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EXHIBIT 1
FRANKLIN FINANCE CORPORATION
_____% NONCUMULATIVE PREFERRED STOCK, SERIES A
(LIQUIDATION PREFERENCE $10.00 PER SHARE)
EXCHANGEABLE INTO PREFERRED STOCK OF
FRANKLIN BANK, N.A.
UNDERWRITING AGREEMENT
__________, 1997
Xxxxx & Co., L.L.C.
Principal Financial Securities, Inc.
c/x Xxxxx & Co., L.L.C.,
Xxx Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Franklin Finance Corporation, a Michigan corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters") an
aggregate of 1,800,000 shares (the "Firm Shares") of ____% Noncumulative
Preferred Stock, Series A (the "Preferred Stock") of the Company and up to an
aggregate of 270,000 shares (the "Optional Shares") of Preferred Stock (the
Firm Shares and the Optional Shares that the Underwriters elect to purchase
pursuant to Section 2 hereof being collectively referred to as the "Shares").
Franklin Bank, a federally chartered and federally insured stock
savings bank and the parent of the Company (the "Bank"), has prepared and filed
on ________, 1997 with the Office of the Comptroller of the Currency (the
"OCC") a preliminary prospectus under cover of Form S-11 (Docket No. ______),
also filed with the Securities and Exchange Commission (the "Commission") as an
attachment to the Registration Statement (as defined below), for the
registration of the preferred stock of the Bank for which the Preferred Stock
will be exchanged automatically under certain conditions (the "Bank Preferred
Shares") pursuant to the rules and regulations of the Commission made
applicable to the offering circular by the rules and regulations of the OCC,
(hereinafter collectively referred to as the "OCC Rules and Regulations"). The
Bank will promptly prepare and file a preliminary prospectus, which includes
the information (the "Pricing Information") excluded from the preliminary
prospectus in reliance upon the OCC Rules and Regulations and 17 C.F.R. Section
230-430A, in accordance with the provisions of Rule 424(b). Each prospectus
used before the time such prospectus is declared effective by the OCC and any
prospectus that omits the Pricing Information that is used after such
effectiveness and prior to the date hereof is herein called a "Bank Preliminary
Prospectus." Such filing under the
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Form S-11, and the prospectus constituting a part thereof, as amended at the
time the prospectus becomes effective under the OCC Rules and Regulations (and
including the Pricing Information), including all documents incorporated by
reference therein, are hereinafter referred to as the "Bank Registration
Statement" and the "Bank Prospectus," respectively, except that if any amended
or supplemented prospectus shall be provided to the Underwriters by the Bank
for use in connection with the offering of the Bank Preferred Shares which
differs from the Bank Prospectus at the time it becomes effective, the term
"Bank Prospectus" shall refer to such newly amended or supplemented prospectus
from and after the time it is first provided to the Underwriters for such use.
1. (a) The Company represents and warrants to, and agrees
with, each of the Underwriters that:
(i) A registration statement on Form S-11 (File No.
333-______) as amended by any pre-effective amendment thereto in
respect of the Shares (the "Initial Registration Statement") has been
filed with the Commission; the Initial Registration Statement and any
post-effective amendment thereto, each in the form heretofore
delivered to you, and, excluding exhibits thereto, as the same may
have been amended from time to time, to each of the other
Underwriters, have been declared effective by the Commission in such
form; other than a registration statement, if any, increasing the size
of the offering (a "Rule 462(b) Registration Statement"), filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended
(the "Act"), which became effective upon filing, no other document
with respect to the Initial Registration Statement has heretofore been
filed with the Commission; and no stop order suspending the
effectiveness of the Initial Registration Statement, any
post-effective amendment thereto or the Rule 462(b) Registration
Statement, if any, has been issued and no proceeding for that purpose
has been initiated or threatened by the Commission (any preliminary
prospectus included in the Initial Registration Statement or filed
with the Commission pursuant to Rule 424(a) of the rules and
regulations of the Commission under the Act, as amended, is
hereinafter called a "Preliminary Prospectus;" the various parts of
the Initial Registration Statement and the Rule 462(b) Registration
Statement, if any, including all exhibits thereto and including the
information contained in the form of final prospectus filed with the
Commission pursuant to Rule 424(b) under the Act in accordance with
Section 5(a) hereof and deemed by virtue of Rule 430A under the Act to
be part of the Initial Registration Statement at the time it was
declared effective or such part of the Rule 462(b) Registration
Statement, if any, became or hereafter becomes effective, each as
amended at the time such part of the registration statement became
effective, is hereinafter collectively called the "Registration
Statement;" and such final prospectus, in the form first filed
pursuant to Rule 424(b) under the Act, is hereinafter called the
"Prospectus");
(ii) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in
all material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder, and did not contain an
untrue statement
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of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter expressly for use therein; and
(iii) The Registration Statement conforms, and the
Prospectus and any further amendments or supplements to the
Registration Statement or the Prospectus will conform, in all material
respects to the requirements of the Act and the rules and regulations
of the Commission thereunder and do not and will not, as of the
applicable effective date of the Registration Statement and any
amendment thereto, and as of the applicable filing date of the
Prospectus and any amendment or supplement thereto, contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company
by an Underwriter expressly for use therein;
(b) The Company represents and warrants to, and agrees with, each
of the Underwriters that:
(i) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not
been any material adverse change in or affecting the general affairs,
management, financial position, stockholders' equity, results of
operations or prospects of the Company, otherwise than as set forth or
contemplated in the Prospectus;
(ii) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Michigan, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus,
and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties, or conducts
any business so as to require such qualification or is subject to no
material liability or disability by reason of the failure to be so
qualified in any such jurisdiction;
(iii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital stock
of the Company have been duly and validly authorized and issued and
are fully paid and nonassessable;
(iv) The Shares have been duly and validly authorized and,
when issued and delivered against payment therefor as provided herein,
will be duly and validly issued and
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fully paid and nonassessable and will conform in all material respects
to the description of the Preferred Stock contained in the Prospectus;
(v) The issue and sale of the Shares by the Company and
the compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions herein contemplated
will not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company is a party or by which the Company
is bound or to which any of the property or assets of the Company is
subject, nor will such action result in any violation of the
provisions of the Articles of Incorporation (or other charter
document) or By-laws of the Company or any statute or any order, rule
or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its properties; and no
consent, approval, authorization, order, registration or qualification
of or with any such court or governmental agency or body is required
for the issue and sale of the Shares or the consummation by the
Company of the transactions contemplated by this Agreement and the
agreements listed in Annex II hereto, except the registration under
the Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Shares by
the Underwriters;
(vi) The Company is not in violation of its Articles of
Incorporation or By-laws or in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound;
(vii) The statements set forth in the Prospectus under the
captions "Description of Series A Preferred Shares," insofar as they
purport to constitute a summary of the terms of the Preferred Stock,
"Description of Capital Stock," insofar as they purport to constitute
a summary of the terms of the capital stock of the Company, and under
the captions "Federal Income Tax Considerations," "ERISA
Considerations," "Business and Strategy -- Acquisition of Initial
Portfolio," "Business and Strategy -- Servicing," "Management -- The
Advisor," and "Underwriting," insofar as they purport to describe the
provisions of the laws and documents referred to therein, are
accurate, complete in all material respects and fair;
(viii) Other than as set forth in the Prospectus, there are
no legal or governmental proceedings pending to which the Company is a
party or of which any property of the Company is the subject which, if
determined adversely to the Company would individually or in the
aggregate have a material adverse effect on the financial position,
stockholders' equity or results of operations of the Company; and, to
the best of the Company's knowledge, no such proceedings are
threatened or contemplated by any governmental authorities or
threatened by others;
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(ix) Each of the agreements listed in Annex II hereto has
been duly authorized, executed and delivered by the Company and
constitutes the valid and legally binding obligation of the Company
and is enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights;
(x) The Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company"
or an entity "controlled" by an "investment company," as such terms
are defined in the Investment Company Act of 1940, as Amended (the
"Investment Company Act");
(xi) The Company does not do business with the government
of Cuba or with any person or affiliate located in Cuba within the
meaning of Section 517.075, Florida Statutes;
(xii) Xxxxx Xxxxxxxx LLP, who have certified certain
financial statements of the Company, are independent public
accountants as required by the Act and the rules and regulations of
the Commission thereunder;
(xiii) This Agreement has been duly authorized, executed and
delivered by the Company;
(xiv) There are no contracts or documents which are
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits thereto which have not been so
described and filed as required;
(xv) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency is necessary or required for the
performance by the Company of its obligations hereunder, in connection
with the offering, issuance or sale of the Preferred Stock hereunder
or the consummation of the transactions contemplated by this
Agreement, except such as have been already obtained or as may be
required under the Act or the rules and regulations thereunder or
state securities laws or by the OCC;
(xvi) The Company possesses such permits, licenses,
approvals, consents, and other authorizations (collectively
"Governmental Licenses") issued by the appropriate federal, state,
local or foreign regulatory agencies or bodies necessary to conduct
the business now operated by it; the Company is in compliance with the
terms and conditions of all such Governmental Licenses, except where
the failure so to comply would not have a material adverse effect on
the financial position, stockholders' equity or results of operations
of the Company; all of the Governmental Licenses are valid and in full
force and effect, except where the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full
force and effect would not have a material adverse effect on the
financial position, stockholders' equity or results of operations of
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the Company; the Company has not received any notice of proceedings
relating to the revocation or modification of any such Governmental
Licenses which singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a material
adverse effect on the financial position, stockholders' equity or
results of operations of the Company;
(xvii) There are no persons with registration rights or
other similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Company under
the Act; and
(xviii) The Company is organized and carries on its business
so as to qualify as a "real estate investment trust" (a "REIT") under
Sections 856 through 860 of the Internal Revenue Code of 1986, as
amended (the "Code"), and no transaction or other event has occurred
which would cause the Company not to enable it to qualify as a REIT
for its current taxable year or for future taxable years.
(c) The Bank represents and warrants to, and agrees with, each of
the Underwriters that:
(i) The Bank has been duly organized and is validly
existing as a national bank under the laws of the United States of
America, with power and authority (corporate and other) to own its
properties and conducts its business as now being conducted;
(ii) Since December 31, 1996, there has not been any
material adverse change in or affecting the general affairs,
management, financial position, stockholders' equity, results of
operations of the Bank;
(iii) The issue and sale of the Shares by the Company and
the compliance by the Company and the Bank with all of the provisions
of this Agreement and the consummation of the transactions herein
contemplated will not conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Bank is a party or by which the
Bank is bound or to which any of the property or assets of the Bank is
subject, nor will such action result in any violation of the
provisions of the Articles of Association (or other charter document)
or By-laws of the Bank or any statute or any order, rule or regulation
of any court or governmental agency or body having jurisdiction over
the Bank or any of its properties, except where such would not result
in a material adverse effect on the financial position, stockholders'
equity or results of operations of the Company or the Bank; and,
except as have been obtained, no consent, approval, authorization,
order, registration or qualification of or with any such court or
governmental agency or body is required to be obtained by the Bank for
the issue and sale of the Shares by the Company or the consummation by
the Bank of the transactions contemplated by this Agreement and the
agreements listed in Annex II hereto;
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(iv) Each of the agreements listed in Annex II hereto has
been duly authorized, executed and delivered by the Bank and
constitutes the valid and legally binding obligation of the Bank and
is enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights;
(v) The representations and warranties of the Bank
contained in the Residential Mortgage Loan Purchase and Warranties
Agreement between the Company and the Bank, the Commercial Mortgage
Loan Purchase and Warranties Agreement between the Company and the
Bank, the Residential Mortgage Loan Servicing Agreement between the
Company and the Bank, and the Commercial Mortgage Loan Servicing
Agreement between the Company and the Bank, each of even date
herewith, are as of the date hereof and will be as of the Time of
Delivery true and correct;
(vi) This Agreement has been duly authorized, executed and
delivered by the Bank;
(vii) The Bank Registration Statement and the Bank
Prospectus, at the respective times the Bank Registration Statement
and any post-effective amendments thereto became effective, at the
date hereof and at all times subsequent thereto up to the Time of
Delivery (as defined in Section 4 hereof), and if any Optional Shares
are purchased, at the Second Time of Delivery (as defined in Section 4
hereof), complied and will comply in all material respects with the
requirements of the OCC Rules and Regulations; the Bank Registration
Statement, at the respective times the Bank Registration Statement and
any post-effective amendments thereto became effective, and at the
date hereof, did not or will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; the Bank
Prospectus, at the respective times the Bank Registration Statement
and any post-effective amendments thereto up to the Time of Delivery,
and if any Optional Shares are purchased, at the Second Time of
Delivery, did not and will not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon, and in
conformity with, information furnished in writing to the Bank by an
Underwriter expressly for use therein;
(viii) The documents incorporated or deemed to be
incorporated by reference in the Bank Registration Statement and the
Bank Prospectus, at the time they were or hereafter are filed with the
OCC, complied and will comply in all material respects with the
requirements of the OCC Rules and Regulations, and, when read together
with the other information in the Bank Prospectus, at the time the
Bank Registration Statement became effective, at the time the Bank
Prospectus was issued and at the Time of Delivery
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(and if any Optional Shares are purchased, at the Second Time of
Delivery), did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
(ix) Xxxxx Xxxxxxxx LLP, who have certified certain
financial statements of the Bank, are independent public accountants
as required by the Act and the rules and regulations of the Commission
and the OCC thereunder;
(x) The financial statements and the related notes
thereto included in the Bank Prospectus present fairly the financial
position of the Bank and its subsidiaries as of the latest respective
dates of such financial statements, and the results of operations of
the Bank and its subsidiaries for the respective periods covered
thereby. Such statements and related notes have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods involved; the tables included
in the Bank Prospectus present fairly the information purported to be
shown thereby at the respective dates thereof and for the respective
periods covered thereby and conform in all material respects with the
OCC Rules and Regulations;
(xi) Except as disclosed in the Bank Prospectus, the Bank
and its subsidiaries are conducting their respective businesses in
compliance in all material respects with all laws, rules, regulations,
decisions, directives and orders (including, without limitation, all
regulations and orders of, or agreements with, the OCC and the FDIC)
applicable to them. There is no action, suit, investigation or
proceeding before or by any government, governmental instrumentality
or court, domestic or foreign, now pending or, to the knowledge of the
Bank, threatened against or affecting the Bank or any of its
subsidiaries (A) that is required to be disclosed in the Bank
Prospectus and not disclosed therein, (B) that would likely result in
any material adverse change in the condition (financial or otherwise),
earnings, business affairs of the Bank and its subsidiaries, (C) that
could materially and adversely affect the properties, assets or
leasehold interests thereof, or (D) that would likely adversely affect
the consummation of the transactions contemplated by this Agreement;
all pending legal or governmental proceedings to which the Bank or any
of its subsidiaries is a party or of which any of their property is
subject, which are not described in the Bank Prospectus, including
ordinary routine litigation incidental to their respective businesses,
would not have a material adverse effect on the condition (financial
or otherwise), earnings, business affairs of the Bank and its
subsidiaries;
(xii) There are no contracts or documents which are
required to be described in the Registration Statement, the Bank
Registration Statement, the Prospectus or the Bank Prospectus or to be
filed as exhibits thereto which have not been so described and filed
as required;
(xiii) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency is necessary or required for the
performance by the Bank of its obligations hereunder, in
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connection with the offering, issuance or sale of the Preferred Stock
hereunder or the consummation of the transactions contemplated by this
Agreement, except such as have been already obtained or as may be
required under applicable law or the OCC Rules and Regulations or
state securities laws;
(xiv) The Bank possesses such Governmental Licenses issued
by the appropriate federal, state, local or foreign regulatory
agencies or bodies necessary to conduct the business now operated by
it; the Bank is in compliance with the terms and conditions of all
such Governmental Licenses, except where the failure so to comply
would not have a material adverse effect on the financial position,
stockholders' equity or results of operations of the Bank; all of the
Governmental Licenses are valid and in full force and effect, except
where the invalidity of such Governmental Licenses or the failure of
such Governmental Licenses to be in full force and effect would not
have a material adverse effect on the financial position,
stockholders' equity or results of operations of the Bank; the Bank
has not received any notice of proceedings relating to the revocation
or modification of any such Governmental Licenses which singly or in
the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a material adverse effect on the financial
position, stockholders' equity or results of operations of the Bank;
(xv) There are no persons with registration rights or
other similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Bank under the
Act; and
(xvi) The Bank Preferred Shares have been duly authorized
and, if and when issued and delivered by the Bank pursuant to the
terms and conditions set forth in the Registration Statement, will be
validly issued and fully paid and nonassessable; the Bank Preferred
Shares conform to the statements relating thereto in the Bank
Prospectus and such description conforms to the instruments defining
the same; no holder of the Bank Preferred Shares will be subject to
personal liability by reason of being such a holder and the issuance
of the bank Preferred Shares is not subject to the preemptive or other
similar rights of any stockholder of the Bank.
2. Subject to the terms and conditions herein set forth, (a) the
Company agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company,
at a purchase price per share of $10.00 the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto and (b) in the event
and to the extent that the Underwriters shall exercise the election to purchase
Optional Shares as provided below, the Company agrees to issue and sell to each
of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at the purchase price per share set
forth in clause (a) of this Section 2, that portion of the number of Optional
Shares as to which such election shall have been exercised (to be adjusted by
you so as to eliminate fractional shares) determined by multiplying such number
of Optional Shares by a fraction, the numerator of which is the maximum number
of Optional Shares which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in
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Schedule I hereto and the denominator of which is the maximum number of
Optional Shares that all of the Underwriters are entitled to purchase
hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to 270,000 Optional Shares, at the purchase price per share
set forth in the paragraph above, for the sole purpose of covering
overallotments in the sale of the Firm Shares. Any such election to purchase
Optional Shares may be exercised only by written notice from you to the
Company, given within a period of 30 business days after the date of this
Agreement, setting forth the aggregate number of Optional Shares to be
purchased and the date on which such Optional Shares are to be delivered, as
determined by you but in no event earlier than the First Time of Delivery (as
defined in Section 4 hereof) or, unless you and the Company otherwise agree in
writing, earlier than two or later than ten business days after the date of
such notice.
As compensation to the Underwriters for their commitments hereunder,
the Company at each Time of Delivery (as defined in Section 4 hereof) will pay
to Xxxxx & Co., L.L.C. ("Xxxxx"), for the accounts of the several Underwriters,
an amount equal to $.425 per share for the Shares to be delivered by the
Company hereunder at such Time of Delivery; provided that, if any or all of the
Optional Shares are purchased by the Underwriters, the Company will pay to
Xxxxx, for the account of the several Underwriters, an amount equal to $.400
per share for such Optional Shares.
3. Upon the authorization by you of the release of the Firm
Shares, the several Underwriters propose to offer the Firm Shares for sale upon
the terms and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter
hereunder will be represented by one or more definitive certificates registered
in the name of Xxxxx which will be deposited by or on behalf of the Company
with The Depository Trust Company ("DTC") or its designated custodian. The
Company will deliver the Shares to Xxxxx, for the account of each Underwriter,
against payment by or on behalf of such Underwriter of the purchase price
therefor by wire transfer to the account specified by the Company in Federal
(same day) funds, by causing DTC to credit the Shares to the account of Xxxxx
at DTC. The Company will cause the certificates representing the Shares to be
made available to Xxxxx for checking at least twenty-four hours prior to the
Time of Delivery at the office of DTC or its designated custodian (the
"Designated Office"). The time and date of such delivery and payment shall be,
with respect to the Firm Shares, 9:30 A.M., Detroit time, on _______, 1997 or
such other time and date as Xxxxx and the Company may agree upon in writing,
and, with respect to the Optional Shares, 9:30 A.M., Detroit time, on the date
specified by Xxxxx in the written notice given by Xxxxx of the Underwriters'
election to purchase such Optional Shares, or such other time and date as Xxxxx
and the Company may agree upon in writing. Such time and date for delivery of
the Firm Shares is herein called the "First Time of Delivery," such time and
date for delivery of the Optional Shares, if not the First Time of Delivery, is
herein called the "Second Time of Delivery," and each such time and date for
delivery is herein called a "Time of Delivery."
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(b) The documents to be delivered at each Time of Delivery by or
on behalf of the parties hereto pursuant to Section 8 hereof, including the
cross-receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 8(k) hereof, will be delivered at the offices
of Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx, 0000 Xxxxx Xxxxxxxx Xxxxxxxx, Xxxxxxx, XX
00000-0000 (the "Closing Location"), the Shares will be delivered at the
Designated Office, and the wire transfers will be made to the specified
accounts, all at such Time of Delivery. A meeting will be held at the Closing
Location at 2:00 P.M., Detroit time, on the Detroit Business Day next preceding
such Time of Delivery, at which meeting the final drafts of the documents to be
delivered pursuant to the preceding sentence will be available for review by
the parties hereto. For the purposes of this Section 4, "Detroit Business Day'
shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
day on which banking institutions in Detroit are generally authorized or
obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Act; to make no further
amendment or any supplement to the Registration Statement or Prospectus which
shall be disapproved by you promptly after reasonable notice thereof; to advise
you, promptly after it receives notice thereof, of the time when any amendment
to the Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed and to
furnish you with copies thereof; to advise you, promptly after it receives
notice thereof, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
Prospectus, of the suspension of the qualification of the Shares for offering
or sale in any jurisdiction, of the initiation or threatening of any proceeding
for any such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for additional
information; and, in the event of the issuance of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
Prospectus or suspending any such qualification, promptly to use every
reasonable effort to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with
such laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Shares, provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction;
(c) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as delivery of a
Prospectus is required in connection with the offering or sale of the Shares,
to furnish the Underwriters with copies of the Prospectus in Detroit in such
quantities as you may from time to time reasonably request, and, if the
delivery
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of a prospectus is required at any time prior to the expiration of nine months
after the time of issue of the Prospectus in connection with the offering or
sale of the Shares and if at such time any event shall have occurred as a
result of which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is delivered, not
misleading, or, if for any other reason it shall be necessary during such
period to amend or supplement the Prospectus in order to comply with the Act,
to notify you and upon your request to prepare and furnish without charge to
each Underwriter and to any dealer in securities as many copies as you may from
time to time reasonably request of an amended Prospectus or a supplement to the
Prospectus which will correct such statement or omission or effect such
compliance, and in case any Underwriter is required to deliver a prospectus in
connection with sales of any of the Shares at any time nine months or more
after the time of issue of the Prospectus, upon your request but at the expense
of such Underwriter, to prepare and deliver to such Underwriter as many copies
as you may reasonably request of an amended or supplemented Prospectus
complying with Section 10(a)(3) of the Act;
To make generally available to the Company's security holders as soon
as practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c) under
the Act), an earnings statement of the Company complying with Section 11(a) of
the Act and the rules and regulations thereunder (including, at the option of
the Company, Rule 158);
(e) During the period beginning from the date hereof and
continuing to and including the date 90 days after the date of the Prospectus,
not to offer, sell, contract to sell or otherwise dispose of, except as
provided hereunder, any securities of the Company or another subsidiary of the
Bank that are substantially similar to the Shares;
(f) To the extent necessary to comply with NASDAQ NMS rules and
regulations or the rules and regulations of any other exchange on which the
Shares are listed, to furnish to holders of the Shares as soon as practicable
after the end of each fiscal year an annual report (including a balance sheet
and statements of income, stockholders, equity and cash flows of the Company
certified by independent public accountants) and, as soon as practicable after
the end of each of the first three quarters of each fiscal year (beginning with
the fiscal quarter ending after the effective date of the Registration
Statement), consolidated summary financial information of the Company for such
quarter in reasonable detail;
(g) During a period of three years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders of the Company,
and to deliver to you (i) as soon as they are available, copies of any reports
and financial statements furnished to or filed with the Commission or any
national securities exchange on which any class of securities of the Company is
listed; and (ii) such additional information concerning the business and
financial condition of the Company as you may from time to time reasonably
request (such financial statements to be on a consolidated
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basis to the extent the accounts of the Company and its subsidiaries (if any)
are consolidated in reports furnished to their stockholders generally or to the
Commission);
(h) To use the net proceeds received by it from the sale of the
Shares pursuant to this Agreement in the manner specified in the Prospectus
under the caption "Use of Proceeds;"
If the Company elects to rely upon Rule 462(b), the Company shall file
a Rule 462(b) Registration Statement with the Commission in compliance with
Rule 462(b) by 5:00 P.M., Washington, D.C. time, on the date of this Agreement,
and the Company shall at the time of filing either pay to the Commission the
filing fee for the Rule 462(b) Registration Statement or give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under the Act;
(j) Except to the extent that a Tax Event (as defined in the
Prospectus) shall have occurred, to make the elections and take the procedural
steps described in the Prospectus under the heading "Federal Income Tax
Considerations" in a timely fashion, to meet the requirements to qualify, for
its taxable year ending December 31, 1997, as a REIT under the Code as in
effect on the date hereof and to otherwise use every reasonable effort to do
so; and
(k) To file with the Commission such reports on Form SR as may be
required by Rule 463 under the Act.
6. The Bank agrees with each of the Underwriters:
(a) The Bank will notify the Underwriters immediately, and confirm
the notice in writing, (i) of the effectiveness of the Bank Registration
Statement and any amendment thereto, (ii) of the receipt by the Bank or its
counsel of any comments from the OCC with respect to the offering of the
Shares, (iii) of any request to the Bank or its counsel by the OCC for any
amendment or supplement to the Bank Prospectus or for any additional
information, and (iv) of the issuance or initiation by the OCC or by any other
state or federal banking or securities regulatory authority of any stop order
or cease-and-desist proceeding to suspend the effectiveness of the Bank
Prospectus or interfering with the offering of the Shares, or of the suspension
of the qualification of the Shares for offering or sale in any jurisdiction, or
the initiation or threat of any other orders or proceedings for such purposes;
the Bank will make every reasonable effort to prevent the issuance or
initiation of any such stop orders or cease-and-desist proceedings and, if any
such stop orders or cease-and-desist proceedings are issued or initiated, to
obtain the lifting or dismissal thereof at the earliest possible moment;
(b) The Bank will give the Underwriters notice of its intention
to file or prepare any amendment to the Bank Prospectus (or to any Bank
Preliminary Prospectus, as the case may be) or any amendment, supplement or
revision to the Prospectus, will xxxxxxx Xxxxx with copies of any such
documents a reasonable amount of time prior to such proposed filing or use, as
the case may be, and will not file or use any such document to which Xxxxx or
counsel for the Underwriters shall object;
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(c) The Bank has furnished or will deliver to the Underwriters
and counsel for the Underwriters, without charge, signed copies of the Bank
Registration Statement, as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein) and
signed copies of all consents and certificates of experts, and will also
deliver to the Underwriters, without charge, a conformed copy of the Bank
Registration Statement, as originally filed and each amendment thereto (without
exhibits) for each of the Underwriters;
(d) If any event shall occur as a result of which it is necessary,
in the opinion of counsel for the Underwriters, to amend or supplement the Bank
Prospectus in order to make the Bank Prospectus not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser, the Bank
will forthwith amend or supplement the Bank Prospectus by preparing and
furnishing to the Underwriters a reasonable number of copies of an amendment or
amendments of, or a supplement or supplements to, the Bank Prospectus (in form
and substance reasonably satisfactory to such counsel) so that, as so amended
or supplemented, the Bank Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of circumstances existing at the time the Bank
Prospectus is delivered to a purchaser, not misleading, and the Bank will
furnish to each underwriter such number of copies of such amendment or
supplement as such Underwriter shall reasonably request. For the purposes of
this subsection, the Bank shall furnish such information with respect to itself
to the Underwriters, counsel for the Underwriters and counsel for the Bank,
as may be necessary for counsel for the Underwriters and counsel for the Bank
with respect to the need to amend or supplement the Bank Prospectus and shall
furnish such further information as may from time to time be reasonably
requested; and
(e) The Bank, during the period when the Bank Prospectus is
required to be delivered, will file all documents required to be filed with the
OCC within the time periods required by OCC Rules and Regulations.
7. The Company and the Bank, jointly and severally, covenant and
agree with the several Underwriters to pay or cause to be paid the following:
(i) the fees, disbursements and expenses of their counsel and accountants in
connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement and Blue Sky Memoranda,
closing documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the Shares;
(iii) all expenses in connection with the qualification of the Shares for
offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Legal Investment
and Blue Sky surveys; (iv) all fees and expenses in connection with listing the
Shares on the NASDAQ NMS; (v) the cost of preparing stock certificates; (vi)
the cost and charges of any transfer agent or registrar; (vii) the cost and
charges of DTC; (vii) the out-of-
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pocket expenses of the Underwriters, including without limitation, road show
expenses and the Underwriter's legal fees and expenses (provided that the
Company's and the Bank's obligation to pay such out-of-pocket expenses shall
not exceed the amount of $65,000) and (viii) all other costs and expenses
incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section.
8. The obligations of the Underwriters hereunder, as to the
Shares to be delivered at each Time of Delivery, shall be subject, in their
discretion, to the condition that all representations and warranties and other
statements of the Company and the Bank herein are, at and as of such Time of
Delivery, true and correct, the condition that the Company and the Bank shall
have performed all of their respective obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with
Section 5(a) hereof; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and all requests for additional information on the part of the
Commission shall have been complied with to your reasonable satisfaction; if
the Company has elected to rely upon Rule 462(b), the Rule 462(b) Registration
Statement shall have become effective by 5:00 P.M., Washington, D.C. time, on
the date of this Agreement;
(b) Xxxxxxxx Xxxxxx Xxxxxxxx and Xxxx, counsel for the
Underwriters, shall have furnished to you such opinion or opinions, dated such
Time of Delivery, with respect to the validity of the Shares as well as such
other related matters as you may reasonably request, and such counsel shall
have received such papers and information as they may reasonably request to
enable them to pass upon such matters;
(c) Silver, Xxxxxxxx & Taff, L.L.P., counsel for the Company,
shall have furnished to you their written opinion, dated such Time of Delivery,
in form and substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Michigan, and the Bank has been duly organized and is validly
existing under the laws of the United States of America as a national
bank, each with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus;
(ii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital stock
of the Company (including the Shares being delivered at such Time of
Delivery) have been duly and validly authorized and issued and are
fully paid and non-assessable; and the Shares conform in all material
respects to the description of the Preferred Stock contained in the
Prospectus;
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(iii) To the knowledge of such counsel and other than as
set forth in the Prospectus there are no legal or governmental
proceedings pending to which the Company is a party or of which any
property of the Company is the subject which, if determined adversely
to the Company, would individually or in the aggregate have a material
adverse effect on the current or future consolidated financial
position, stockholders' equity or results of operations of the
Company; and, to the knowledge of such counsel, no such proceedings
are threatened or contemplated by governmental authorities or
threatened by others;
(iv) This Agreement has been duly authorized, executed and
delivered by the Company and the Bank;
(v) The issue and sale of the Shares being delivered at
such Time of Delivery by the Company and the compliance by the Company
with all of the provisions of this Agreement and the consummation of
the transactions herein contemplated will not conflict with or result
in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument known to such counsel
to which the Company is a party or by which the Company is bound or to
which any of the property or assets of the Company is subject, nor
will such action result in any violation of the provisions of the
Articles of Incorporation (or other charter document) or By-laws of
the Company or any statute or any order, rule or regulation known to
such counsel of any court or governmental agency or body having
jurisdiction over the Company or any of its properties;
(vi) No consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the
Shares or the consummation by the Company or the Bank of the
transactions contemplated by this Agreement and the agreements listed
in Annex II hereto, except the registration under the Act of the
Shares and such consents, approvals, authorizations, registrations or
qualifications as may be required under the OCC Rules and Regulations,
state securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters;
(vii) The Company is not, to the knowledge of such counsel,
(i) in violation of its Articles of Incorporation (or other charter
documents) or By-laws or (ii) in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound;
(viii) The statements set forth in the Prospectus under the
captions "Description of Series A Preferred Shares," insofar as they
purport to constitute a summary of the terms of the Preferred Stock
and the Automatic Exchange, "Description of Capital Stock," insofar as
they purport to constitute a summary of the terms of the capital stock
of the
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Company, and under the captions "Federal Income Tax Considerations,"
"ERISA Considerations," "Business and Strategy -- Acquisition of
Initial Portfolio," "Business and Strategy -- Servicing," "Management
-- The Advisor," and "Underwriting," insofar as they constitute or
purport to describe matters of law or legal conclusions, provisions of
laws and documents referred to therein, have been reviewed by such
counsel, are accurate in all material respects and present fairly the
information required to be shown therein;
(ix) Each of the agreements listed in Annex II hereto has
been duly authorized, executed and delivered by the Bank and the
Company and constitutes the valid and legally binding obligation of
the Bank and the Company enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights;
(x) The Company is not an "investment company" or an
entity "controlled" by an "investment company," as such terms are
defined in the Investment Company Act;
(xi) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Company prior
to such Time of Delivery (other than the financial statements, related
schedules and other financial data therein, as to which such counsel
need express no opinion) comply as to form in all material respects
with the requirements of the Act and the rules and regulations
thereunder; although such counsel does not assume any responsibility
for the accuracy, completeness or fairness of the statements contained
in the Registration Statement or the Prospectus, except as otherwise
indicated in its opinion, such counsel has no reason to believe that,
as of its effective date, the Registration Statement or any further
amendment thereto made by the Company prior to such Time of Delivery
(other than the financial statements, related schedules and other
financial data therein, as to which such counsel need express no
opinion) contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that, as of its date,
the Prospectus or any further amendment or supplement thereto made by
the Company prior to such Time of Delivery (other than the financial
statements, related schedules and other financial data therein, as to
which such counsel need express no opinion) contained an untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading or that, as
of such Time of Delivery, either the Registration Statement or the
Prospectus or any further amendment or supplement thereto made by the
Company prior to such Time of Delivery (other than the financial
statements, related schedules and other financial data therein, as to
which such counsel need express no opinion) contains an untrue
statement of a material fact or omits to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and they do
not know of any amendment to the Registration Statement required to be
filed or of any contracts or other documents of a character required
to be filed as an exhibit to the Registration Statement or required to
be described in the Registration Statement or the Prospectus which are
not filed or described as required; and
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(d) [XXXXXXX XXXX], counsel of the Bank, shall have furnished to
you its written opinion, dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that the issue and sale of the Shares being
delivered at such Time of Delivery by the Company and the compliance by the
Company and the Bank with all of the provisions of this Agreement and the
consummation of the transactions herein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such counsel to which the
Bank is a party or by which the Bank is bound or to which any of the property
or assets of the Bank is subject, nor will such action result in any violation
of the provisions of the Certificate of Incorporation (or other charter
document) or By-laws of the Bank or any statute or any order, rule or
regulation known to such counsel of any court or governmental agency or body
having jurisdiction over the Bank or any of its properties;
(e) On the date of the Prospectus at a time prior to the execution
of this Agreement, at 9:30 A.M., Detroit time, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent to the
date of this Agreement and also at each Time of Delivery, Xxxxx Xxxxxxxx LLP
shall have furnished to you a letter or letters, dated the respective dates of
delivery thereof, in form and substance satisfactory to you, to the effect set
forth in Annex I hereto (the executed copy of the letter delivered prior to the
execution of this Agreement is attached as Annex I(a) hereto and a draft of the
form of letter to be delivered on the effective date of any post-effective
amendment to the Registration Statement and as of each Time of Delivery is
attached as Annex I(b) hereto);
(f) (i) Neither the Company nor the Bank shall have sustained
since the date of the latest audited financial statements included in the
Prospectus or the Bank Prospectus, as the case may be, any loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in the
Prospectus or the Bank Prospectus, and (ii) since the respective dates as of
which information is given in the Prospectus or the Bank Prospectus there shall
not have been any change in the capital stock or long-term debt of the Company
or the Bank or any change in or affecting the general affairs, management,
financial position, stockholders' equity, results of operations of the Company
or the Bank, otherwise than as set forth or contemplated in the Prospectus or
the Bank Prospectus, the effect of which, in any such case described in clause
(i) or (ii), is in the judgment of the Underwriters after discussion with
the Company so material and adverse as to make it impracticable or inadvisable
to proceed with the public offering or the delivery of the Shares being
delivered at such Time of Delivery on the terms and in the manner contemplated
in the Prospectus.
(g) The Prospectus has become effective and at the Time of
Delivery (and, if any of the Optional Shares are purchased, at the Second Time
of Delivery), no stop order or cease-and-desist proceeding suspending the
effectiveness of the Prospectus or interfering with the offering of the Shares
or the Bank Preferred Shares shall have been issued and no proceedings for the
purposes of issuing a stop order or cease-and-desist proceedings shall have
been instituted or shall
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be pending, or to the knowledge of the Bank, shall be contemplated by the OCC
or by any other state or federal banking or securities regulatory authority.
Any request on the part of the OCC for additional information or for the
inclusion of additional information in the Bank Registration Statement shall
have been complied with to the reasonable satisfaction of counsel for the
Underwriters.
(h) (x) On or after the date hereof (i) trading in securities
generally on the NASDAQ NMS shall not have been suspended or materially
limited, (ii) trading in the Shares on the NASDAQ NMS shall not have been
suspended, (iii) a general moratorium on commercial banking activities in
Detroit shall not have been declared by Federal or Detroit authorities, (iv)
there shall not have occurred any outbreak of hostilities or escalation thereof
or other calamity or crisis having an adverse effect on the financial markets
of the United States or (v) there shall not have occurred any material adverse
development in any of the real estate markets in which the mortgaged properties
are located and (y) the occurrence or consequences of any one or more of such
events shall have, in the reasonable judgment of the Underwriters, made it
impracticable to market the Shares on the terms and in the manner contemplated
by the Prospectus;
(i) The Shares to be sold at such Time of Delivery shall have been
duly listed, subject to notice of issuance, on the NASDAQ NMS;
(j) The Company shall have complied with the provisions of Section
5(c) hereof with respect to the furnishing of Prospectuses;
(k) The Company shall furnish or cause to be furnished to you at
such Time of Delivery certificates of officers of the Company and the Bank
satisfactory to you as to the accuracy of the representations and warranties of
the Company and the Bank herein at and as of such Time of Delivery, as to the
performance by the Company and the Bank of all of its obligations hereunder to
be performed at or prior to such Time of Delivery, as to the matters set forth
in subsections (a) and (e) of this Section and as to such other matters as you
may reasonably request; and
(l) The Company shall be furnished or caused to be furnished to
you at such Time of Delivery an opinion of Xxxxxxx Xxxx Xxxx Xxxx Xxxxxx &
Xxxxxx, in form and substance satisfactory to you, to the effect that
commencing with the Company's taxable year ending December 31, 1997 and
assuming that the elections and other procedural steps described in the
Prospectus under the heading "Federal Income Tax Considerations," are completed
by the Company in a timely fashion and based on the other assumptions stated
therein, the Company will be organized, managed and owned in conformity with
the requirements for qualification as a REIT under the Code and its proposed
method of operation will enable it to meet the requirements for qualification
and taxation as a REIT under the Code.
9. (a) The Company and the Bank, jointly and severally, will
indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses,
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claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Prospectus, Bank Preliminary Prospectus, the
Registration Statement, the Bank Registration Statement, the Prospectus or the
Bank Prospectus, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that neither the Company nor the Bank shall be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, Bank Preliminary
Prospectus, the Registration Statement, the Bank Registration Statement, the
Prospectus or the Bank Prospectus, or any such amendment or supplement thereto
in reliance upon and in conformity with written information furnished to the
Company by any Underwriter expressly for use therein; and provided, further,
that with respect to any untrue statement or omission or alleged untrue
statement or omission made in any Preliminary Prospectus or Bank Preliminary
Prospectus, the indemnity agreement contained in this subsection (a) shall not
inure to the benefit of any Underwriter to the extent that any such loss,
claim, damage or liability of such Underwriter results from the fact that a
copy of the Prospectus or the Bank Prospectus was not sent or given to any
person at or prior to the written confirmation of the sale of such securities
to such person.
(b) Each Underwriter will indemnify and hold harmless the Company
and the Bank against any losses, claims, damages or liabilities to which the
Company and the Bank may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus, Bank Preliminary
Prospectus, the Registration Statement, the Bank Registration Statement, the
Prospectus or the Bank Prospectus, or any amendment or supplement thereto, or
arise out of or are based on the omission or alleged omission to state therein
a material fact required be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent,
that such untrue statement, alleged untrue statement or omission or alleged
omission was made in any Preliminary Prospectus, Bank Preliminary Prospectus,
the Registration Statement, the Bank Registration Statement, the Prospectus or
the Bank Prospectus, or any such amendment or supplement thereto in reliance
upon and in conformity with written information furnished to the Company by
such Underwriter expressly for use therein.
(c) Promptly after receipt by an indemnified party under
subsections (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against an
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any
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indemnified party and it has notified the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses
of other counsel or any other expenses, in each case subsequently incurred by
such indemnified party, in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder unless such settlement, compromise or judgment (i)
includes a conditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as
to, or an admission of, fault, culpability or a failure to act, by or on behalf
of any indemnified party.
(d) If the indemnification provided for in this Section 9 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) such proportion as is appropriate to reflect
the relative benefits received by the Company and the Bank on the one hand and
the Underwriters on the other from the offering of the Shares. If, however,
the allocation provided for by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (c) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company and the Bank on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or abilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Bank on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion the
total net proceeds from the offering (before deducting expenses) received by
the Company and the Bank bear to the total underwriting commissions received by
the Underwriters, in each case as set forth in the table on the cover page of
the Prospectus. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company and the Bank on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission. The Company, the Bank and the Underwriters agree that it would not
be just and equitable if contributions pursuant to this section (d) were
determined by pro rata allocation (even if the Underwriters are treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
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subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company and the Bank under this Section
9 shall be in addition to any liability which the Company and the Bank may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Underwriter within the meaning of the Act; and
the obligations of the Underwriters under this Section 9 shall be in addition
to any liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of the
Company or the Bank and to each person, if any, who controls the Company or the
Bank within the meaning of the Act.
10. (a) If any Underwriter shall default in its obligation to
purchase the Shares which it has agreed to purchase hereunder at a Time of
Delivery, you may in your discretion arrange for you or another party or other
parties to purchase such Shares on the terms contained herein. If within
thirty-six hours after such default by any Underwriter you do not arrange for
the purchase of such Shares, then the Company shall be entitled to a further
period of thirty-six hours within which to procure another party or other
parties satisfactory to you to purchase such Shares on such terms. In the
event that, within the respective prescribed periods, you notify the Company
that you have so arranged for the purchase of such Shares, or the Company
notifies you that it has so arranged for the purchase of such Shares, you or
the Company shall have the right to postpone such Time of Delivery for a period
of not more than seven days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in your
opinion may thereby be made necessary. The term "Underwriter" as used in this
Agreement shall include any person substituted under this Section with like
effect as if such person had originally been a party to this Agreement with
respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase
of the Shares of a defaulting Underwriter or Underwriters by you and the
Company as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased does not exceed one-tenth of the aggregate
number of all the Shares to be purchased at such Time of Delivery, then the
Company shall have the right to require each non- defaulting Underwriter to
purchase the
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number of shares which such Underwriter agreed to purchase hereunder at such
Time of Delivery and, in addition, to require each non-defaulting Underwriter
to purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made, but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase
of the Shares of a defaulting Underwriter or Underwriters by you and the
Company as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased exceeds one-tenth of the aggregate number of
all the Shares to be purchased at such Time of Delivery, or if the Company
shall not exercise the right described in subsection (b) above to require
non-defaulting Underwriters to purchase Shares of a defaulting Underwriter or
Underwriters, then this Agreement (or, with respect to the Second Time of
Delivery, the obligations of the Underwriters to purchase and of the Company to
sell the Optional Shares) shall thereupon terminate, without liability on the
part of any non-defaulting Underwriter, the Company or the Bank, except for the
expenses to be borne by the Company, the Bank, and the Underwriters as provided
in Section 7 hereof and the indemnity and contribution agreements in Section 9
hereof; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
11. The respective indemnities, agreements, representations,
warranties and other statements of the Company or the Bank and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and
effect, regardless of any investigation (or any statement as to the results
thereof) made by or on behalf of any Underwriter or any controlling person of
any Underwriter, or the Company or the Bank, or any officer or director or
controlling person of the Company or the Bank, and shall survive delivery of
and payment for the Shares.
12. If this Agreement shall be terminated pursuant to Section 10
hereof, neither the Company nor the Bank shall then be under any liability to
any Underwriter except as provided in Sections 7 and 9 hereof; but, if for any
other reason, any Shares are not delivered by or on behalf of the Company as
provided herein, the Company will reimburse the Underwriters through you for
all out-of-pocket expenses approved in writing by you, including fees and
disbursements of counsel, reasonably incurred by the Underwriters in making
preparations for the purchase, sale and delivery of the Shares not so
delivered, but the Company or the Bank shall then be under no further liability
to any Underwriter except as provided in Sections 7 and 9 hereof.
13. In all dealings hereunder, you shall act on behalf of each of
the Underwriters, and the parties hereto shall be entitled to act and rely upon
any statement, request, notice or agreement on behalf of any Underwriter made
or given by you.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex
or facsimile transmission to Xxxxx & Co., L.L.C. at Xxx Xxxxxxxx, Xxxxxxx,
Xxxxxxxx 00000, Attention: Corporate Finance Department and Principal
Financial Securities, Inc., 0 Xxxxx XxXxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, XX
00000,
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Attention:______________; and if to the Company or the Bank shall be delivered
or sent by mail to the address of the Company or the Bank, respectively set
forth in the Registration Statement, Attention: Xxxxx X. Xxxxxx, Esq.;
provided, however, that any notice to an Underwriter pursuant to Section 9(c)
hereof shall be delivered or sent by mail, telex or facsimile transmission to
such Underwriter at its address set forth in its Underwriters' Questionnaire,
or telex constituting such Questionnaire, which address will be supplied to the
Company or the Bank by you upon request. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.
14. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company, the Bank and, to the extent provided
in Sections 9 and 11 hereof, the officers and directors of the Company, the
Bank and each person who controls the Company, the Bank or any Underwriter, and
their respective heirs, executors, administrators, successors and assigns, and
no other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Shares from any Underwriter shall be
deemed a successor or assign by reason merely of such purchase.
15. As used herein, the term "business day" shall mean any day
when the Commission's office in Washington, D.C. is open for business.
16. This Agreement shall be governed by and construed in
accordance with the laws of the State of Michigan.
17. This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute one and the
same instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us one counterpart for the Company and the Bank plus one for each
counsel thereof, and upon the acceptance hereof by each of the Underwriters,
this letter and such acceptance hereof shall constitute a binding agreement
between each of the Underwriters, the Company and the Bank.
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Very truly yours,
Franklin Finance Corporation
By:_____________________________________
Name:
Title:
Franklin Bank, N.A.
By:_____________________________________
Name:
Title:
Accepted as of the date hereof:
Xxxxx & Co., L.L.C.
By:________________________________
Name:
Title:
Principal Financial Securities, Inc.
By:________________________________
Name:
Title:
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SCHEDULE I
Number of Optional
Shares to be
Total Number of Purchased if
Shares to be Maximum Option
Underwriter Purchased Exercised
-------------- -------------- ----------------
Xxxxx & Co, L.L.C. . . . . . . . . . . . . . . . .
Principal Financial Securities, Inc. . . . . . . .
Total 1,800,000 270,000
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ANNEX I
ANNEX 1 (a)
ANNEX 1 (b)
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ANNEX II
Residential Mortgage Loan Purchase and Warranties Agreement
Residential Mortgage Loan Servicing Agreement
Commercial Mortgage Loan Purchase and Warranties Agreement
Commercial Mortgage Loan Servicing Agreement
Advisory Agreement
