CONFORMED COPY
$50,000,000 PRINCIPAL AMOUNT OF 10% SENIOR SUBORDINATED NOTES
DUE 2003(1)
AMRESCO, INC.
PURCHASE AGREEMENT
January 29, 1996
▇▇▇▇▇ ▇▇▇▇▇▇▇ INC.
▇.▇. ▇▇▇▇▇▇▇▇ & CO.
▇▇▇▇▇▇ ▇▇▇▇▇▇ & COMPANY, INC.
c/o ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
AMRESCO, INC., a Delaware corporation (the "Company"), proposes to
issue and sell to you (the "Underwriters") its 10% Senior Subordinated Notes
due 2003 in an aggregate principal amount of $50,000,000 (the "Firm Notes").
The Company has also granted to the Underwriters an option to purchase up to
an additional $7,500,000 in aggregate principal amount of its 10% Senior
Subordinated Notes due 2003 on the terms and for the purposes set forth in
Section 3(b) hereof. Such additional 10% Senior Subordinated Notes due 2003
are referred to in this Agreement as the "Option Notes," and the Firm Notes
and the Option Notes, if purchased, are hereinafter referred to as the
"Notes" or the "Securities." The Notes shall be issued under an indenture,
dated as of January 15, 1996 (the "Indenture"), between the Company and Bank
One, Columbus, N.A., as trustee (the "Trustee").
The Company hereby confirms its agreement with respect to the sale
of the Securities to the Underwriters.
________________
(1) Plus an option to purchase up to an additional $7,500,000 aggregate
principal amount of Notes to cover over-allotments.
1. REGISTRATION STATEMENT. A registration statement on Form S-3
(File No. 33-65329) with respect to the Securities, including a
preliminary form of prospectus, has been prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as amended
(the "Act"), the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and the rules and regulations ("Rules and Regulations") of
the Securities and Exchange Commission (the "Commission") under those acts,
and has been filed with the Commission. One or more amendments to such
registration statement have also been so prepared and have been, or will be,
so filed. Copies of such registration statement and amendments and each
related preliminary prospectus have been delivered to the Underwriters.
If the Company has elected not to rely upon Rule 430A of the Rules
and Regulations, the Company has prepared and will promptly file an amendment
to the registration statement and an amended prospectus. If the Company has
elected to rely upon Rule 430A of the Rules and Regulations, it will prepare
and file a prospectus pursuant to Rule 424(b) that discloses the information
previously omitted from the prospectus in reliance upon Rule 430A. Such
registration statement as amended at the time it is or was declared effective
by the Commission and, in the event of any amendment thereto after the
effective date and prior to the First Closing Date (as hereinafter defined),
but only from and after the effectiveness of such amendment, including all
financial statements, schedules and exhibits thereto, all documents
incorporated by reference therein filed under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and any information deemed to be part
of the registration statement at the time of effectiveness pursuant to Rule
430A(b), if applicable, is hereinafter called the "Registration Statement."
The prospectus included in the Registration Statement at the time it is or
was declared effective by the Commission is hereinafter called the
"Prospectus," except that if any prospectus filed by the Company with the
Commission pursuant to Rule 424(b) of the Rules and Regulations or any other
prospectus provided to the Underwriters by the Company for use in connection
with the offering of the Securities (whether or not required to be filed by
the Company with the Commission pursuant to Rule 424(b) of the Rules and
Regulations) differs from the prospectus on file at the time the Registration
Statement is or was declared effective by the Commission, the term
"Prospectus" shall refer to such differing prospectus from and after the time
such prospectus is filed with the Commission or transmitted to the Commission
for filing pursuant to such Rule 424(b) or from and after the time it is
first provided to the Underwriters by the Company for such use. The term
"Preliminary Prospectus" as used herein means any preliminary prospectus
included in the Registration Statement prior to the time it becomes or became
effective under the Act and any prospectus subject to completion as described
in Rule 430A of the Rules and Regulations. Reference made herein to any
Preliminary Prospectus or Prospectus, as amended or supplemented, shall
include all documents incorporated by reference therein.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the Underwriters as follows:
(a) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission or the
securities authority of any state or other jurisdiction
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in which the Notes are to be offered and sold and each Preliminary
Prospectus, at the time of filing thereof, did 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 light of the circumstances under which they
were made, not misleading. The foregoing shall not apply to
statements in or omissions from any Preliminary Prospectus in
reliance upon, and in conformity with, written information
furnished to the Company by any Underwriter specifically for use in
the preparation thereof.
(b) As of the time the Registration Statement (or any
post-effective amendment thereto) is or was declared effective by
the Commission, upon the filing or first delivery to the
Underwriters of the Prospectus (or any supplement to the
Prospectus) and at the First Closing Date and Option Notes Closing
Date (as hereinafter defined), (i) the Registration Statement and
Prospectus (in each case, as so amended and/or supplemented) will
conform in all material respects to the applicable requirements of
the Act, the Trust Indenture Act and the Rules and Regulations,
(ii) the Registration Statement (as so amended) will not or did not
include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading, and (iii) the Prospectus (as
so supplemented) will not or did 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
light of the circumstances in which they are or were made, not
misleading; except that the foregoing clauses (i), (ii) and (iii)
shall not apply to statements in or omissions from any such
document in reliance upon, and in conformity with, written
information furnished to the Company by any Underwriter
specifically for use in the preparation thereof. The documents
incorporated by reference in the Registration Statement, the
Prospectus, and any Preliminary Prospectus pursuant to Item 12 of
Form S-3, as of the date they were or are filed with the
Commission, conformed or will conform in all material respects to
the requirements of the Exchange Act and, as of the date of filing,
none of such documents contained or will contain an untrue
statement of a material fact or omitted or will omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading.
(c) The consolidated financial statements of the
Company, together with the related notes thereto, set forth or
otherwise included in the Registration Statement and Prospectus
comply in all material respects with the requirements of the Act
and fairly present the financial condition and the results of
operations and changes in cash flows of the Company and its
Subsidiaries (as hereinafter defined) or its predecessor or
acquired businesses, as the case may be, at the date and for the
periods therein specified in conformity with generally accepted
accounting principles consistently applied throughout the periods
involved (except as otherwise stated therein), and the independent
public accountants whose reports are contained therein are
independent public accountants as required by the Act, the Exchange
Act and the Rules and Regulations. The financial statement
schedules, if any, included in the Registration Statement or
incorporated by reference therein, or in any post-effective
amendment thereto, and the other financial and statistical
information included in the
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Prospectus under the captions "Prospectus Summary " and "Summary
Financial and Other Data," in all material respects present fairly
and on a basis consistent with the books and records of the Company
the information stated therein. The terms "Subsidiary" and "Material
Subsidiary" shall have the meanings assigned thereto in the Indenture.
(d) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under
this Agreement. This Agreement has been duly authorized, executed
and delivered by the Company, and constitutes a valid, legal and
binding obligation of the Company, enforceable in accordance with
its terms, except as rights to indemnity hereunder may be limited
by federal or state securities laws and subject as to enforcement,
to applicable bankruptcy, insolvency, reorganization and moratorium
laws and other laws relating to or affecting the enforcement of
creditors' rights generally and to general equitable principles.
(e) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Indenture and the Notes. The Indenture has been duly and validly
authorized by the Company and, when the Indenture has been executed
and delivered, will be a valid and binding obligation of the
Company, enforceable against the Company in accordance with its
terms, subject, as to enforcement, to applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws
relating to or affecting the enforcement of creditors' rights
generally and to general equitable principles. The Notes sold
hereunder have been duly and validly authorized by the Company and,
when the Notes have been executed and authenticated in the manner
set forth in the Indenture and issued, sold, and delivered in the
manner set forth in the Prospectus, will be the valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms and the terms of the Indenture,
subject, as to enforcement, to applicable bankruptcy, insolvency,
reorganization and moratorium laws affecting the enforcement of
creditors' rights generally and to general equitable principles.
The Indenture will have been duly qualified under the Trust
Indenture Act upon effectiveness of the Registration Statement.
The Indenture will be substantially in the form filed as an exhibit
to the Registration Statement and will comply with the Trust
Indenture Act and the regulations thereunder. The Indenture and
the Notes conform in all material respects to the descriptions
thereof contained in the Registration Statement and the Prospectus.
(f) The authorized capital stock of the Company is as
set forth under the caption "Capitalization" in the Prospectus.
All of the outstanding shares of capital stock have been duly
authorized, validly issued and are fully paid and non-assessable.
All offers and sales of the Company's capital stock or 8%
Convertible Subordinated Debentures due 2005 prior to the date
hereof were at all relevant times duly registered under the Act or
exempt from the registration requirements of the Act and were duly
registered or the subject of an available exemption from the
registration requirements of the applicable state securities or
Blue Sky laws. None of the issued shares of capital stock of the
Company or its predecessors or any of its Subsidiaries has been
issued or is owned or held in violation of any pre-emptive rights
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of shareholders, and no preemptive rights or similar rights of any
security holders of the Company exist with respect to the Notes.
The Company has no agreement with any security holder as to which
the Company has not obtained waiver which gives such security
holder the right to require the Company to register under the Act
any securities of any nature owned or held by such person in
connection with the transactions contemplated by this Agreement.
(g) The execution, delivery and performance of this
Agreement, the Indenture and the Securities, the issuance and
delivery of the Securities, and the consummation of the
transactions herein and therein contemplated will not conflict
with, or result in a breach or violation of any of the terms and
provisions of, or constitute a default under, (i) any statute,
(ii) any material agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which either the Company
or any Subsidiary is bound or to which any of their property is
subject, (iii) the Company's or any Subsidiary's charter or
by-laws, or (iv) any order, rule, regulation or decree of any court
or governmental agency or body having jurisdiction over the
Company, any Subsidiary or any of their respective properties,
which breach, violation or default reasonably could or might be
expected, individually or in the aggregate with other such
breaches, violations or defaults, to result in a material adverse
effect on the financial condition, results of operations or
business of the Company and its Subsidiaries, taken as a whole.
Other than those already obtained or waivers from which have been
obtained, no consent, approval, authorization or order of, or
filing with, any court or governmental agency or body is required
by the Company or any Subsidiary for the execution, delivery and
performance of this Agreement, the Indenture or the Securities or
for the consummation of the transactions contemplated hereby and
thereby, including the issuance, sale and delivery of the
Securities by the Company, except such as may be required under the
Act, the Trust Indenture Act or state securities or blue sky laws.
(h) Neither the Company nor any Subsidiary is (i) in
violation of its respective certificate of incorporation or charter
or its respective by-laws or other organizational documents,
(ii) in default (nor has an event occurred which with notice or passage
of time or both would constitute such a default) under any bond,
indenture, mortgage, deed of trust, note, loan or credit agreement
or other material agreement or instrument to which any of them is a
party or by which any of them or any of their properties or assets
may be bound or affected, (iii) in violation of any order of any
court, arbitrator or governmental body or (iv) except as disclosed
in the Registration Statement and the Prospectus, in violation of
or has violated any franchise, grant, authorization, license,
permit, judgment, decree, order, statute, rule or regulation,
which, in the case of clauses (i)-(iv) of this sentence, would
(individually or in the aggregate) (x) adversely affect the
legality, validity or enforceability of this Agreement, the
Indenture or the Securities, or any document related hereto or
thereto or (y) have a material adverse effect on the financial
condition, results of operations or business of the Company and the
Subsidiaries, taken as a whole, or (z) materially impair the
Company's ability to perform fully on a timely basis any
obligations which it has under this Agreement, the Indenture or the
Securities. The Company or the Subsidiaries hold all franchises,
grants, authorizations, licenses, permits, easements, consents,
certificates and orders of any
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governmental or self-regulatory body required for the conduct of their
respective businesses, except where any such failure to hold will not
have a material adverse effect on the Company and its Subsidiaries,
taken as a whole. The descriptions in the Registration Statement and
the Prospectus of statutes, legal and governmental proceedings or
contracts and other documents are accurate in all material respects and
fairly present the information required to be shown; and there are no
statutes or legal or governmental proceedings required to be described
in the Registration Statement or the Prospectus that are not described
as required.
(i) Each of the Company and the Material Subsidiaries has
been duly incorporated and is validly existing as a corporation in
good standing under the laws of its jurisdiction of incorporation with
full corporate power and authority to own or lease its properties and
conduct its business as currently being carried on and as described in
the Registration Statement and Prospectus; and is duly qualified to do
business as a foreign corporation and is in good standing in each other
jurisdiction in which it owns or leases real property of a nature, or
transacts business of a type, that would make such qualification
necessary and in which the failure to so qualify would have a material
adverse effect on the financial condition, results of operations or
business of the Company and the Subsidiaries, taken as a whole. Each of
the Company and the Subsidiaries is in compliance with the rules,
regulations or other lawful directives established by each regulatory
authority having jurisdiction over the Company's or the Subsidiary's
respective business, conduct and affairs, including without limitation
the timely and accurate filing of all reports, statements, documents,
registrations, filings or submissions required to be filed by it with
any such regulatory authority, where the failure to comply with such
rules, regulations or other lawful directives reasonably could or might
be expected to result in a material adverse effect on the financial
condition, results of operations or business of the Company and its
Subsidiaries, taken as a whole.
(j) Except as disclosed in the Registration Statement and
the Prospectus, there is no action, suit, investigation or proceeding,
governmental or otherwise, pending or overtly threatened, to which the
Company or any Subsidiary is or may be a party or of which the business
or property of the Company or any Subsidiary is or may be the subject
which, in each case, is material to the Company and the Subsidiaries,
taken as a whole, or which seeks to restrain, enjoin, prevent the
consummation of or otherwise challenge the issuance of the Securities
or any of the other transactions contemplated hereby or by the
Indenture, or which questions the legality or validity of any such
transactions or which seeks to recover damages or obtain other relief
in connection with any of such transactions; and there is no contract
or document of a character required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement which is not described or filed as required.
(k) All of the outstanding capital stock of each
Subsidiary has been duly authorized, validly issued and is fully paid
and non-assessable, and except as otherwise noted
6
in the Prospectus, is owned directly or indirectly by the Company
free and clear of any security interest, claim, lien or other
encumbrance.
(l) The Company and its Subsidiaries have good and
marketable title in fee simple to all real property, if any, and
good title to all personal property owned by them, in each case
free and clear of all liens, security interests, pledges, charges,
encumbrances, mortgages and defects, except such as are disclosed
in the Prospectus or such as do not materially and adversely affect
the value of those properties which individually or in the
aggregate are material to the Company and its Subsidiaries taken as
a whole and do not interfere with the use made or proposed to be
made of such property by the Company or any one of its
Subsidiaries, as the case may be; and any real property and
buildings held under lease by the Company or any of its
Subsidiaries are held under valid, subsisting and enforceable
leases, with such exceptions as are disclosed in the Prospectus or
are not material and do not interfere with the use made or proposed
to be made of such property and buildings by the Company or such
Subsidiary.
(m) The Company and each of its Subsidiaries have
filed all necessary foreign, federal and state and local income and
franchise tax returns and, other than taxes the Company or its
Subsidiaries are consisting in good faith and for which the Company
has established adequate reserves, have paid all taxes shown as due
thereon. Except as is otherwise expressly stated in the
Registration Statement or Prospectus, the Company has no knowledge
of any tax deficiency which might be asserted against it which
would materially and adversely affect the financial condition,
results of operations or business of the Company and its
Subsidiaries, taken as a whole.
(n) Since the date of the most recent audited financial
statements included in the prospectus, neither the Company nor any
of the Subsidiaries has sustained any loss or interference with its
business, which loss or interference was material to the Company
and its Subsidiaries, taken as a whole, 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,
other than as disclosed in or contemplated by the Prospectus.
(o) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) neither
the Company nor any of the Subsidiaries has incurred any
liabilities or obligations, direct or contingent, or entered into
any transactions, not in the ordinary course of business, that are
material to the Company and the Subsidiaries taken as a whole, (ii)
the Company has not purchased any of its outstanding capital stock
or declared, paid or otherwise made any dividend or distribution of
any kind on its capital stock, (iii) there has not been any change
in the capital stock (except as a result of shares issued upon
exercise of stock options pursuant to existing stock option plans
of the Company and the Subsidiaries, upon conversion of the
Company's 8% Convertible Subordinated Debentures and upon issuances
of 65,790 shares of restricted stock pursuant to the Company's
Stock Option and Award Plan), long-term debt or, otherwise than in
the ordinary
7
course of business consistent with past practice, short-term debt
of the Company or any of the Subsidiaries and (iv) there has not
been any material adverse change, or any development involving a
prospective material adverse change, in or affecting the financial
condition, results of operations or business of the Company and the
Subsidiaries taken as a whole, in each case other than as disclosed
in or contemplated by the Prospectus.
(p) Neither the Company nor any of its officers, directors
or affiliates has taken, directly or indirectly, any action
designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to
facilitate the sale of the Notes.
(q) Neither the Company nor any of the Subsidiaries, nor
any director, officer, agent, employee or other person associated
with or acting on behalf of the Company or any such Subsidiary has,
directly or indirectly (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses
related to political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns from corporate funds,
(iii) violated any provisions of the Foreign Corrupt Practices Act
of 1977, as amended, or (iv) made any bride, rebate, payoff,
influence payment, kick back or other unlawful payment.
(r) To the Company's knowledge, the operations of the
Company and its Subsidiaries with respect to any real property
currently leased or owned or by any means controlled by the Company
or any Subsidiary (the "Real Property") are in compliance with all
federal, state and local laws, ordinances, rules and regulations
relating to occupational health and safety and the environment
(collectively "Laws"), except where the failure to so comply would
not have a material adverse effect on the Company's business or
results of operations, and the Company and its Subsidiaries have
all licenses, permits and authorizations necessary to operate under
all Laws and are in compliance with all terms and conditions of
such licenses, permits and authorizations, except where such
failure would not have a material adverse effect on the Company's
and its Subsidiaries' business or results of operations taken as a
whole; neither the Company nor any Subsidiary has authorized,
conducted or has knowledge of the generation, transportation,
storage, use, treatment, disposal or release of any hazardous
substance, hazardous waste, hazardous material, hazardous
constituent, toxic substance, pollutant, contaminate, petroleum
product, natural gas, liquefied gas or synthetic gas defined in or
regulated under any environmental law on, in or under any Real
Property in violation of any Laws, except where such violation
would not have a material adverse effect on the Company's business
or results of operations; and there is no material pending or
threatened claim, litigation or any administrative agency
proceeding, nor has the Company or any Subsidiary received any
written or oral notice from any governmental entity or third party
that (i) alleges a violation of any Laws by the Company or any
Subsidiary; (ii) alleges the Company or any Subsidiary is a liable
party under the Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. Section 9601 ET SEQ. or any state
superfund law; (iii) alleges possible contamination of the
environment by the Company or any Subsidiary
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or (iv) alleges possible contamination of the Real Property, except
as to each of the above, for any violations, liability or
contamination that would not have a material adverse effect on the
Company's and its Subsidiaries' business or results of operations
taken as a whole.
(s) The Company and its Subsidiaries own or have the right
to use all patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights, franchises,
trade secrets, proprietary or other confidential information and
intangible properties and assets (collectively "Intangibles")
necessary to their respective businesses as presently conducted or
as the Prospectus indicates the Company or such Subsidiary proposes
to conduct; to the Company's knowledge, neither the Company nor any
Subsidiary has infringed or is infringing, and neither the Company
nor any Subsidiary has received notice of infringement with respect
to, asserted Intangibles of others; and, to the Company's
knowledge, there is no infringement by others of Intangibles of the
Company or any of its Subsidiaries which would have a material
adverse effect on the Company and its Subsidiaries taken as a whole.
(t) The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the
business in which they are engaged by similarly situated companies;
and neither the Company nor any such Subsidiary has any reason to
believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a comparable cost, except as disclosed in the
Prospectus.
(u) Each of the Company and its Subsidiaries makes and
keeps accurate books, records and accounts, which, in reasonable
detail, accurately and fairly reflect the transactions and
dispositions of its assets and maintains a system of internal
accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's
general and specific authorization, (ii) transactions are recorded
as necessary to permit preparation of the Company's consolidated
financial statements in accordance with generally accepted
accounting principles and to maintain accountability for the assets
of the Company, (iii) access to the assets of the Company and each
of its Subsidiaries is permitted only in accordance with
management's general and specific authorization and (iv) the
recorded accountability for assets of the Company and each of its
Subsidiaries is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
(v) No Subsidiary is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making
any other distributions on such Subsidiary's capital stock, from
repaying to the Company any loans or advances to such Subsidiary or
from transferring any of such Subsidiary's property or assets to
the Company or any other Subsidiary, except as disclosed in the
Prospectus.
9
(w) The Company is not, will not become as a result of the
transactions contemplated hereby, and does not intend to conduct
its business in any manner that would cause it to become an
"investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940.
(x) The Company's common stock, par value $0.05 per share
(the "Common Stock") is registered pursuant to Section 12(g) of the
Exchange Act and is qualified as a Nasdaq National Market security
of The Nasdaq Stock Market, Inc. The Company has taken no action
designed to terminate, or likely to have the effect of terminating,
the registration of the Common Stock under the Exchange Act or
qualification of the Common Stock on the Nasdaq National Market,
nor has the Company received any notification that the Commission
or The Nasdaq Stock Market, Inc. is contemplating terminating such
registration or qualification.
(y) The Company has not distributed and will not distribute
any prospectus or other offering material in connection with the
offering and sale of the Securities other than any Preliminary
Prospectus or the Prospectus or other materials permitted by the
Act to be distributed by the Company; provided, however, that
materials used in the "road show" with the express approval of the
Underwriters but not otherwise delivered to prospective purchasers
of the Notes shall not be deemed, for the purposes of this
paragraph 2(y), to be distributed by the Company.
(z) The Company is in compliance with all provisions of
Florida Statutes Section 517.075 (Chapter 92-198, laws of Florida).
The Company does not do any business, directly or indirectly, with
the government of Cuba or, to the Company's knowledge, with any
person or entity located in Cuba.
(aa) The conditions for use of a Registration Statement on
Form S-3 set forth in the General Instructions to Form S-3 have
been satisfied with respect to the Company and the transactions
contemplated by this Agreement and the Registration Statement.
(bb) Any certificate signed by any officer of the
Company and delivered to the Underwriters or to counsel for the
Underwriters shall be deemed a representation and warranty by the
Company to each Underwriter as to the matters covered thereby.
(cc) Other than as contemplated herein, the Company has
not incurred any liability for any finder's or broker's fee or
agent's commission in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated
hereby.
3. PURCHASE, SALE AND DELIVERY OF SECURITIES.
(a) On the basis of the representations, warranties
and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to issue and sell
the Firm Notes to the Underwriters, and the Underwriters agree to
purchase the
10
respective principal amounts of Firm Notes set forth opposite each
Underwriter's name in Schedule I hereto. The purchase price for
each Firm Note shall be 96.0% of the principal amount thereof,
which shall reflect an Underwriting Discount of 4.0% of the
principal amount of the Firm Notes payable to the Underwriters.
The obligation of each Underwriter to the Company shall be to
purchase from the Company that principal amount of Firm Notes set
forth opposite the name of such Underwriter in Schedule I hereof.
In making this Agreement, each Underwriter is contracting severally
and not jointly. Except as provided in paragraph (c) of this
Section 3 and in Section 8 hereof, the agreement of each
Underwriter is to purchase only its respective principal amount of
Firm Notes as specified in Schedule I.
The Firm Notes will be delivered by the Company to ▇▇▇▇▇
▇▇▇▇▇▇▇ Inc. for each Underwriter's account against payment of the
purchase price therefor by wire transfer of same day funds to the
account designated by the Company, at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇
Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇ Tower, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, or such other location as may be mutually acceptable, at
9:00 a.m., Minneapolis time, on the third (or, if the Notes are
priced, as contemplated by Rule 15c6-1(c) promulgated pursuant to
the Exchange Act, after 4:30 p.m. Washington, D.C. time, the
fourth) full business day following the date hereof, or at such
other time as the Underwriters and the Company determine, such time
and date of delivery being herein referred to as the "First Closing
Date." Certificates for the Firm Notes, each in definitive form
and in such denominations and registered in such names as the
Underwriters may request upon at least two business days' prior
notice to the Company, will be made available for checking and
packaging at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇
Tower, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, or such
other location as may be mutually acceptable, at least one business
day prior to the First Closing Date.
(b) On the basis of the representations, warranties
and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company hereby grants to the
Underwriters an option to purchase up to $7,500,000 principal
amount of Option Notes, at the same purchase price as the Firm
Notes, for use solely in covering any over-allotments made by the
Underwriters in the sale and distribution of the Securities. The
option granted hereunder may be exercised at any time (but not more
than once) within 30 days after the effective date of this
Agreement upon notice (confirmed in writing) by the Underwriters to
the Company setting forth the aggregate principal amount of Option
Notes as to which the Underwriters are exercising the option, the
names and denominations in which the Option Notes are to be
registered and the date and time, as determined by the
Underwriters, when the Option Notes are to be delivered, such time
and date of purchase of the Option Notes being herein referred to
as the "Option Notes Closing" and "Option Notes Closing Date,"
respectively; provided, however, that the Option Notes Closing Date
shall not be earlier than the First Closing Date nor earlier than
the third business day after the date on which the option shall
have been exercised. The First Closing Date and the Option Notes
Closing Date are sometimes herein individually called the "Closing
Date" and collectively called the "Closing Dates." The principal
amount of Option Notes to be sold by the Company to the
Underwriters and purchased by the Underwriters from the Company
shall be determined by
11
the Underwriters. The option granted hereby may be canceled by the
Underwriters as to the Option Notes for which the options are
unexercised, at any time prior to the expiration of the 30-day
period, upon notice to the Company. No Option Notes shall be sold
and delivered unless the Firm Notes previously have been, or
simultaneously are, sold and delivered.
The Option Notes will be delivered by the Company to ▇▇▇▇▇
▇▇▇▇▇▇▇ Inc. for each Underwriter's account against payment of the
purchase price therefor by wire transfer of same day funds to the
account designated by the Company, at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇
Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇ Tower, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, or such other location as may be mutually acceptable at
9:00 a.m., Minneapolis time, on the Option Notes Closing Date. The
Option Notes in definitive form and in such denominations and
registered in such names as the Underwriters have set forth in the
notice of option exercise, will be made available for checking and
packaging at the office of ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇ Tower,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, or such other
location as may be mutually acceptable, at least one business day
prior to the Option Notes Closing Date.
(c) It is understood that each Underwriter may (but
shall not be obligated to) make payment to the Company on behalf of
another Underwriter for the Securities to be purchased by such
Underwriter. Nothing herein contained shall constitute any of the
Underwriters an unincorporated association or partner with the
Company or with each other.
(d) The Underwriters propose to make a public offering
of the Notes directly to the public (which may include selected
dealers and special purchasers) as soon as the Underwriters deem
practicable after the Registration Statement becomes effective, at
the initial public offering price as set forth on the cover page of
the Prospectus, subject to the terms and conditions of this
Agreement and in accordance with the Prospectus. Such concessions
from the public offering price may be allowed to selected dealers
and other members of the National Association of Securities
Dealers, Inc. as the Underwriters may determine, and the
Underwriters will furnish the Company with such information about
the distribution arrangements as may be necessary for inclusion in
the Registration Statement. It is understood that the public
offering price and concessions may vary after the initial public
offering.
4. COVENANTS. The Company covenants and agrees with the
Underwriters as follows:
(a) If the Registration Statement has not already been
declared effective by the Commission, the Company will use its best
efforts to cause the Registration Statement or any post-effective
amendments thereto to become effective as promptly as possible; the
Company will notify the Underwriters promptly of the time when the
Registration Statement or any post-effective amendment to the
Registration Statement has become effective or any supplement to
the Prospectus has been filed and of any request by the Commission
for any amendment or supplement to the Registration Statement or
Prospectus or additional information; if the Company has elected to
rely on Rule 430A of the Rules and Regulations,
12
the Company will file a Prospectus containing the information
omitted therefrom pursuant to such Rule 430A with the Commission
within the time period required by, and otherwise in accordance
with the provisions of, Rules 424(b) and 430A of the Rules and
Regulations; the Company will prepare and file with the Commission,
promptly upon the request of the Underwriters, any amendments or
supplements to the Registration Statement or Prospectus that, in
the Underwriters' reasonable opinion, may be necessary or advisable
in connection with the distribution of the Securities by the
Underwriters; and the Company will not file any amendment or
supplement to the Registration Statement or Prospectus to which the
Underwriters shall reasonably object by notice to the Company after
having been furnished a copy a reasonable time prior to the filing.
(b) The Company will advise the Underwriters, promptly
after it shall receive notice or obtain knowledge thereof, of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement, of the suspension of
the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceeding
for any such purpose; and the Company will promptly use its best
efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such a stop order should be issued.
(c) Within the time during which a prospectus relating to
the Securities is required to be delivered under the Act, the
Company will comply as far as it is able with all requirements
imposed upon it by the Act, as now and hereafter amended, and by
the Rules and Regulations, as from time to time in force, so far as
necessary to permit the continuance of sales of or dealings in the
Securities as contemplated by the provisions hereof and the
Prospectus. If during such period any event occurs as a result of
which the Prospectus would include an untrue statement of a
material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances then
existing, not misleading, or if during such period it is necessary
to amend the Registration Statement or supplement the Prospectus to
comply with the Act, the Company will promptly notify the
Underwriters and will amend the Registration Statement or
supplement the Prospectus (at the expense of the Company) so as to
correct such statement or omission or effect such compliance.
(d) The Company will use its best efforts to qualify
the Securities for sale under the securities laws of such
jurisdictions as the Underwriters may reasonably designate and to
continue such qualifications in effect so long as required for the
distribution of the Securities, except that the Company shall not
be required in connection therewith to qualify as a foreign
corporation or to execute a general consent to service of process
in any state. In each jurisdiction in which the Notes shall have
been qualified as above provided, the Company will make and file
such statements and reports as may be identified as requiring
post-sale filings in any blue sky memoranda delivered in connection
with the offer and sale of the Notes contemplated hereby or as
otherwise reasonably requested by the Underwriters or officials of
such jurisdictions.
13
(e) The Company will furnish to you copies of the
Registration Statement (two of which will be manually signed and
will include all exhibits), the Indenture, each Preliminary
Prospectus, the Prospectus, and all amendments and supplements to
such documents, in each case as soon as available and in such
quantities as each Underwriter may from time to time reasonably
request.
(f) During a period of five years commencing with the
date hereof, the Company will furnish to each Underwriter who may
so request in writing, copies, without charge, of (i) all periodic
and special reports furnished to the securities holders of the
Company and (ii) all information, documents and reports filed with
the Commission or any national securities exchange under the
Exchange Act.
(g) The Company will make generally available to its
security holders as soon as practicable, but in any event not later
than 15 months after the end of the Company's current fiscal
quarter, an earnings statement (which need not be audited) covering
a 12-month period beginning after the effective date of the
Registration Statement that shall satisfy the provisions of
Section 11(a) of the Act and Rule 158 of the Rules and Regulations.
(h) The Company, whether or not the transactions
contemplated hereunder are consummated or this Agreement is
prevented from becoming effective under the provisions of Section 9(a)
hereof or is terminated, will pay or cause to be paid (i) all
expenses (including transfer taxes allocated to the respective
transferees) incurred in connection with the delivery to the
Underwriters of the Securities, (ii) all expenses and fees
(including, without limitation, fees and expenses of the Company's
accountants and counsel but, except as otherwise provided below,
not including fees and expenses of the Underwriters' counsel) in
connection with the preparation, printing, filing, delivery, and
shipping of the Registration Statement (including the financial
statements therein and all amendments, schedules and exhibits
thereto), the Securities, the Indenture, each Preliminary
Prospectus, the Prospectus, and any amendment thereof or supplement
thereto, and underwriting documents, including Blue Sky Memoranda,
(iii) all filing fees and reasonable fees and disbursements of the
Underwriters' counsel incurred in connection with the qualification
of the Securities for offering and sale by the Underwriters or by
dealers under the securities or blue sky laws of the states and
other jurisdictions which the Underwriters shall designate in
accordance with Section 4(d) hereof, (iv) the fees and expenses of
the Trustee and counsel for the Trustee, (v) the filing fees
incident to any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the
Securities, (vi) listing fees, if any, (vii) fees or expenses, if
any, of Underwriters' counsel incurred in connection with
investigating the legality of an investment in the Securities by
certain purchasers in certain jurisdictions and the preparation of
memoranda relating thereto, and (viii) all other reasonable costs
and expenses incident to the performance of its obligations
hereunder that are not otherwise specifically provided for herein.
If the sale of the Securities provided for herein is not
consummated by reason of action by the Company pursuant to Section 9(a)
hereof which prevents this Agreement from becoming effective,
or by reason of any failure, refusal or inability on the part of
the Company
14
to perform any material agreement on its part to be performed, or
because any other material condition of the Underwriters'
obligations hereunder required to be fulfilled by the Company is
not fulfilled, the Company will reimburse the Underwriters for all
reasonable out-of-pocket disbursements (including fees and
disbursements of counsel) incurred by the Underwriters in
connection with their investigation, preparing to market and
marketing the Securities or in contemplation of performing their
obligations hereunder. The Company shall not in any event be
liable to either Underwriter for loss of anticipated profits from
the transactions covered by this Agreement.
(i) The Company will apply the net proceeds from the
sale of the Securities to be sold by it hereunder for the purposes
set forth in the Prospectus.
(j) The Company has not taken and will not take,
directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in, or which has
constituted, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Securities.
(k) For so long as the delivery of a prospectus is
required in connection with the offering, sale and distribution of
the Notes, the Company will file on a timely basis such
registration statements and other filings and take such other
action as is required pursuant to the Securities Exchange Act of
1934 and the rules and regulations promulgated thereunder.
(l) So long as any of the Notes are outstanding, the
Company will furnish to each of you, upon request, the reports
required to be filed with the Trustee pursuant to the Indenture,
concurrently with such filing.
(m) The Company will use its best efforts to cause the
Notes to be listed on the New York Stock Exchange, Inc. upon
issuance of the Notes and will use its best efforts to cause the
Notes to be so listed as long as the Notes remain outstanding.
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the Underwriters hereunder are subject to the accuracy, as of the date hereof
and at each of the First Closing Date and the Option Notes Closing Date (as
if made at such Closing Date), of and compliance with all representations,
warranties and agreements of the Company contained herein, to the performance
by the Company of its obligations hereunder and to the following additional
conditions:
(a) The Registration Statement shall have become
effective not later than 5:00 p.m., Minneapolis time, on the date
of this Agreement, or at such later time and date as the
Underwriters shall approve and all filings required by Rule 424 and
Rule 430A of the Rules and Regulations shall have been timely made;
no stop order suspending the effectiveness of the Registration
Statement or any amendment thereof shall have been issued; no
proceedings for the issuance of such an order shall be pending or
threatened; and any request of the
15
Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall have
been complied with to the Underwriters' satisfaction.
(b) Except as contemplated in the Prospectus,
subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, neither the
Company nor any Subsidiary shall have incurred any material
liabilities or obligations, direct or contingent, or entered into
any material transactions not in the ordinary course of business;
and there shall not have been any change in the capital stock
(other than capital stock issued upon exercise of outstanding stock
options or upon conversion of convertible debentures), or any
material change in the short-term or long-term debt of the Company,
or any material adverse change, or any development involving a
prospective material adverse change, in the general affairs,
condition (financial or otherwise), business, key personnel,
property, prospects, net worth or results of operations of the
Company and the Subsidiaries, considered as a whole, that, in your
judgment, makes it unpractical or inadvisable to offer or deliver
the Securities on the terms and in the manner contemplated in the
Prospectus.
(c) On each Closing Date, there shall have been
furnished to the Underwriters, the opinion (which may be governed
by the Legal Opinion Accord of the ABA Section of Business Law
(1991)) of ▇▇▇▇▇▇ and ▇▇▇▇▇, L.L.P., counsel for the Company, dated
such Closing Date and addressed to the Underwriters, to the effect
that:
(i) The Company has all requisite corporate
power to execute, deliver and perform this Agreement.
This Agreement has been duly authorized by all requisite
corporate action necessary on behalf of the Company, duly
executed and delivered by the Company and is enforceable
against the Company, subject to the General
Qualifications.
(ii) The Company has all requisite corporate
power to execute, deliver and perform its obligations
under the Indenture. The Indenture has been duly
authorized by all requisite corporate action necessary on
behalf of the Company, has been duly executed and
delivered by the Company and is enforceable against the
Company, subject to the General Qualifications. The Notes
being delivered on the Closing Date have been duly
authorized, and, when executed, authenticated, issued and
delivered in accordance with the terms of the Indenture,
will be enforceable against the Company, subject to the
General Qualifications. The Indenture and the form of
Certificate representing the Notes conform in all
material respects, as to legal matters, to the
descriptions thereof contained in the Registration
Statement and the Prospectus. The Indenture complies in
all material respects with the Trust Indenture Act. The
Notes have been listed for trading on the New York Stock
Exchange, Inc.
(iii) The execution and delivery by the Company
of, and performance of its obligations in, this
Agreement, the Indenture and the Notes being delivered on
the Closing Date do not (a) violate the Company's or any
Material Subsidiary's
16
Constituent Documents, (b) breach, or result in a default
under, any existing obligation of the Company (or, as
applicable, the Material Subsidiaries) under the written
contracts listed on an exhibit to such opinion, or (c)
violate applicable provisions of statutory law or
regulation. Except for permits and similar
authorizations required under the Act, the Trust
Indenture Act and the securities or Blue Sky laws of
certain jurisdictions and except for permits and
authorizations which have been obtained and registrations
which have been effected, no consent, approval,
authorization, registration or order of, or filing with,
any court or governmental agency or body is required in
connection with the sale of the Notes by the Company.
(iv) The Company's authorized, issued and
outstanding capital stock is as disclosed in the
Prospectus. All of the issued shares of capital stock of
the Company have been duly authorized and validly issued
and are fully paid and non-assessable. To such counsel's
Actual Knowledge, except as disclosed in the Prospectus,
there are no contracts, agreements or understandings
between the Company and any person granting such person
the right to require the Company to file a registration
statement under the Act with respect to any securities of
the Company owned or to be owned by such person or to
require the Company to include such securities in the
Registration Statement for the Notes (or any such right
has been effectively waived) and to such counsel's Actual
Knowledge, none of the issued shares of capital stock of
the Company, its predecessors or any Material Subsidiary
has been issued in violation of any preemptive rights of
shareholders, and no person or entity, including any
holder of outstanding shares of capital stock of the
Company has any preemptive or, to such counsel's Actual
Knowledge, other similar rights to subscribe for any of
the Notes. All of the shares of capital stock of each
Material Subsidiary have been duly authorized and validly
issued, are fully paid and non-assessable, and to such
counsel's Actual Knowledge are owned of record by the
Company and the Company has not received notice of any
adverse claim, except for security interests in a
majority of the present and future capital stock of all
the Material Subsidiaries granted by the Company pursuant
to the Revolving Loan Agreement dated as of September 29,
1995, among the Company, NationsBank of Texas, N.A. as
agent and the banks which are parties thereto from time
to time.
(v) To such counsel's Actual Knowledge, the
Company is not named as a party to any pending or overtly
threatened litigation, arbitration, claim or proceeding
that is material to the Company and its Subsidiaries
taken as a whole, except as disclosed on the Company's
Defensive Litigation/Counterclaim Report for the Fourth
Quarter 1995, and all attachments thereto. The
statements contained in the Prospectus under the captions
"Recent Developments," "Management's Discussion and
Analysis of Financial Condition and Results of Operations
-- Liquidity and Capital Resources," "Description of the
Notes" and "Description of Other Indebtedness," insofar
as they purport to summarize the provisions of statutes,
legal and governmental proceedings or contracts or other
documents are materially
17
accurate and fairly present in all material respects the
information required to be shown.
(vi) The Registration Statement is effective
under the Act and the Indenture has been qualified under
the Trust Indenture Act. To such counsel's Actual
Knowledge, no stop order suspending the effectiveness of
the Registration Statement has been issued and no
proceeding for that purpose has been instituted or
threatened by the Commission.
(vii) Each of the Company and the Material
Subsidiaries has been duly incorporated and is existing
as a corporation in good standing under the laws of its
jurisdiction of incorporation with full corporate power
to own or lease its properties and conduct its business
as described in the Registration Statement and
Prospectus.
(viii) The Registration Statement and the
Prospectus and each amendment or supplement thereto
(other than the financial statements and related
schedules therein and other than the Form T-1, as to each
of which such counsel need express no opinion), as of
their respective effective or issue dates, complied as to
form in all material respects with the requirements of
the Act, the Rules and Regulations, the Exchange Act and
the rules and regulations promulgated thereunder.
(ix) The Company is not, and immediately after
the applicable Closing Date will not be, required to be
registered under the Investment Company Act of 1940, as
amended, as an "investment company," and, to the Actual
Knowledge of such counsel, is not a company "controlled"
by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
(x) A Texas court or a Federal court applying
Texas law should give effect to the choice of Minnesota
law set forth in the Indenture with respect to general
issues of contract validity, enforcement and
interpretation and should not apply Texas usury laws to
the Notes.
Such counsel shall also advise the Underwriters that
although they do not assume any responsibility for, and cannot
guarantee the accuracy, completeness or fairness of, the statements
contained in the Registration Statement or the Prospectus, on the
basis of the information such counsel developed during the course
of preparing the Registration Statement and the Prospectus, which
involved attending conferences with officers of the Company, the
Company's accountants and other parties and a review of documents
specifically referred to or incorporated by reference in the
Registration Statement and Prospectus (although such documents
incorporated by reference were prepared and filed by the Company
without, in certain cases, such counsel's participation), and as a
result of such counsel's participation in such conferences and
review of such documents, but otherwise without independent check
or verification except as specified, such counsel has no reason to
believe that the Registration
18
Statement, at the time the Registration Statement became effective,
or any further amendment thereto upon filing thereof (but excluding
the financial statements and supporting schedules and other
financial or statistical information or other scheduled data
included or incorporated by reference therein and the Form T-1, as
to each of which such counsel need express no comment), 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 the Prospectus or any
further amendment or supplement thereto (but excluding the
financial statements and supporting schedules and other financial
or statistical information or other scheduled data included or
incorporated by reference therein and the Form T-1, as to each of
which such counsel need express no comment) contained or contains
an untrue statement of a material fact or omits or omitted to state
a material fact necessary to make the statements therein, in the
light of the circumstances in which they were made, not misleading.
(d) On each Closing Date, there shall have been
furnished to the Underwriters, the opinion (which may be governed
by the Legal Opinion Accord of the ABA Section of Business Law
(1991)) of ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq., General Counsel for the
Company, dated such Closing Date and addressed to the Underwriters,
to the effect that
(i) the Company is duly qualified to transact
business as a foreign corporation and in good standing under
the laws of each other jurisdiction in which it owns or leases
material property, or conducts material business, so as to
require such qualification, except where the failure to so
qualify would not have a material adverse effect on the
financial position of the Company and its Subsidiaries, taken
as a whole.
(ii) Each of the United States and Canadian
Subsidiaries of the Company is duly qualified to transact
business as a foreign corporation and is in good standing under
the laws of each other United States and Canadian jurisdiction
in which it owns or leases material property, or conducts
material business, so as to require such qualification, except
where the failure to so qualify would not have a material
adverse effect on the financial position of the Company and its
Subsidiaries, taken as a whole.
(iii) Each sale of the Company's capital stock during
the period from December 13, 1992 through each Closing Date
was, at the time of each sale, registered or exempt from the
registration requirements of the Act and applicable state
securities or Blue Sky laws.
(iv) To such counsel's Actual Knowledge, neither the
Company nor any of the Subsidiaries has (a) breached or
otherwise violated any existing obligation of the Company under
any court order that names the Company as a party or
(b) violated applicable provisions of statutory law or
regulation, in either case where any such breach or violation
would have a material adverse effect on the financial position
of the Company and its Subsidiaries, taken as a whole.
19
(v) To such counsel's Actual Knowledge, (a) the
Company has not violated its Certificate of Incorporation or
Bylaws and (b) neither the Company nor any of the Material
Subsidiaries has breached or otherwise violated any existing
obligation under any material agreement to which the Company or
any Material Subsidiary is a party, in either case where such
breach or violation would have a material adverse effect on the
financial position of the Company and its Subsidiaries, taken
as a whole.
(vi) Except as disclosed in the Registration
Statement and the Prospectus, such counsel knows of no action,
suit, investigation or proceeding, governmental or otherwise,
pending or overtly threatened against the Company or any
Subsidiary, or involving the business or properties of the
Company or any Subsidiary with respect to the issuance and
sale of the Securities pursuant to this Agreement and the
Indenture or which is required to be described in the
Registration Statement or Prospectus that is not disclosed as
required. The agreements, contracts and exhibits and
amendments thereto filed by the Company under the Exchange Act
to date constitute all of the material contracts to which the
Company or any of its Subsidiaries is a party which could be,
but are not, breached or violated in connection with the
execution and delivery by the Company of, and performance of
its obligations in, this Agreement, the Indenture and the Notes
and the consummation of the transactions herein and therein
contemplated. Such counsel does not know of any contracts or
documents of a character required to be described in the
Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement which are not described
or filed as required. The descriptions contained in the
Registration Statement and Prospectus of contracts and other
documents are accurate and fairly present the information
required to be shown. The statements contained in the
Registration Statement or the Prospectus to the extent such
statements relate to matters of law, descriptions of statutes,
legal or governmental proceedings, regulatory matters or other
legal matters or conclusions of law, fairly summarize such
matters.
(e) On each Closing Date, there shall have been
furnished to the Underwriters, such opinion or opinions from
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.L.L.P., counsel for the Underwriters, dated
such Closing Date and addressed to the Underwriters, with respect
to the formation of the Company, the validity of the Securities,
the Registration Statement, the Prospectus and other related
matters as the Underwriters reasonably may request, and such
counsel shall have received such papers and information as they
request to enable them to pass upon such matters.
(f) On each Closing Date the Underwriters shall have
received letters from Deloitte & Touche, LLP, dated such Closing
Date and addressed to the Underwriters, confirming that they are
independent public accountants within the meaning of the Act and
are in compliance with the applicable requirements relating to the
qualifications of accountants under Rule 2-01 of Regulation S-X of
the Commission, and stating, as of the date of such letter (or,
with respect to matters involving changes or developments since the
respective dates as of which specified financial information is
given in the Prospectus, as of a date not more than five days prior
to the date of such letter), the conclusions and findings
20
of said firm with respect to the financial information and other
matters covered by its letter (as provided in Exhibit A hereto)
delivered to the Underwriters concurrently with the execution of
this Agreement, and the effect of the letter so to be delivered on
such Closing Date shall be to confirm the conclusions and findings
set forth in such prior letter.
(g) On each Closing Date, there shall have been
furnished to the Underwriters a certificate, dated such Closing
Date and addressed to the Underwriters, signed by the Chief
Executive Officer and by the Chief Financial Officer of the
Company, to the effect that:
(i) The representations and warranties of the
Company in this Agreement are true and correct, in all
material respects, as if made at and as of such Closing
Date, and the Company has complied with all the
agreements and satisfied all the conditions on its part
to be performed or satisfied at or prior to such Closing
Date;
(ii) To the best of their knowledge, no stop
order or other order suspending the effectiveness of the
Registration Statement or any amendment thereof or the
qualification of the Securities for offering or sale has
been issued, and, to the best of their knowledge, no
proceeding for that purpose has been instituted or is
contemplated by the Commission or any state or regulatory
body; and
(iii) The signers of said certificate have
carefully examined the Registration Statement and the
Prospectus, and any amendments thereof or supplements
thereto, and (A) such documents contain all statements
and information required to be included therein, the
Registration Statement, or any amendment thereof, does
not contain any untrue statement of a material fact or
omit to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading, and the Prospectus, as amended or
supplemented, does not include any untrue statement of
material fact or omit to state a material fact necessary
to make the statements therein, in light of the
circumstances under which they were made, not misleading,
(B) since the effective date of the Registration
Statement, there has occurred no event required to be set
forth in an amended or supplemented prospectus which has
not been so set forth, (C) except as disclosed in the
Prospectus, subsequent to the respective dates as of
which information is given in the Registration Statement
and the Prospectus, neither the Company nor any
Subsidiary has incurred any material liabilities or
obligations, direct or contingent, or entered into any
material transactions not in the ordinary course of
business, or declared or paid any dividends or made any
distribution of any kind with respect to its capital
stock, and except as disclosed in the Prospectus, there
has not been any change in the capital stock, or any
material change in the short-term or long-term debt, or
any issuance of options, warrants, convertible securities
or other rights to purchase the capital stock of the
Company or any Subsidiary, or any material adverse
change, or any development involving a prospective
material adverse change, in the general affairs,
condition (financial or otherwise), business, key
personnel, property, prospects, net worth or results of
operations of the Company and the Subsidiaries,
considered as a whole, and (D) except as stated in the
Registration Statement and the Prospectus, there is not
21
pending, or, to the knowledge of the Company, threatened
or contemplated, any action, suit or proceeding to which
the Company or any Subsidiary is a party before or by any
court or governmental agency, authority or body, or any
arbitrator, which might result in any material adverse
change in the condition (financial or otherwise),
business, prospects or results of operations of the
Company and the Subsidiaries, considered as a whole.
(h) The Company shall have furnished to the
Underwriters and their counsel such additional documents,
certificates and evidence as the Underwriters or their counsel may
have reasonably requested.
All such opinions, certificates, letters and other
documents will be in compliance with the provisions hereof only if
they are reasonably satisfactory in form and substance to the
Underwriters and counsel for the Underwriters. The Company will
furnish the Underwriters with such conformed copies of such
opinions, certificates, letters and other documents as the
Underwriters shall reasonably request.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to 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 (including in settlement of any
litigation if such settlement is effected with the written consent
of the Company), 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 the Registration Statement or
incorporated therein by reference, including the information deemed
to be a part of the Registration Statement at the time of
effectiveness pursuant to Rule 430A, if applicable, any Preliminary
Prospectus, the 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 it in connection with investigating or
defending against such loss, claim, damage, liability or action;
provided, however, that neither the Company nor any Subsidiary
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 the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any such amendment or supplement, in
reliance upon and in conformity with written information furnished
to the Company by the Underwriters specifically for use in the
preparation thereof; provided further, however, that the Company
shall not be liable to any Underwriter in respect of any untrue
statement or alleged untrue statement contained in, or omission or
alleged omission from, any Preliminary Prospectus to the extent
that (i) the Prospectus did not contain such untrue statement or
alleged untrue statement or omission or alleged omission giving
rise to such loss, claim, damage, liability or action, (ii) the
Prospectus was not sent or given to the purchaser of the Notes in
question at or prior to the time at which the written confirmation
of the sale of Notes was sent or given to such person, and (iii)
the failure to
22
deliver such Prospectus was not the result of the Company's
non-compliance with its obligations under Section 4(e) hereof.
(b) Each Underwriter will indemnify and hold harmless
the Company against any losses, claims, damages or liabilities to
which the Company may become subject, under the Act or otherwise
(including in settlement of any litigation, if such settlement is
effected with the written consent of such Underwriter), 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 the
Registration Statement, any Preliminary Prospectus, the 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, in each case to the extent,
but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the
Registration Statement, any Preliminary Prospectus, the Prospectus,
or any such amendment or supplement thereto, in reliance upon and
in conformity with written information furnished to the Company by
such Underwriter, specifically for use in the preparation thereof,
and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating
or defending against any such loss, claim, damage, liability or
action.
(c) Promptly after receipt by an indemnified party
under subsection (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 the 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 the indemnifying party from
any liability that it may have to any indemnified party otherwise
than under such subsection or unless and to the extent that the
indemnifying party is substantially prejudiced thereby. In case
any such action shall be brought against any indemnified party, and
it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in, and, to
the extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of the
indemnifying party's election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party
under such subsection for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided,
however, that if, in the sole judgment of the Underwriters, it is
advisable for the Underwriters to be represented as a group by
separate counsel, the Underwriters shall have the right to employ a
single counsel to represent all Underwriters who may be subject to
a liability arising from any claim in respect of which indemnity
may be sought by the Underwriters under paragraph (a) of this
Section 6, in which event the reasonable fees and expenses of such
separate counsel shall be borne by the indemnifying party or
parties and remitted to the Underwriters for payment to such
counsel as such fees and expenses are incurred. An indemnifying
party shall not be obligated under any settlement agreement
relating to any action under this Section 6 to which it has not
agreed in writing.
23
(d) If the indemnification provided for in this
Section 6 is unavailable or insufficient to hold harmless an
indemnified party under subsection (a) or (b) above, then each
indemnifying party shall contribute to the amount paid or payable
by such indemnified party as a result of the losses, claims,
damages or liabilities referred to in subsection (a) or (b) above,
(i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the
Underwriters on the other from the offering of the Securities or
(ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand
and the Underwriters on the other in connection with the statements
or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on
the one hand and the Underwriters on the other shall be deemed to
be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear
to the total underwriting discounts and commissions received by the
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 or the Underwriters and the parties' relevant
intent, knowledge, access to information and opportunity to correct
or prevent such untrue statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if
contributions pursuant to this subsection (d) were to be determined
by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations
referred to in the first sentence of this subsection (d). The
amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of
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 against any action or
claim which is the subject of this subsection (d). 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 Securities underwritten by it and
distributed to the public were offered to the public exceeds the
amount of any damages that 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 or any Subsidiary
under this Section 6 shall be in addition to any liability which
the Company or any Subsidiary 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 6 shall be in
addition to any liability that the respective Underwriters may
otherwise have and shall extend, upon the same terms and
conditions, to each director of the Company (including any person
who, with his consent, is named in the Registration Statement as
about
24
to become a director of the Company), to each officer of the Company
who has signed the Registration Statement and to each person, if any,
who controls the Company within the meaning of the Act.
7. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties, and agreements of the Company herein or in
certificates delivered pursuant hereto, and the agreements of the
Underwriters and the Company (and any Subsidiary) contained in Section 6
hereof, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any controlling
person thereof, or the Company or any of its officers, directors, or
controlling persons and shall survive delivery of, and payment for, the
Securities to and by the Underwriters hereunder.
8. SUBSTITUTION OF UNDERWRITERS.
(a) If any Underwriter shall fail to take up and pay for
the principal amount of Firm Notes agreed by such Underwriter to be
purchased hereunder, upon tender of such Firm Notes in accordance
with the terms hereof, and the principal amount of Firm Notes not
purchased does not in either case aggregate more than 10% of the
aggregate principal amount of Firm Notes set forth in Schedule I
hereto, the remaining Underwriters shall be obligated, severally,
in proportion to the respective principal amount of Firm Notes
which they are obligated to purchase hereunder, to take up and pay
for the principal amount of Firm Notes that the withdrawing or
defaulting Underwriter agreed but failed to purchase.
(b) If any Underwriter shall fail to take up and pay
for the principal amount of Firm Notes agreed by such Underwriter
to be purchased hereunder, upon tender of such Firm Notes in
accordance with the terms hereof, and the principal amount of Firm
Notes not purchased aggregates more than 10% of the aggregate
principal amount of Firm Notes set forth in Schedule I hereto, and
arrangements for the purchase of such Firm Notes by other persons
reasonably satisfactory to the Company are not made within 36 hours
thereafter, this Agreement shall terminate. In the event of any
such termination the Company shall not be under any liability to
any Underwriter (except to the extent provided in Section 4(h) and
Section 6 hereof) nor shall any Underwriter (other than an
Underwriter who shall have failed, otherwise than for some material
reason permitted under this Agreement, to purchase the principal
amount of Firm Notes agreed by such Underwriter to be purchased
hereunder) be under any liability to the Company (except to the
extent provided in Section 6 hereof). Nothing contained herein
shall relieve a defaulting Underwriter from liability for its
default.
If Firm Notes to which a default relates are to be
purchased by non-defaulting Underwriters or by any other party or
parties, the non-defaulting Underwriters or the Company shall have
the right to postpone the First Closing Date for not more than
seven business days in order that the necessary changes in the
Registration Statement, Prospectus and any other documents, as well
as any other arrangements, may be effected. As used herein, the
term "Underwriter" includes any person substituted for an
Underwriter under this Section 8.
25
9. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION.
(a) This Agreement shall become effective at
10:00 a.m., Minneapolis time, on the first business day following the
date hereof, or at such earlier time after the effective date of
the Registration Statement as the Underwriters in their discretion
shall first release the Securities for sale to the public. For the
purpose of this Section, the Securities shall be deemed to have
been released for sale to the public upon release by the
Underwriters of the publication of a newspaper advertisement
relating thereto or upon release by the Underwriters of telexes
offering the Securities for sale to securities dealers, whichever
shall first occur. By giving notice as hereinafter specified
before the time this Agreement becomes effective, the Underwriters
or the Company may prevent this Agreement from becoming effective
without liability of any party to any other party, except that the
provisions of Section 4(h) and Section 6 hereof shall at all times
be effective.
(b) The Underwriters shall have the right to terminate
this Agreement by giving notice as hereinafter specified at any
time at or prior to the First Closing Date, and the option referred
to in Section 3(b), if exercised, may be canceled at any time prior
to the First Closing Date, if (i) the Company shall have failed,
refused or been unable, at or prior to such Closing Date, to
perform any agreement on its part to be performed hereunder, (ii)
any other condition of the Underwriters' obligations hereunder is
not fulfilled, (iii) trading on the New York Stock Exchange or the
American Stock Exchange shall have been wholly suspended, (iv)
minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required,
on the New York Stock Exchange or the American Stock Exchange, by
such Exchange or by order of the Commission or any other
governmental authority having jurisdiction, (v) a banking
moratorium shall have been declared by Federal, New York, Texas or
Minnesota authorities, or (vi) there has occurred any material
adverse change in the financial markets in the United States or an
outbreak of major hostilities (or an escalation thereof) in which
the United States is involved, a declaration of war by Congress,
any other substantial national or international calamity or any
other event or occurrence of a similar character shall have
occurred since the execution of this Agreement that, in the
Underwriters' judgment, makes it impractical or inadvisable to
proceed with the completion of the sale of and payment for the
Securities. Any such termination shall be without liability of any
party to any other party except that the provisions of Section 4(h)
and Section 6 hereof shall at all times be effective.
(c) If the Underwriters elect to prevent this
Agreement from becoming effective or to terminate this Agreement as
provided in this Section, the Company shall be notified promptly by
the Underwriters by telephone or telegram, confirmed by letter. If
the Company elects to prevent this Agreement from becoming
effective, the Underwriters shall be notified by the Company by
telephone or telegram, confirmed by letter.
10. INFORMATION FURNISHED BY UNDERWRITERS. The statements set
forth in the last paragraph of the cover page, in the last paragraph of page 3,
and under the caption "Underwriting" in any Preliminary Prospectus and in
the Prospectus constitute the written information furnished by or on behalf
of the Underwriters referred to in Section 2 and Section 6 hereof.
26
11. NOTICES. Except as otherwise provided herein, all
communications hereunder shall be in writing or by telegraph and, if to the
Underwriters, shall be mailed, telegraphed or delivered to the Underwriters
c/o ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇ Tower, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: Director of Corporate Finance, with a
copy to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq., ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.L.L.P., ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, except that notices given to an Underwriter pursuant
to Section 6 hereof shall be sent, if to ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., to the address
listed above; if to ▇. ▇. ▇▇▇▇▇▇▇▇ & Co., to ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇, Attn: Director of Corporate Finance; and if to ▇▇▇▇▇▇ ▇▇▇▇▇▇ &
Company, Inc., to ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn:
Director of Corporate Finance; if to the Company, shall be mailed,
telegraphed or delivered to it at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇ Attention: Chief Executive Officer, with a copy to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Esq., ▇▇▇▇▇▇ and ▇▇▇▇▇, L.L.P., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. All notices given by telegram shall be promptly
confirmed by letter. Any party to this Agreement may change such address for
notices by sending to the parties to this Agreement written notice of a new
address for such purpose.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and
their respective successors and assigns and the controlling persons, officers
and directors referred to in Section 6. Nothing in this Agreement is intended
or shall be construed to give to any other person, firm or corporation any
legal or equitable remedy or claim under or in respect of this Agreement or
any provision herein contained. The term "successors and assigns" as herein
used shall not include any purchaser, as such purchaser, of any of the
Securities from any of the Underwriters.
13. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota.
27
Please sign and return to the Company the enclosed duplicates of
this letter whereupon this letter will become a binding agreement between the
Company and the Underwriters in accordance with its terms.
Very truly yours,
AMRESCO, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
---------------------------------
Its Chairman and CEO
-----------------------------
CONFIRMED
as of the date first
above mentioned
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇ INC.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
Managing Director
Acting on behalf of itself
and the other Underwriters
SCHEDULE I
PRINCIPAL AMOUNT
UNDERWRITER OF FIRM NOTES(1)
----------- ----------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc. . . . . . . . . . . . . . . . . . . . $25,000,000
▇. ▇. ▇▇▇▇▇▇▇▇ & Co. . . . . . . . . . . . . . . . . . . 12,500,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc.. . . . . . . . . . . . . . 12,500,000
-----------
Total . . . . . . . . . . . . . . $50,000,000
-----------
-----------
____________
(1) The Underwriters may purchase up to an additional $7,500,000 in
aggregate principal amount of Notes, to the extent the option to
purchase Option Notes described in Section 3(b) of the Agreement is
exercised, in the proportions and in the manner described in the
Agreement.
EXHIBIT A
ACCOUNTANTS' LETTERS
1. A letter from Deloitte & Touche, LLP dated and delivered on
the date this Agreement is executed and a similar certificate or letter dated
and delivered on each Closing Date, confirming that they are independent
public accountants within the meaning of the Act and the published rules and
regulations thereunder, shall be issued to the Underwriters stating that:
(a) in their opinion, the consolidated financial statements
and schedules audited by them and included in the Prospectus and the
Registration Statement comply as to form in all material respects with
the applicable accounting requirements of the Act and the related
published rules and regulations thereunder; the financial statements
of the Company as and for the nine month period ended September 30,
1995 (the "Latest Balance Sheet Date") were reviewed by them in
accordance with the standards established by the American Institute of
Certified Public Accountants and based upon their review they are not
aware of any material modifications that should be made to such
financial statements for them to be in conformity with generally
accepted accounting principles, and such financial statements comply
as to form in all material respects with the applicable accounting
requirements of the Act and the applicable rules and regulations
thereunder;
(c) on the basis of a limited review of unaudited consolidated
financial statements, including a reading of the latest available
financial statements, a reading of the minutes of the meetings of the
Board of Directors of the Company, and discussions with officials of
the Company responsible for financial and accounting matters as to
transactions and events subsequent to the Latest Balance Sheet Date,
and such other inquiries and procedures as they may specify, nothing
has come to their attention which, in their judgment, would indicate,
(i) that the unaudited consolidated financial
statements of the Company included or incorporated by reference
in the Registration Statement and Prospectus do not comply in
form in all material respects with the applicable accounting
requirements of the Act and of the related published rules and
regulations, or that such unaudited consolidated financial
information contained or incorporated by reference in the
Registration Statement was not prepared in conformity with
generally accepted accounting principles applied on a basis
substantially consistent, in all material respects, with those
followed in the preparation of the audited financial statements
of the Company included therein;
(ii) at the date of the latest balance sheet read by
them and at a subsequent specified date not more than five
business days prior to the date of such letter there was any
decrease in the common stock or increase in long-term debt of
the Company as compared with amounts shown in the unaudited
consolidated balance sheet dated as of the Latest Balance Sheet
Date, included in the Registration Statement, except for
changes which the Registration Statement discloses have
occurred or may occur;
(iii) at the date of the latest balance sheet read by
them and at a subsequent specified date not more than five
business days prior to the date of such letter there were any
decreases, as compared with amounts shown in the balance sheet
dated as of the Latest Balance Sheet Date included in the
Registration Statement, in total assets, stockholders' equity
of the Company, except for decreases which the Registration
Statement discloses have occurred or may occur or which are
described in such letter;
(iv) for the period from the Latest Balance Sheet
Date to the date of the latest statement of operations read by
them there were any decreases, as compared with the
corresponding period of the preceding year, in revenues or the
total or per share amounts of net income of the Company, except
for decreases which the Registration Statement discloses have
occurred or may occur or which are described in such letter;
(v) for the period from the date of the latest
statement of operations to a subsequent specified date not more
than five business days prior to the date of such letter, that
certain conclusions described in such letter were not correct,
except as otherwise described in the Registration Statement or
such letter; and
(d) they have compared specific dollar amounts, numbers
of shares, and other financial information pertaining to the Company
set forth in the Registration Statement, which have been specified by
the Underwriters prior to the date of this Agreement, to the extent
that such amounts, numbers and information may be derived from the
general accounting records of the Company, and excluding any questions
requiring any interpretation by legal counsel, with the results
obtained from the application of specified readings, inquiries and
other appropriate procedures (which procedures do not constitute an
audit in accordance with generally accepted auditing standards) set
forth in the letter, and found them to be in agreement.
