested in a timely manner as to
the accuracy and completeness, at the Closing Time, of any statement in the
Registration Statement or the Prospectus; as to the accuracy, at the Closing
Time, of the representations and
-32-
warranties of the Company and the Selling Shareholders herein and in each
certificate and document contemplated under this Agreement to be delivered to
you; as to the performance by the Company and the Selling Shareholders of their
respective obligations hereunder and under each such certificate and document;
or as to the fulfillment of the conditions concurrent and precedent to your
obligations hereunder.
(j) Except as contemplated by the Registration Statement
and the Prospectus, since the date hereof, there shall not have been any change
in the capitalization of the Company or any material adverse change in the
business, business prospects, financial condition or results of operations of
the Company or in the value of the assets of the Company, or any change, without
your consent, in the conduct of the business of the Company, arising for any
reason whatsoever.
(k) Each of the agreements referred to in Section 6(a)(xi)
hereof shall have been delivered to you and there shall have been no breach of
any such agreement.
(l) All corporate proceedings and other legal matters
relating to the sale and transfer of the Shares, this Agreement, the Warrants,
the Warrant Agreement, the Power of Attorney Agreement, the Registration
Statement, the Prospectus and other related matters shall be reasonably
satisfactory in all material respects to counsel for the Underwriters, who shall
have furnished to you at the Closing Time such opinion, in form and substance
reasonably satisfactory to you, with respect to the sufficiency of the
aforementioned corporate proceedings and other legal matters as you may
reasonably require; and the Company shall have furnished to such counsel such
records and documents as such counsel may have reasonably requested in a timely
manner for the purpose of enabling them to pass upon such matters.
(m) The Common Stock shall be authorized for quotation on
the National Market.
All of the opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance satisfactory to
counsel for the Underwriters. You reserve the right to waive any condition
hereinabove set forth. Each opinion, certificate, letter or other document
required to be delivered at the Closing Time shall also be required to be
delivered at each Option Exercise Time.
Section 9. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person who controls an
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act and each and all of them, from and against any and all losses,
claims,
-33-
damages, liabilities or actions, joint or several (including any investigation,
legal or other expense incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted), to which
an Underwriter or they or any of them may become subject under the Act, the
Exchange Act or otherwise but only insofar as such losses, claims, damages,
liabilities or actions arise out of, or are based upon, (i) any untrue statement
or alleged untrue statement made by the Company in Section 3 of this Agreement;
or (ii) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, any preliminary prospectus, the
Prospectus or any amendment or supplement thereto or in any application or other
document executed by the Company based upon written information furnished by or
on behalf of the Company filed in any jurisdiction in order to register or
qualify the Shares under the securities laws thereof or filed with the
Commission, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that the indemnity agreement contained in this subsection shall not
extend to any Underwriter in respect of any such losses, claims, damages,
liabilities or actions arising out of, or based upon, any such untrue statement
or alleged untrue statement or any such omission or alleged omission, if such
statement or omission was made in reliance upon information furnished in writing
to the Company through you or on behalf of any Underwriter specifically for use
in connection with the preparation of the Registration Statement, any
preliminary prospectus or the Prospectus or any such amendment or supplement
thereto. The Company agrees to pay any legal and other expenses for which it is
liable under this subsection (a) from time to time (but not more frequently than
monthly) within 30 days after its receipt of a xxxx therefor.
(b) Each of the Selling Shareholders, jointly and severally,
agrees to indemnify and hold harmless each Underwriter and each person who
controls any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act and each and all of them, from and against any and all
losses, claims, damages, liabilities or actions, joint or several (including any
investigation, legal or other expense incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claim
asserted), to which an Underwriter or they or any of them may become subject
under the Act, the Exchange Act or otherwise but only insofar as such losses,
claims, damages, liabilities or actions arise out of, or are based upon (i) any
untrue statement or alleged untrue statement made by a Selling Shareholder in
Section 3 of this Agreement; or (ii) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendment or supplement thereto or
in any application or other document executed by any Selling Shareholder based
upon written information furnished by or on behalf of any Selling Shareholder
filed in any jurisdiction in order to register or qualify the Shares under the
securities laws thereof or filed with the Commission, or the omission or alleged
omission to state
-34-
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Each Selling Shareholder agrees to pay any legal and other
expenses for which it is liable under this subsection (b) from time to time (but
not more frequently than monthly) within 30 days after its receipt of a xxxx
therefor.
(c) Each Underwriter, severally and not jointly, agrees to
indemnify and hold harmless the Company, its directors, its officers who shall
have signed the Registration Statement, each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act and each of the Selling Shareholders to the same extent as the
foregoing indemnity from the Company and the Selling Shareholders to such
Underwriter, but in each case to the extent, and only to the extent, that any
statement in or omission from or alleged omission from the Registration
Statement, any preliminary prospectus, the Prospectus or any amendment or
supplement thereto was made in reliance upon information furnished in writing to
the Company by such Underwriter specifically for use in connection with the
preparation of the Registration Statement, any preliminary prospectus or the
Prospectus or any such amendment or supplement thereto; provided, however, that
the obligation of each Underwriter to indemnify the Company and each of the
Selling Shareholders under the provisions of this subsection (c) shall be
limited to the product of the number of Shares purchased by such Underwriter and
the initial public offering price set forth on the cover page of the Prospectus.
Each Underwriter agrees to pay any legal and other expenses for which it is
liable under this subsection (c) from time to time (but not more frequently than
monthly) within 30 days after receipt of a xxxx therefor.
(d) If any action is brought against a person entitled to
indemnification pursuant to the foregoing subsections (a), (b) or (c) (an
"indemnified party") in respect of which indemnity may be sought against a
person granting indemnification (an "indemnifying party") pursuant to such
subsections, such indemnified party shall promptly notify such indemnifying
party in writing of the commencement thereof; but the omission so to notify the
indemnifying party of any such action shall not release the indemnifying party
from any liability it may have to such indemnified party otherwise than on
account of the indemnity agreement contained in subsection (a), (b) or (c) of
this Section 9. In case any such action is brought against an indemnified party
and it notifies an indemnifying party of the commencement thereof, the
indemnifying party against which a claim is to be made will be entitled to
participate therein at its own expense and, to the extent that it may wish, to
assume at its own expense the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that (i) if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
based upon advice of counsel that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party shall
-35-
have the right to select separate counsel to assume such legal defenses and
otherwise to participate in the defense of such action on behalf of such
indemnified party or parties; and (ii) in any event, the indemnified party shall
be entitled to have counsel chosen by such indemnified party participate in, but
not conduct, the defense. Upon receipt of notice from the indemnifying party to
such indemnified party of its election so to assume the defense of such action
and approval by the indemnified party of counsel, the indemnifying party will
not be liable to such indemnified party under this Section 9 for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
such counsel in connection with the assumption of legal defenses in accordance
with proviso (i) to the next preceding sentence (it being understood, however,
that the indemnifying party shall not be liable for the expenses of more than
one separate counsel); (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of the
action; or (iii) the indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying party. An
indemnifying party shall not be liable for any settlement of any action or
proceeding effected without its written consent.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in subsection (a),
(b) or (c) of this Section 9 is unavailable in accordance with its terms, the
Company, the Selling Shareholders and, subject to the limitations set forth
below, the Underwriters shall contribute to the aggregate losses, claims,
damages and liabilities, of the nature contemplated by said indemnity agreement,
incurred by the Company, the Selling Shareholders and one or more Underwriters,
in such proportions as are applicable to reflect the relative benefits received
by the Company, the Selling Shareholders and the Underwriters from the offering
of the Shares; provided, however, that if such allocation is not permitted by
applicable law or if the indemnified party failed to give the notice required
under subsection (d) of this Section 9, then the relative fault of the Company,
the Selling Shareholders and the Underwriters in connection with the statements
or omissions which resulted in such losses, claims, damages and liabilities and
other relevant equitable considerations will be considered together with such
relative benefits. The relative benefits received by the Company, the Selling
Shareholders and the Underwriters shall be deemed to be in such proportion as
the total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company or the
Selling Shareholders, as the case may be, bear to the total underwriting
discount received by the Underwriters, in each case as set forth in the table on
the cover page of the Prospectus and in the notes thereto. The relative fault of
the Company, the Selling Shareholders and the Underwriters shall be determined
by reference to, among other things, whether in the case of an untrue statement
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact, such
-36-
statement or omission relates to information supplied by the Company, the
Selling Shareholders or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company, the Selling Shareholders and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this subsection (e) were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable considerations
referred to in this subsection (e). The amount paid or payable by the
indemnified party as a result of the losses, claims, damages or liabilities
referred to above in this subsection (e) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending against or appearing as a third-party witness in any
such action or claim. Notwithstanding the provisions of this subsection (e), (i)
no Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Shares purchased by it were offered
to the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay in respect of any loss, claim, damage, liability
or action covered by this Section; (ii) no Selling Shareholder shall be required
to contribute any amount in excess of the amount by which the proceeds of the
Shares sold by it (net of underwriting discounts and commissions but before
deducting expenses) exceeds the amount of any damages which such Selling
Shareholder has otherwise been required to pay in respect of any loss, claim,
damage, liability or action covered by this Section; and (iii) no person guilty
of fraudulent misrepresentation within the meaning of Section 11(f) of the Act
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation. For purposes of this subsection (e), each person,
if any, who controls an Underwriter within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act shall have the same rights to contribution as
such Underwriter. The Underwriters' obligations to contribute pursuant to this
subsection (e) are several in proportion to their respective underwriting
commitments and not joint.
(f) The respective indemnity and contribution agreements by the
Underwriters, the Selling Shareholders and the Company contained in subsections
(a), (b), (c), (d) and (e) of this Section 9, and the respective covenants,
representations and warranties of the Company and the Selling Shareholders set
forth in Sections 2, 3, 4, 5, 6, and 7 hereof, shall remain operative and in
full force and effect regardless of (i) any investigation made by any
Underwriter, on its behalf or by or on behalf of any person who controls an
Underwriter, the Company or any controlling person of the Company, any director
or officer of the Company or any Selling Shareholder; (ii) acceptance of any of
the Shares and payment therefor; or (iii) any termination of this Agreement, and
shall survive the delivery of the Shares, and any successor of any Underwriter
or the Company, or of any person who controls any Underwriter or the Company, as
the case may be, or any Selling Shareholder shall be entitled to the benefit of
such respective indemnity and contribution agreements. The respective
-37-
indemnity and contribution agreements by the Underwriters, the Company and the
Selling Shareholders contained in subsections (a), (b), (c), (d) and (e) of this
Section 9 shall be in addition to any liability which the Underwriters, the
Company and the Selling Shareholders may otherwise have.
Section 10. Termination. This Agreement (except for the
provisions of Sections 7 and 9 hereof) may be terminated by you by notifying
the Company and the Selling Shareholders at any time:
(a) at or prior to the Closing Time if any of the
conditions specified in Section 8 hereof shall not have been fulfilled when and
as required by this Agreement to be fulfilled or if any of the representations
or warranties contained in any certificate or document contemplated under this
Agreement to be delivered to you shall not have been true, unless compliance
therewith shall have been expressly waived by you in writing; or
(b) at or prior to the Closing Time if any one or more of
the following shall have occurred or have been established between the time of
your execution of this Agreement and the Closing Time and in your judgment the
same has made or makes it inadvisable or impracticable for you generally to
proceed with the offering, sale, delivery, or collection of payment for, the
Shares pursuant to the public offering contemplated by this Agreement: (i) a
general suspension of, or a general limitation on prices for, trading in
securities on the New York Stock Exchange, American Stock Exchange, National
Market or in the over-the-counter market; (ii) any new legal or regulatory
restriction affecting the distribution of securities generally or of the Shares;
(iii) a material adverse change in general market or economic conditions, either
domestic or foreign, from such conditions on the date hereof; (iv) a declaration
of a banking moratorium by federal or New York State authorities; (v) any
outbreak of major hostilities or other national or international calamity; (vi)
a material interruption in the mail service or other means of communications
within the United States; (vii) an action by any government in respect of its
monetary affairs which, in your opinion, has a material adverse effect on the
United States securities markets; or (viii) any material adverse change or any
material adverse development involving a prospective change not contemplated in
the Registration Statement or affecting particularly the business or properties
of the Company and its subsidiaries taken as a whole.
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Your right to terminate will not be waived or otherwise
relinquished because you do not give the required notice of termination prior to
the time that the event giving rise to the right to terminate shall have ceased
to exist, provided that you give the required notice prior to the Closing Time.
Section 11. Default of Underwriters. If any Underwriter or
Underwriters default in their obligation to take and pay for Firm or Option
Shares and the aggregate number of Firm or Option Shares which such defaulting
Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of
the aggregate number of Firm or Option Shares, as the case may be, the other
Underwriters shall be obligated severally in proportion to their respective
commitments hereunder to purchase the Firm or Option Shares which such
defaulting Underwriter or Underwriters agreed but failed to purchase. If any
Underwriter or Underwriters so default and the aggregate number of Firm or
Option Shares with respect to which such default or defaults occur is more than
10% of the aggregate number of Firm or Option Shares, as the case may be, and
arrangements satisfactory to you for the purchase of such Firm or Option Shares
by other persons (who may include one or more of the non-defaulting Underwriters
including you) are not made within 36 hours after such default, this Agreement
may be terminated by you without liability on the part of any non-defaulting
Underwriter or the Company, except for the expenses to be paid or reimbursed by
the Company pursuant to Section 7 and except for the provisions of Section 9
hereof. In the event of any default by one or more Underwriters as described in
this Section 11, the Representative shall have the right to postpone the Closing
Time or the Option Exercise Time, as the case may be, established as provided in
Section 4 hereof for not more than seven business days in order that any
necessary changes may be made in the arrangements or documents for the purchase
and delivery of the Firm Shares or Option Shares, as the case may be. As used in
this Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 11. Nothing herein shall relieve a defaulting
Underwriter from liability for its default.
Section 12. Notice. Except as otherwise expressly provided in
this Agreement, whenever advice or a notice, objection, designation, request or
report is given or is required by the provisions of this Agreement to be given,
such advice, notice, objection, designation, request or report shall be in
writing and shall be delivered by first-class mail, postage prepaid, nationally
recognized courier or by telecopy, (a) if to the Company, addressed to it and
delivered at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxx 00000 (telecopier number (512)
472-1548), Attention: Xxxxxx Xxxx, Vice Chairman, with a copy to Xxxxx
Xxxxxxxxxx, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (telecopier
number (000) 000-0000), Attention: Xxxxx X. Xxxxx, Esq.; (b) if to a Selling
Shareholder, addressed to such Selling Shareholder and delivered in care of the
Company as herein provided, with a copy to counsel to the Company, Attention:
Xxxxx X. Xxxxx, Esq.; and (c) if to you or the Underwriters, addressed to The
Boston Group, L.P., and delivered at 2049
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Century Park East, 30th Floor, Xxx Xxxxxxx, Xxxxxxxxxx 00000 (telecopier number
(000) 000-0000), Attention: Xxxxxxx X. Xxxxx, with a copy to Fulbright &
Xxxxxxxx L.L.P., 000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxx 00000
(telecopier number (000) 000-0000), Attention: Xxxxxxx X. Xxxxxx, Esq.; or at
such other address or telecopier number as a party hereto may give notice in
accordance herewith.
Section 13. Miscellaneous. (a) This Agreement is made solely for
the benefit of the Underwriters, the Selling Shareholders and the Company, the
Company's directors, the Company's officers who shall have signed the
Registration Statement and any controlling person referred to in Section 9
hereof, and their respective successors and assigns, and no other person,
partnership, association or corporation shall acquire or have any right under or
by virtue of this Agreement. The term "successor" or the term "successors and
assigns" as used in this Agreement shall not include any buyer, as such, of any
of the Shares from the Underwriters. All of the obligations of the Underwriters
hereunder are several and not joint.
(b) The information in the Prospectus under the section
"Underwriting" with respect to (i) the names of, and number of Shares to be
purchased by, each of the Underwriters, (ii) the initial price offered to the
public, (iii) the expectation as to sales to discretionary accounts, and (iv)
the amounts of the selling concession and reallowance shall constitute the only
information furnished in writing by or on behalf of the several Underwriters for
use in connection with the preparation of the Registration Statement as
originally filed or in any amendment thereto, any preliminary prospectus or the
Prospectus as the case may be.
(c) This Agreement shall supersede any agreement or
understanding, oral or in writing, express or implied, between the Company, the
Selling Shareholders and you relating to the sale of any of the Shares.
(d) No change, amendment or supplement to, or waiver of, this
Agreement or any term, provision or condition contained herein, shall be valid
or of any effect unless in writing and signed by the party against whom such is
asserted.
(e) This Agreement shall be governed by and construed in
accordance with the law of the State of Texas applicable to contracts made and
to be performed therein without giving effect to the principles of conflicts of
law thereof. If any action or proceeding shall be brought by any of the
Underwriters in order to enforce any right or remedy under this Agreement, the
Company and the Selling Shareholders hereby consent to and submit to, the
jurisdiction of the courts of the State of Texas.
(f) This Agreement may be signed in two or more counterparts with
the same effect as if the signatures to each counterpart were upon a single
instrument, and all such counterparts together shall be deemed an original of
this Agreement.
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-41-
Please confirm that the foregoing correctly sets forth the
agreement between the Company, each of the Selling Shareholders and you.
Very truly yours,
AUTOBOND ACCEPTANCE CORPORATION
By:
_____________________________________
Xxxxxxx X. Xxxxxxxx,
Chairman of the Board and
Chief Executive Officer
SELLING SHAREHOLDERS
By:
_____________________________________
___________________, individually
and as attorney-in-fact for the
Selling Shareholders
Accepted as of the date
first above written
THE BOSTON GROUP, L.P.
By:
_____________________________________
Acting on behalf of itself and
as the Representative of the
other Underwriters named in
Schedule A attached hereto.
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SCHEDULE A
Number
Name of Underwriter of Shares
------------------- ---------
The Boston Group, L.P.
---------
Total 1,000,000
---------
---------
SCHEDULE B
Selling Shareholders
Number of Firm
Name Shares to be sold
---- -----------------
Xxxxxxx X. Xxxxxxxx 196,000
Xxxx X. Xxxxxxxx 54,000
-------
Total 250,000
-------
-------
