EXHIBIT 1.1
WILSHIRE FINANCIAL SERVICES GROUP INC.
1,500,000 SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
[__________ __,] 1996
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
as Representative of the several Underwriters
c/o Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Wilshire Financial Services Group Inc., a Delaware corporation (the
"Company"), confirms its agreement with Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
and each of the other Underwriters listed on Schedule I hereto (collectively,
the "Underwriters"), for whom Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc. is acting
as representative (in such capacity, the "Representative"), with respect to (i)
the sale by the Company and the purchase by the Underwriters, acting severally
and not jointly, of the respective numbers of shares of Common Stock, par value
$0.01 per share, of the Company ("Common Stock") set forth in Schedule I hereto
and (ii) the grant by the Company to the Underwriters, acting severally and not
jointly, of the option described in Section 1(b) hereof to purchase all or any
part of 225,000 additional shares of Common Stock solely to cover over-
allotments, if any. The 1,500,000 shares of Common Stock (the "Firm Shares") to
be purchased by the Underwriters and all or any part of the 225,000 shares of
Common Stock subject to the option described in Section 1(b) hereof (the "Option
Shares") are hereinafter called, collectively, the "Shares".
The Company has filed with the Securities and Exchange Commission (the
"Commission"), a registration statement on Form S-1 (No. 333-15263) and a
related preliminary prospectus for the registration of the Shares under the
Securities Act of 1933, as amended (the "Securities Act") and the rules and
regulations thereunder (the "Securities Act Regulations"). The Company has
prepared and filed such amendments thereto, if any, and such amended preliminary
prospectuses, if any, as may have been required to the date hereof, and will
file such additional amendments thereto and such amended prospectuses as may
hereafter be required. The registration statement has been declared effective
under the Securities Act by the Commission. The registration statement as
amended at the time it became effective (including all information deemed to be
a part of the registration statement at the time it became effective pursuant to
Rule 430A(b) of the Securities Act Regulations) is hereinafter called the
"Registration Statement," except that, if the Company files a post-effective
amendment to such registration statement which becomes effective prior to the
Closing Time (as defined below), "Registration Statement" shall
refer to such registration statement as so amended. Any registration statement
filed pursuant to Rule 462(b) of the Securities Act Regulations is hereinafter
called the "Rule 462(b) Registration Statement," and after such filing the term
"Registration Statement" shall include the 462(b) Registration Statement. Each
prospectus included in the registration statement, or amendments thereof or
supplements thereto, before it became effective under the Securities Act and any
prospectus filed with the Commission by the Company with the consent of the
Underwriters pursuant to Rule 424(a) of the Securities Act Regulations is
hereinafter called the "Preliminary Prospectus." The term "Prospectus" means
the final prospectus, as first filed with the Commission pursuant to paragraph
(1) or (4) of Rule 424(b) of the Securities Act Regulations, and any amendments
thereof or supplements thereto. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus.
The Company and the Underwriters agree as follows:
1. Sale and Purchase:
-----------------
(a) Firm Shares. Upon the basis of the warranties and representations and
other terms and conditions herein set forth, the Company agrees to sell to each
Underwriter, severally and not jointly, and each Underwriter agrees, severally
and not jointly, to purchase from the Company at the purchase price per share of
$_______, the number of Firm Shares set forth in Schedule I opposite such
Underwriter's name, plus any additional number of Firm Shares which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 8 hereof, subject in each case, to such adjustments among the
Underwriters as the Representative in its sole discretion shall make to
eliminate any sales or purchases of fractional shares. The Underwriters may
from time to time increase or decrease the public offering price of the Firm
Shares after the initial public offering to such extent as the Underwriters may
determine in accordance with applicable law.
(b) Option Shares. In addition, upon the basis of the warranties and
representations and other terms and conditions herein set forth, the Company
hereby grants an option to the Underwriters, severally and not jointly, to
purchase from the Company up to an aggregate of 225,000 Option Shares at the
purchase price per share set forth in paragraph (a) above plus any additional
number of Option Shares which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 8 hereof. The option hereby granted will
expire 30 days after the date hereof and may be exercised in whole or in part
from time to time only for the purpose of covering over-allotments which may be
made in connection with the offering and distribution of the Firm Shares upon
notice by the Representative to the Company setting forth the number of Option
Shares as to which the several Underwriters are then exercising the option and
the time and date of payment and delivery for the Option Shares. Any such time
and date of delivery (a "Date of Delivery") shall be determined by the
Representative, but shall not be later than seven full business days (or
earlier, without the consent of the Company, than two full business days) after
the exercise of said option, nor in any event prior to the Closing Time, as
hereinafter defined. If the option is exercised as to all or any portion of the
Option Shares, each of the Underwriters, acting severally and not jointly, will
purchase that proportion of the total number of Option Shares then being
purchased which the number of Firm Shares set forth in Schedule I opposite the
name of such Underwriter bears to the total number of Firm Shares,
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subject in each case to such adjustments as the Representative in its sole
discretion shall make to eliminate any sales or purchases of fractional shares.
The Underwriters may from time to time increase or decrease the public offering
price of the Option Shares after the initial public offering to such extent as
the Underwriters may determine in accordance with applicable law.
2. Payment and Delivery:
--------------------
(a) Firm Shares. Payment of the purchase price for the Firm Shares shall
be made to the Company by wire transfer of immediately available funds or
certified or official bank check payable in federal (same-day) funds at the
offices of Proskauer ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP located at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (unless another place shall be agreed upon by the
Representative and the Company) against delivery of the certificates for the
Firm Shares to the Representative for the respective accounts of the
Underwriters. Such payment and delivery shall be made at ____ a.m., New York
City time, on the third (fourth, if pricing occurs after 4:30 p.m. (New York
City time)) business day after the date hereof (unless another time, not later
than ten business days after such date, shall be agreed to by the Representative
and the Company). The time at which such payment and delivery are actually made
is hereinafter sometimes called the "Closing Time". Certificates for the Firm
Shares shall be delivered to the Representative in definitive form registered in
such names and in such denominations as the Representative shall specify. The
Representative shall provide such information at least two full business days
prior to the Closing Time. For the purpose of expediting the checking of the
certificates for the Firm Shares by the Representative, the Company agrees to
make such certificates available to the Representative for such purpose at least
one full business day preceding the Closing Time, provided that the Company
shall have received the names of registered holders and denominations from the
Representative as aforesaid.
(b) Option Shares. In addition, payment of the purchase price for the
Option Shares shall be made to the Company by wire transfer of immediately
available funds or certified or official bank check payable in federal (same-
day) funds at the offices of Proskauer ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP located at
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (unless another place shall be agreed
upon by the Representative and the Company), against delivery of the
certificates for the Option Shares to the Representative for the respective
accounts of the Underwriters. Such payment and delivery shall be made at ____
a.m., New York City time, on each Date of Delivery. Certificates for the Option
Shares shall be delivered to the Representative in definitive form registered in
such names and in such denominations as the Representative shall specify. The
Representative shall provide such information at least two full business days
prior to the relevant Date of Delivery. For the purpose of expediting the
checking of the certificates for the Option Shares by the Representative, the
Company agrees to make such certificates available to the Representative for
such purpose at least one full business day preceding the relevant Date of
Delivery, provided that the Company shall have received the names of registered
holders and denominations from the Representative as aforesaid.
3. Representations and Warranties of the Company:
---------------------------------------------
The Company represents and warrants to the Underwriters as of the date hereof
that:
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(a) the Company is a multiple savings and loan holding company duly
registered under the Home Owners' Loan Act, as amended ("HOLA"), and its current
business operations constitute permissible services or activities for a multiple
savings and loan holding company under HOLA and 12 C.F.R. Part 584;
(b) the Company has an authorized capitalization as of September 30, 1996
as set forth in the Prospectus under the column entitled "Actual" under the
caption "Capitalization" (and not under the column entitled "Adjusted"); the
outstanding shares of capital stock of the Company and its direct and indirect
subsidiaries (the "Subsidiaries"), Wilshire Funding Corporation, Wilshire
Servicing Corporation, Wilshire Acquisitions Corporation, First Bank of ▇▇▇▇▇▇▇
Hills, F.S. B. ("First Bank") and ▇▇▇▇▇▇ Savings Bank, F.S.B. ("▇▇▇▇▇▇" and
together with First Bank, the "Savings Banks"), have been duly and validly
authorized and issued and are fully paid and non-assessable, and all of the
outstanding shares of capital stock of the Subsidiaries are directly or
indirectly owned of record and beneficially by the Company;
(c) the Company and each of the Company's Subsidiaries other than the
Savings Banks have been duly incorporated and is validly existing as a
corporation in good standing under the laws of its respective jurisdiction of
incorporation with the corporate power and authority to own its respective
properties and to conduct its respective business and, in the case of the
Company, to execute and deliver this Agreement and (i) the Employment Agreement
dated November 15, 1996 between the Company and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, (ii) the
Employment Agreement dated November 15,1996 between the Company and ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇, (iii) the Servicing Agreement dated as of November 15, 1996 among
Wilshire Credit Corporation, a Nevada corporation ("WCC"), the Company, Wilshire
Funding Corporation, a Delaware corporation ("WFC"), and Wilshire Servicing
Corporation, a Delaware corporation ("WSC"), (iv) the Loan Purchase Agreement
dated ______________ between WCC and WFC, (v) the Administrative Services
Agreement dated ____________ among WCC and certain of its affiliates and the
Company and (vi) the credit facilities filed as Exhibits 10.21 and 10.22 to the
Registration Statement (the "Other Transaction Documents");
(d) each Savings Banks has been chartered as a federal savings bank under
the laws of the United States of America, and its charter is in full force and
effect; each Savings Bank has full corporate power and corporate authority to
own its properties and conduct its business as described in the Registration
Statement and the Prospectus; each Savings Bank is a member of the Federal Home
Loan Bank System; and the savings accounts of depositors in the Savings Banks
are insured by the Savings Association Insurance Fund (the "SAIF") of the
Federal Deposit Insurance Corporation (the "FDIC") to the fullest extent
permitted by law and the rules and regulations of the FDIC, and no proceedings
for the termination of such insurance are pending, or to the best of the
Company's knowledge, threatened;
(e) except as set forth in the Prospectus, the Company and all of its
Subsidiaries are duly qualified or licensed by each jurisdiction in which they
conduct their respective businesses and in which the failure, individually or in
the aggregate, to be so qualified or licensed could have a material adverse
effect on the assets, operations, business or condition (financial or otherwise)
of the Company and its Subsidiaries taken as a whole, and the Company and its
Subsidiaries are duly qualified, and are in good standing, in each jurisdiction
in which they own or lease real
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property or maintain an office and in which such qualification is necessary,
except where the failure to be so qualified and in good standing would not have
a material adverse effect on the assets, operations, business or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole;
(f) the Company and its Subsidiaries are in compliance in all material
respect with all applicable laws, rules, regulations, orders, decrees and
judgments, including those relating to transactions with affiliates;
(g) neither the Company nor any of its Subsidiaries is party to or
otherwise the subject of any consent decree, memorandum of understanding,
written agreement or similar supervisory or enforcement agreement or
understanding with the OTS, the FDIC or any other government authority or agency
responsible for the supervision, regulation or insurance of depository
institutions or their holding companies, other than the cease and desist orders
issued to the Savings Banks by the Office of Thrift Supervision (the "OTS") on
October 31, 1996 (the "Cease and Desist Orders"); the Savings Banks are in
compliance with the provisions of the Cease and Desist Orders in effect as of
the date hereof; and, to the best of the Company's knowledge, no further or
additional bank regulatory action against the Savings Banks and/or their
directors is threatened;
(h) neither the Company nor any of its Subsidiaries is in breach of, or in
default under (nor has any event occurred which with notice, lapse of time, or
both would constitute a breach of, or default under), its respective articles of
incorporation or charter or by-laws or in the performance or observance of any
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, loan or credit agreement or other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which any of them is bound, except for such breaches or defaults which would not
have a material adverse effect on the assets, operations, business or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole,
and the execution, delivery and performance of this Agreement and the Other
Transaction Documents, and consummation of the transactions contemplated hereby
and thereby will not conflict with, or result in any breach of or constitute a
default under (nor constitute any event which with notice, lapse of time, or
both would constitute a breach of, or default under), (i) any provision of the
articles of incorporation or charter or by-laws of the Company or any of its
Subsidiaries, or (ii) any provision of any indenture, mortgage, deed of trust,
loan or credit agreement or other agreement or instrument to which the Company
or any of its Subsidiaries is a party or by which any of them or their
respective properties may be bound or affected, or under any federal, state,
local or foreign law, regulation or rule or any decree, judgment or order
applicable to the Company or any of its Subsidiaries, except in the case of this
clause (ii) for such breaches or defaults which would not have a material
adverse effect on the assets, operations, business or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole;
(i) this Agreement has been duly authorized, executed and delivered by the
Company and is a legal, valid and binding agreement of the Company enforceable
in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or similar laws
affecting creditors' rights generally, and by general
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principles of equity, and except to the extent that the indemnification and
contribution provisions of Section 9 hereof may be limited by federal or state
securities laws and public policy considerations in respect thereof;
(j) the Other Transaction Documents have been duly authorized and will be,
upon execution and delivery by the Company, legal, valid and binding agreements
of the Company enforceable by it in accordance with their terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or similar laws affecting creditors' rights generally, and by general
principles of equity;
(k) no approval, authorization, consent or order of or filing with any
federal, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the sale and delivery of the
Shares by the Company as contemplated hereby other than (A) such as have been
obtained, or will have been obtained at the Closing Time or the relevant Date of
Delivery, as the case may be, under the Securities Act, (B) such approvals as
have been obtained in connection with the approval of the quotation of the
Shares on the Nasdaq National Market System and (C) any necessary qualification
under the securities or blue sky laws of the various jurisdictions in which the
Shares are being offered by the Underwriters;
(l) each of the Company and its Subsidiaries has all necessary licenses,
authorizations, consents and approvals and has made all necessary filings
required under any federal, state or local law, regulation or rule, and has
obtained all necessary authorizations, consents and approvals from other
persons, required in order to conduct their respective businesses, except to the
extent that any failure to have any such licenses, authorizations, consents or
approvals, to make any such filings or to obtain any such authorizations,
consents or approvals would not, individually or in the aggregate, have a
material adverse effect on the assets, operations, business or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole;
neither the Company nor any of its Subsidiaries is in violation of, or in
default under, any such license, authorization, consent or approval or any
federal, state, local or foreign law, regulation or rule or any decree, order or
judgment applicable to the Company or any of its Subsidiaries the effect of
which could be material and adverse to the assets, operations, business or
condition (financial or otherwise) of the Company and its Subsidiaries taken as
a whole;
(m) the Registration Statement has become effective under the Securities
Act and no stop order suspending the effectiveness of the Registration Statement
has been issued under the Securities Act and no proceedings for that purpose
have been instituted or are pending or, to the knowledge of the Company, are
threatened by the Commission, and any request on the part of the Commission for
additional information has been complied with;
(n) the Registration Statement as of its effective date and the Prospectus
at the Closing Time or on any Date of Delivery (if any) complies in all material
respects with the requirements of the Securities Act and the Securities Act
Regulations; neither the Registration Statement as of its effective date nor the
Prospectus as of the Closing Time or on any Date of Delivery 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, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the
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Company makes no warranty or representation with respect to any statement
contained in the Registration Statement or the Prospectus in reliance upon and
in conformity with the information concerning the Underwriters and furnished in
writing by or on behalf of the Underwriters through the Representative to the
Company expressly for use in the Registration Statement or the Prospectus (that
information being limited to that described in the last sentence of the first
paragraph of Section 9(b) hereof);
(o) the Preliminary Prospectus and the Prospectus delivered to the
Underwriters for use in connection with this offering was identical to the
versions of the Preliminary Prospectus and Prospectus created to be transmitted
to the Commission for filing via the Electronic Data Gathering Analysis and
Retrieval System ("▇▇▇▇▇"), except to the extent permitted by Regulation S-T;
(p) except as set forth in the Preliminary Prospectus and the Prospectus,
there are no actions, suits or proceedings pending or, to the Company's
knowledge, threatened against the Company or any of its Subsidiaries or any of
their respective properties, at law or in equity, or before or by any federal,
state, local or foreign governmental or regulatory commission, board, body,
authority or agency which reasonably could be expected to have a material
adverse effect on the assets, operations, business or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole;
(q) the financial statements, including the notes thereto, included in the
Registration Statement and the Prospectus present fairly the consolidated or
combined financial position of the Company and its Subsidiaries, ▇▇▇▇▇▇ and its
subsidiary and WCC and its affiliates as of the dates indicated and the
consolidated results of operations and changes in financial position and cash
flows of the Company and its Subsidiaries, ▇▇▇▇▇▇ and its subsidiary and WCC and
its affiliates for the periods specified; such financial statements have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis during the periods involved (except as indicated in the notes
thereto);
(r) Deloitte & Touche LLP, whose reports on the consolidated or combined
financial statements of the Company and its Subsidiaries, ▇▇▇▇▇▇ and its
subsidiary and WCC and its affiliates are filed with the Commission as part of
the Registration Statement and Prospectus, are independent public accountants as
required by the Securities Act and the Securities Act Regulations;
(s) subsequent to the effective date of the Registration Statement and the
date of the Prospectus up to and including the Closing Time and any Date of
Delivery, and except as may be otherwise stated in the Registration Statement or
Prospectus, there has not been (A) any material and unfavorable change, in the
assets, operations, business or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole, (B) any transaction, which is
material to the Company and its Subsidiaries taken as a whole, contemplated or
entered into by the Company or any of its Subsidiaries or (C) any obligation,
contingent or otherwise, directly or indirectly incurred by the Company or any
of its Subsidiaries, which is material to the Company and its Subsidiaries taken
as a whole;
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(t) the Company is not, and upon the sale of the Shares as herein
contemplated will not be, an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(u) the Shares conform in all material respects to the description thereof
contained in the Registration Statement and the Prospectus;
(v) there are no persons with registration or other similar rights to have
any equity securities registered pursuant to the Registration Statement or
otherwise registered by the Company under the Securities Act;
(w) the Shares, when issued and delivered to and paid for by the
Underwriters as contemplated hereby, will be duly authorized and validly issued
and fully paid and nonassessable, free and clear of any pledge, lien,
encumbrance, security interest, preemptive right or other claim;
(x) the Company has not taken, and will not take, directly or indirectly,
any action which is designed to or which has constituted or which might
reasonably be expected to cause or result in stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Shares;
(y) neither the Company nor any of its affiliates directly, or indirectly
through one or more intermediaries, controls or has any other association with
(within the meaning of Article 1 of the By-laws of the National Association of
Securities Dealers, Inc. (the "NASD")), any member firm of the NASD, other than
Wilshire Securities Corporation; and
(z) any certificate signed by any officer of the Company or any Subsidiary
delivered to the Representative or to counsel for the Underwriters pursuant to
or in connection with this Agreement shall be deemed a representation and
warranty by the Company to each Underwriter as to the matters covered thereby.
4. Certain Covenants of the Company: The Company
--------------------------------
hereby agrees with each Underwriter:
(a) to furnish such information as may be required and otherwise to
cooperate in qualifying the Shares for offering and sale under the securities or
blue sky laws of such states as the Representative may designate and to maintain
such qualifications in effect as long as required for the distribution of the
Shares, but not longer than 60 days following the Closing Time or any Date of
Delivery without the consent of the Company, provided that the Company shall not
be required to qualify as a foreign corporation or to consent to the service of
process under the laws of any such state (except service of process with respect
to the offering and sale of the Shares);
(b) to prepare the Prospectus in a form approved by the Underwriters and
file such Prospectus with the Commission pursuant to Rule 424(b) as soon as
possible, on the day following the execution and delivery of this Agreement and
to furnish promptly (and with respect to the initial delivery of such
Prospectus, as soon as possible on the day following the execution and delivery
of this Agreement) to the Underwriters as many copies of the Prospectus (or of
the Prospectus as amended or supplemented if the Company shall have made any
amendments or supplements thereto after the effective date of the Registration
Statement) as the Underwriters may reasonably request for the purposes
contemplated by the Securities Act Regulations, which Prospectus and any
amendments or
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supplements thereto furnished to the Underwriters will be identical to the
version created to be transmitted to the Commission for filing via ▇▇▇▇▇, except
to the extent permitted by Regulation S-T;
(c) to advise the Representative promptly and (if requested by the
Representative) to confirm such advice in writing, when the Registration
Statement has become effective and when any post-effective amendment thereto
becomes effective under the Securities Act Regulations;
(d) to advise the Representative promptly and (if requested by the
Representative) to confirm such advice in writing, of (i) any request by the
Commission for amendments or supplements to the Registration Statement or
Prospectus or for additional information with respect thereto, or (ii) the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, or of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes and, if
the Commission or any other government agency or authority should issue any such
order, to make every reasonable effort to obtain the lifting or removal of such
order as soon as possible; to advise the Representative promptly of any proposal
to amend or supplement the Registration Statement or Prospectus and to file no
such amendment or supplement to which the Representative shall reasonably object
in writing;
(e) if requested by any Underwriter, to furnish to such Underwriter for a
period of five years from the date of this Agreement (i) as soon as available,
copies of all annual, quarterly and current reports or other communications
supplied to holders of shares of Common Stock, (ii) as soon as practicable after
the filing thereof, copies of all reports filed by the Company with the
Commission, the NASD or any securities exchange and (iii) such other information
as the Underwriter may reasonably request regarding the Company and its
Subsidiaries;
(f) to advise the Underwriters promptly of the happening of any event known
to the Company within the time during which a Prospectus relating to the Shares
is required to be delivered under the Securities Act Regulations which, in the
judgment of the Company, would require the making of any change in the
Prospectus then being used so that the Prospectus would not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and, during such time,
to prepare and furnish, at the Company's expense, to the Underwriters promptly
such amendments or supplements to such Prospectus as may be necessary to reflect
any such change and to furnish to the Underwriters a copy of such proposed
amendment or supplement before filing any such amendment or supplement with the
Commission;
(g) to furnish promptly to the Representative a signed copy of the
Registration Statement, as initially filed with the Commission, and of all
amendments thereto (including all exhibits thereto) and such number of conformed
copies of the foregoing as the Underwriters may reasonably request;
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(h) to furnish to the Underwriters, not less than two business days before
filing with the Commission subsequent to the effective date of the Prospectus
and during the period referred to in paragraph (f) above, a copy of any document
proposed to be filed with the Commission pursuant to Section 13, 14, or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act");
(i) to make generally available to its security holders as soon as
practicable after the effective date of the Registration Statement an earning
statement (in form, at the option of the Company, complying with the provisions
of Rule 158 of the Securities Act Regulations) covering a period of 12 months
beginning after the effective date of the Registration Statement;
(j) to use its best efforts to effect and maintain the quotation of the
Shares on the Nasdaq National Market and to file with the Nasdaq National Market
all documents and notices required by the Nasdaq National Market of companies
that have securities that are traded in the over-the-counter market and
quotations for which are reported by the Nasdaq National Market; and
(k) to refrain during a period of 180 days from the date of the Prospectus,
without the prior written consent of the Representative, from (i) offering,
pledging, selling, contracting to sell, selling any option or contract to
purchase, purchasing any option or contract to sell, granting any option for the
sale of, or otherwise disposing of or transferring, directly or indirectly, any
share of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, or filing any registration statement under the
Securities Act with respect to any of the foregoing or (ii) entering into any
swap or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to (A)
the Shares to be sold hereunder, (B) any shares of Common Stock issued by the
Company upon the exercise of an option outstanding on the date hereof and
referred to in the Prospectus or (C) any shares of Common Stock issued or
options to purchase Common Stock granted pursuant to the Company's 1996
Incentive Stock Plan referred to in the Prospectus.
5. Payment of Expenses:
-------------------
(a) The Company agrees to pay all costs and expenses incident to the
performance of its obligations under this Agreement, whether or not the
transactions contemplated hereunder are consummated or this Agreement is
terminated (except if the Representative is unable to complete the offering
contemplated hereby due to the Representative's willful misconduct or bad
faith), including expenses, fees and taxes in connection with (i) the
preparation and filing of the Registration Statement, each Preliminary
Prospectus, the Prospectus, and any amendments or supplements thereto, and the
printing and furnishing of copies of each thereof to the Underwriters and to
dealers (including costs of mailing and shipment), (ii) the preparation,
issuance and delivery of the certificates for the Shares to the Underwriters,
(iii) reproduction of this Agreement and any dealer agreements and furnishing of
copies of each to the Underwriters and to dealers (including costs of mailing
and shipping), (iv) the qualification of the Shares for offering and sale under
state laws that the Company and the Representative have mutually agreed are
appropriate and the
10
determination of their eligibility for investment under state law as aforesaid
(including the legal fees and filing fees and other disbursements of counsel for
the Underwriters in the amount of $15,000 assuming that the Common Stock is
approved for quotation on the Nasdaq National Market; such $15,000 to be the
aggregate amount when taken together with such blue sky legal fees and filing
fees and other disbursements of counsel to Friedman, Billings, ▇▇▇▇▇▇ & Co.,
Inc., as underwriter, in the concurrent offering by the Company of its __% Notes
due 2003 (the "Notes Offering")) and the printing and furnishing of copies of
any blue sky surveys or legal investment surveys to the Underwriters and to
dealers, (v) filing for review of the public offering of the Shares by the NASD,
(vi) the fees and expenses of any transfer agent or registrar for the Shares,
(vii) the fees and expenses incurred in connection with the inclusion of the
Shares in the Nasdaq National Market, and (viii) the performance of the
Company's other obligations hereunder. Upon the Representative's request, the
Company will provide funds in advance for filing fees.
(b) The Company agrees to reimburse the Representative for its reasonable
and documented out-of-pocket expenses in connection with the performance of its
activities under this Agreement, whether or not the transactions contemplated
hereunder are consummated or this Agreement is terminated, including, but not
limited to, costs such as printing, facsimile, courier service, direct computer
expenses, accommodations, travel and the fees and expenses of the
Representative's outside legal counsel and any other advisors, accountants,
appraisers, etc., and costs in connection with making road show presentations
with respect to the offering of the Shares. Such expenses shall not exceed,
when aggregated with the reimbursable expenses of Friedman, Billings, ▇▇▇▇▇▇ &
Co., Inc., as underwriter, pursuant to the Underwriting Agreement dated December
__, 1996 for the Notes Offering, $300,000 (not including fees and expenses of
counsel with respect to state securities or blue sky laws), without the
Company's permission. Notwithstanding the foregoing, the Company will not be
obligated to reimburse the Representative for out-of-pocket expenses if the
Representative is unable to complete the offering contemplated hereby due to the
Representative's willful misconduct or bad faith.
6. Conditions of the Underwriters' Obligations: The
-------------------------------------------
obligations of the Underwriters hereunder are subject to the accuracy of the
representations and warranties on the part of the Company in all material
respects on the date hereof and at the Closing Time and on each Date of
Delivery, the performance by the Company of its obligations hereunder in all
material respects and to the following conditions:
(a) The Company shall furnish to the Underwriters at the Closing Time and
on each Date of Delivery opinions of counsel for the Company as set forth below,
addressed to the Underwriters and dated the Closing Time and each Date of
Delivery and in form satisfactory to ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for
the Underwriters, stating that:
(i) the Company is a multiple savings and loan holding company duly
registered under HOLA and its business operations, as described in the
Registration Statement and the Prospectus, constitute permissible services
or activities for a multiple savings and loan holding company under HOLA
and 12 C.F.R. Part 584;
(ii) the Company has an authorized capitalization as of September 30,
1996 as set forth in the Prospectus under the column entitled "Actual"
under the caption
11
"Capitalization" (and not under the column entitled "Adjusted"); the
outstanding shares of capital stock of the Company and its Subsidiaries
have been duly and validly authorized and issued and are fully paid and
non-assessable, and all of the outstanding shares of capital stock of the
Subsidiaries are directly or indirectly owned of record and beneficially by
the Company;
(iii) the Company and each of the Company's Subsidiaries other than
the Savings Banks have been duly incorporated and is validly existing as a
corporation in good standing under the laws of its respective jurisdiction
of incorporation with full corporate power and authority to own its
respective properties and to conduct its respective business and, in the
case of the Company, to execute and deliver this Agreement;
(iv) each Savings Banks has been duly chartered as a federal savings
bank under the laws of the United States of America, and its charter is in
full force and effect; each Savings Bank has full corporate power and
corporate authority to own its properties and conduct its businesses as
described in the Registration Statement and the Prospectus; each Savings
Bank is a member of the Federal Home Loan Bank System; and the savings
accounts of depositors in the Savings Banks are insured by the SAIF of the
FDIC to the fullest extent permitted by law and the rules and regulations
of the FDIC, and, to such counsel's knowledge, no proceedings for the
termination of such insurance are pending or threatened;
(v) the Company and all of its Subsidiaries (other than the Savings
Banks) are duly qualified, and are in good standing, in Oregon and
California;
(vi) other than the Cease and Desist Orders, to such counsel's
knowledge, none of the Company and the Savings Banks is a party to or
otherwise the subject of any consent decree, memorandum of understanding,
written agreement or similar supervisory or enforcement agreement or
understanding with the OTS, the FDIC or any other government authority or
agency responsible for the supervision, regulation or insurance of
depository institutions or their holding companies; and, to such counsel's
knowledge, no further or additional bank regulatory action against the
Company, the Savings Banks or their directors is threatened, except actions
that would relate to a failure to comply fully with the Cease and Desist
Orders;
(vii) to such counsel's knowledge, neither the Company nor any of its
Subsidiaries is in breach of, or in default under (nor has any event
occurred which with notice, lapse of time, or both would constitute a
breach of, or default under), any license, indenture, mortgage, deed of
trust, loan or credit agreement or any other agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which any of
them or their respective properties may be bound or affected and identified
as a material agreement or instrument of the Company or a Subsidiary in the
certificate of the Company attached hereto or under any law, regulation or
rule or any decree, judgment or order applicable to the Company or any of
its Subsidiaries, except such breaches or defaults which would not have a
material adverse effect on the assets, operations, business or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a
whole.
12
(viii) the execution, delivery and performance of this Agreement and
the Other Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby do not and will
not conflict with, or result in any breach of, or constitute a default
under (nor constitute any event which with notice, lapse of time, or both
would constitute a breach of or default under), (i) any provisions of the
articles of incorporation, charter or by-laws of the Company or any
Subsidiary, (ii) any provision of any license, indenture, mortgage, deed of
trust, loan or credit agreement or other agreement or instrument known to
such counsel to which the Company or any Subsidiary is a party or by which
any of them or their respective properties may be bound or affected and
identified as a material agreement or instrument of the Company or a
Subsidiary in the certificate of the Company attached hereto, or (iii) any
law or regulation or any decree, judgment or order applicable to the
Company or any Subsidiary, except in the case of clause (ii) for such
conflicts, breaches or defaults which individually or in the aggregate
would not have a material adverse effect on the assets, operations,
business or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole;
(ix) this Agreement has been duly authorized, executed and delivered
by the Company;
(x) the Other Transaction Documents have been duly authorized and will
be, upon execution and delivery by the Company, legal, valid and binding
agreements of the Company enforceable by it in accordance with their terms,
except as may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or similar laws affecting creditors'
rights generally, and by general principles of equity;
(xi) no approval, authorization, consent or order of or filing with
any federal or state governmental or regulatory commission, board, body,
authority or agency is required in connection with the sale and delivery of
the Shares by the Company as contemplated hereby other than such as have
been obtained or made under the Securities Act and except that such counsel
need express no opinion as to any necessary qualification under the state
securities or blue sky laws of the various jurisdictions in which the
Shares are being offered by the Underwriters or any approval of the
underwriting terms and arrangements by the National Association of
Securities Dealers, Inc.;
(xii) the Company is not an "investment company" as such term is
defined in the Investment Company Act;
(xiii) the sale of the Shares by the Company is not subject to
preemptive or other similar rights arising by operation of law, under the
articles of incorporation or by-laws of the Company, under any agreement
known to such counsel to which the Company or any of its Subsidiaries is a
party or, to such counsel's knowledge, otherwise;
(xiv) the Shares, when issued and delivered to and paid for by the
Underwriters as contemplated hereby, will be duly authorized and validly
issued and fully paid and nonassessable;
13
(xv) the form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory
requirements, with any applicable requirements of the articles of
incorporation and by-laws of the Company;
(xvi) the Registration Statement has become effective under the
Securities Act and, to such counsel's knowledge, no stop order suspending
the effectiveness of the Registration Statement has been issued and, to
such counsel's knowledge, no proceedings with respect thereto have been
commenced or threatened;
(xvii) as of the effective date of the Registration Statement, the
Registration Statement and the Prospectus (except as to the financial
statements and other financial and statistical data contained therein, as
to which such counsel need express no opinion) complied as to form in all
material respects with the requirements of the Securities Act Regulations;
(xviii) the statements under the captions "Regulation" and
"Description of Capital Stock" in the Registration Statement and the
Prospectus, insofar as such statements constitute a summary of the legal
matters referred to therein, constitute accurate summaries thereof in all
material respects;
(xix) there are no actions, suits or proceedings pending or, to such
counsel's knowledge, threatened against the Company or any of its
Subsidiaries or any of their respective properties, at law or in equity, or
before or by any federal, state or foreign governmental or regulatory
commission, board, body, authority or agency which are required to be
described in the Prospectus but are not so described;
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company, independent
public accountants of the Company and Underwriters at which the contents of the
Registration Statement and Prospectus were discussed and, although such counsel
is not passing upon and does not assume responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or Prospectus (except as and to the extent stated in subparagraphs
(xvii) and (xviii) above), on the basis of the foregoing, nothing has come to
the attention of such counsel that causes them to believe that the Registration
Statement, the Preliminary Prospectus or the Prospectus, as of their respective
effective or issue dates and as of the date of such counsel's opinion, contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading (it
being understood that, in each case, such counsel need express no view with
respect to the financial statements and other financial and statistical data
included in the Registration Statement, Preliminary Prospectus or Prospectus).
For purposes of rendering the foregoing opinions, counsel may as to factual
matters rely upon statements, certificates and other assurances of public
officials and upon certificates of officers of the Company, which certificates
of officers of the Company will be furnished to the Underwriters together with
such counsel's opinion.
14
The Underwriters acknowledge that the opinions set forth above in this
Section 6(a) in paragraphs (i), (iv) and (vi) and with regard to paragraph
(xviii), with respect to the "Regulation" section of the Registration Statement
and Prospectus, will be rendered by Heller, Ehrman, White & ▇▇▇▇▇▇▇▇▇
("▇▇▇▇▇▇"); that the opinions set forth in paragraphs (vii), (viii) and (x) of
this Section 6(a) will be rendered by both Stoel Rives LLP, local counsel to the
Company in Oregon ("Oregon Counsel"), and Proskauer ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP
("Proskauer"), with such opinion pursuant to paragraph (x) to be rendered with
respect to Other Transaction Documents governed by Oregon law (except for the
Employment Agreements between the Company and each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ (the "Employment Agreements")) by Oregon Counsel and with
respect to Other Transaction Documents governed by New York law by Proskauer;
and that the opinions set forth in all other paragraphs of this Section 6(a)
(including, with respect to paragraph (x), the execution and delivery of the
Employment Agreements, and with respect to paragraph (xviii), the "Description
of Capital Stock" section of the Registration Statement and Prospectus) will be
rendered by Proskauer.
(b) The Representative shall have received from Deloitte & Touche LLP,
letters dated, respectively, as of the date of this Agreement, the Closing Time
and each Date of Delivery, as the case may be, addressed to the Representative
as representative of the Underwriters and in form and substance satisfactory to
the Representative.
(c) The Underwriters shall have received at the Closing Time and on each
Date of Delivery the favorable opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, dated the
Closing Time or such Date of Delivery, addressed to the Representative and in
form and substance satisfactory to the Representative.
(d) No amendment or supplement to the Registration Statement or Prospectus
shall have been filed to which the Underwriters shall have objected in writing.
(e) Prior to the Closing Time and each Date of Delivery (i) no stop order
suspending the effectiveness of the Registration Statement or any order
preventing or suspending the use of any Preliminary Prospectus or Prospectus has
been issued by the Commission, and no suspension of the qualification of the
Shares for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes, has occurred; and (ii)
the Registration Statement and the Prospectus shall not contain an untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(f) Between the time of execution of this Agreement and the Closing Time or
the relevant Date of Delivery no material and unfavorable change (other than as
disclosed in the Registration Statement and Prospectus), in the assets,
operations, business or condition (financial or otherwise) of the Company and
its Subsidiaries taken as a whole shall occur or become known.
(g) At the Closing Time, the closing of the Notes Offering shall have
occurred, substantially concurrently with the closing of the offering of the
Shares.
15
(h) At the Closing Time, the Other Transaction Documents shall have been
entered into by all required parties and the undrawn amounts under the
transferred repurchase facilities, warehouse facilities and term loans shall
have been made available to the Company.
(i) At the Closing Time, the Shares shall have been approved for inclusion
in the Nasdaq National Market.
(j) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
(k) The Representative shall have received letters from ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, each a principal stockholder, director
and principal executive officer of the Company, in form and substance
satisfactory to the Representative, confirming that for a period of 180 days
after the Closing Time, such persons will not directly or indirectly (i) offer,
pledge to secure any obligation due on or within 180 days after the Closing
Time, sell, contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option for the sale of, or otherwise
dispose of or transfer (other than a disposition or transfer pursuant to which
the acquiror or transferee is subject to the restrictions on disposition and
transfer set forth in this Section 6(k) to the same extent as such director or
executive officer of the Company delivering a letter hereunder), directly or
indirectly, any share of Common Stock (other than by participating as selling
stockholders in a registered offering of Common Stock offered by the Company
with the consent of the Representative) or any securities convertible into or
exercisable or exchangeable for Common Stock or (ii) enter into any swap or any
other agreement or any transaction that transfers, in whole or in part, directly
or indirectly, the economic consequence of ownership of the Common Stock,
whether any such swap or transaction described in clause (i) or (ii) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise, without the prior written consent of the Representative, which
consent may be withheld at the sole discretion of the Representative.
(l) The Company will, at the Closing Time and on each Date of Delivery,
deliver to the Underwriters a certificate of its two principal executive
officers, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, to the effect that,
to each of such officer's knowledge, the representations and warranties of the
Company set forth in this Agreement and the conditions set forth in paragraphs
(e), (f), and (h) have been met and are true and correct as of such date.
(m) The Company shall have furnished to the Underwriters such other
documents and certificates as to the accuracy and completeness of any statement
in the Registration Statement and the Prospectus as of the Closing Time or any
Date of Delivery as the Underwriters may reasonably request.
7. Termination: The obligations of the several Underwriters
-----------
hereunder shall be subject to termination in the absolute discretion of the
Representative, at any time prior to the Closing Time or any Date of Delivery,
if trading in securities on the New York Stock Exchange shall have been
suspended (including automatic halts in trading pursuant to market-decline
triggers other than those in which solely program trading is temporarily halted)
or minimum prices shall have been established on the New York Stock Exchange, or
if a banking moratorium shall
16
have been declared either by the United States or New York State authorities, or
if the United States shall have declared war in accordance with its
constitutional processes or there shall have occurred any material outbreak or
escalation of hostilities or other national or international calamity or crisis
of such magnitude in its effect on the financial markets of the United States
as, in the judgment of the Representative, to make it impracticable to market
the Shares.
If the Representative elects to terminate this Agreement as provided in
this Section 7, the Company and the Underwriters shall be notified promptly by
telephone, promptly confirmed by facsimile.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply in all material respects with any of the terms of this
Agreement, the Company shall not be under any obligation or liability under this
Agreement (except to the extent provided in Sections 5 and 9 hereof) and the
Underwriters shall be under no obligation or liability to the Company under this
Agreement (except to the extent provided in Section 9 hereof) or to one another
hereunder.
8. Increase in Underwriters' Commitments: If any Underwriter
-------------------------------------
shall default at Closing Time or on a Date of Delivery in its obligation to take
up and pay for the Shares to be purchased by it under this Agreement on such
date and if the total number of Shares which such Underwriter shall have agreed
but failed to take up and pay for does not exceed 10% of the total number of
Shares to be purchased on such date, each non-defaulting Underwriter shall take
up and pay for (in addition to the number of Shares which it is obligated to
purchase on such date pursuant to this Agreement) the portion of the total
number of Shares agreed to be purchased by the defaulting Underwriter on such
date in the proportion that its underwriting obligations hereunder bears to the
underwriting obligations of all non-defaulting Underwriters.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that it will
not sell any Shares hereunder on such date unless all of the Shares to be
purchased on such date are purchased on such date by the Underwriters (or by
substituted Underwriters selected by the Representative with the approval of the
Company or selected by the Company with the approval of the Representative).
If a new Underwriter or Underwriters are substituted for a defaulting
Underwriter in accordance with the foregoing provision, the Company or the
nondefaulting Underwriters shall have the right to postpone the Closing Time or
the relevant Date of Delivery for a period not exceeding five business days in
order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
The term Underwriter as used in this Agreement shall refer to and include
any Underwriter substituted under this Section 8 with the like effect as if such
substituted Underwriter had originally been named in this Agreement.
17
9. Indemnity and Contribution by the Company and the
-------------------------------------------------
Underwriters:
------------
(a) The Company agrees to indemnify, defend and hold harmless each
Underwriter and any person who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any loss, expense, liability or claim (including the reasonable cost of
investigation) which, jointly or severally, any such Underwriter or controlling
person may incur under the Securities Act, the Exchange Act or otherwise,
insofar as such loss, expense, liability or claim arises out of or is based upon
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement (or in the Registration Statement as amended by any
post-effective amendment thereof by the Company) or in a Prospectus (the term
Prospectus for the purpose of this Section 9 being deemed to include any
Preliminary Prospectus, the Prospectus and the Prospectus as amended or
supplemented by the Company), or arises out of or is based upon any omission or
alleged omission to state a material fact required to be stated in either such
Registration Statement or Prospectus or necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading, except insofar as any such loss, expense, liability or claim arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in and in conformity
with information furnished in writing by the Underwriters through the
Representative to the Company expressly for use in such Registration Statement
or such Prospectus, provided, however, that the indemnity agreement contained in
this subsection (a) with respect to the Preliminary Prospectus or the Prospectus
shall not inure to the benefit of any Underwriter (or to the benefit of any
person controlling such Underwriter) with respect to any person asserting any
such loss, expense, liability or claim which is the subject thereof if the
Prospectus or any supplement thereto prepared with the consent of the
Representative and furnished to the Underwriters prior to the Closing Time
corrected any such alleged untrue statement or omission and if such Underwriter
failed to send or give a copy of the Prospectus or supplement thereto to such
person at or prior to the written confirmation of the sale of Shares to such
person, unless such failure resulted from noncompliance by the Company with
Section 4(b).
If any action is brought against an Underwriter or controlling person in
respect of which indemnity may be sought against the Company pursuant to the
preceding paragraph, such Underwriter shall promptly notify the Company in
writing of the institution of such action and the Company shall assume the
defense of such action, including the employment of counsel and payment of
expenses. Such Underwriter or controlling person shall have the right to employ
its or their own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of such Underwriter or such controlling person
unless the employment of such counsel shall have been authorized in writing by
the Company in connection with the defense of such action or the Company shall
not have employed counsel to have charge of the defense of such action within a
reasonable time or such indemnified party or parties shall have reasonably
concluded (based on the advice of counsel) that there may be defenses available
to it or them which are different from or additional to those available to the
Company and which counsel to the Underwriter believes may present a conflict for
counsel representing the Company and the Underwriter (in which case the Company
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events such fees and expenses
shall be borne by the Company and paid as incurred (it being understood,
however, that
18
the Company shall not be liable for the expenses of more than one separate
counsel for the Underwriters or controlling persons in any one action or series
of related actions in the same jurisdiction representing the indemnified parties
who are parties to such action). Anything in this paragraph to the contrary
notwithstanding, the Company shall not be liable for any settlement of any such
claim or action effected without the its written consent.
(b) Each Underwriter agrees, severally and not jointly, to indemnify,
defend and hold harmless the Company, its directors, the officers that signed
the Registration Statement and any person who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
from and against any loss, expense, liability or claim (including the reasonable
cost of investigation) which, jointly or severally, the Company or any such
person may incur under the Securities Act, the Exchange Act or otherwise,
insofar as such loss, expense, liability or claim arises out of or is based upon
any untrue statement or alleged untrue statement of a material fact contained in
and in conformity with information furnished in writing by such Underwriter
through the Representative to the Company expressly for use in the Registration
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof by the Company) or in a Prospectus, or arises out of or is
based upon any omission or alleged omission to state a material fact in
connection with such information required to be stated either in such
Registration Statement or Prospectus or necessary to make such information, in
the light of the circumstances under which made, not misleading. The statements
set forth in the last paragraph on the cover page and under the caption
"Underwriting" in the Preliminary Prospectus and the Prospectus (to the extent
such statements relate to the Underwriters) constitute the only information
furnished by or on behalf of any Underwriter through the Representative to the
Company for purposes of this Section 9(b).
If any action is brought against the Company or any such person in respect
of which indemnity may be sought against any Underwriter pursuant to the
foregoing paragraph, the Company or such person shall promptly notify the
Representative in writing of the institution of such action and the
Representative, on behalf of the Underwriters, shall assume the defense of such
action, including the employment of counsel and payment of expenses. The
Company or such person shall have the right to employ its own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
the Company or such person unless the employment of such counsel shall have been
authorized in writing by the Representative in connection with the defense of
such action or the Representative shall not have employed counsel to have charge
of the defense of such action within a reasonable time or such indemnified party
or parties shall have reasonably concluded (based on the advice of counsel) that
there may be defenses available to it or them which are different from or
additional to those available to the Underwriters (in which case the
Representative shall not have the right to direct the defense of such action on
behalf of the indemnified party or parties), in any of which events such fees
and expenses shall be borne by such Underwriter and paid as incurred (it being
understood, however, that the Underwriters shall not be liable for the expenses
of more than one separate counsel in any one action or series of related actions
in the same jurisdiction representing the indemnified parties who are parties to
such action). Anything in this paragraph to the contrary notwithstanding, no
Underwriter shall be liable for any settlement of any such claim or action
effected without the written consent of such Underwriter.
19
(c) If the indemnification provided for in this Section 9 is unavailable to
an indemnified party under subsections (a) and (b) of this Section 9 in respect
of any losses, expenses, liabilities or claims referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, expenses, liabilities or claims in such proportion as is
appropriate to reflect (i) the relative benefits received by the Company on the
one hand and the Underwriters on the other hand from the offering of the Shares
and (ii) the relative fault of the Company on the one hand and of the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, expenses, liabilities or claims, 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 proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company bear to the underwriting discounts and commissions received by
the Underwriters. The relative fault of the Company on the one hand and of the
Underwriters on the other shall be determined by reference to, among other
things, whether the untrue statement or alleged untrue statement of a material
fact or omission or alleged omission relates to information supplied by the
Company or by the Underwriters and the parties, relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the losses,
claims, damages and liabilities referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any claim or action.
(d) The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in subsection (c) above. Notwithstanding
the provisions of this Section 9, (i) no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission and (ii) the Company shall not be required to
contribute any amount in excess of the amount by which the proceeds received in
connection herewith exceed the amount of any damages which the Company 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 Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 9 are several in proportion to their respective
underwriting commitments and not joint.
10. Survival: The indemnity and contribution
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agreements contained in Section 9 and the covenants, warranties and
representations of the Company contained in Sections 3, 4 and 5 shall remain in
full force and effect regardless of any investigation made by or on behalf of
any Underwriter, or any person who controls any Underwriter within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act, or by or
on behalf of the Company, its directors and officers or any person who controls
the Company within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, and the indemnity and contribution
20
agreements contained in Section 9 and the Company's covenants in Section 5 shall
survive any termination of this Agreement or the sale and delivery of the
Shares. The Company and each Underwriter agree promptly to notify the others of
the commencement of any litigation or proceeding against it and, in the case of
the Company, against any of the Company's officers and directors, in connection
with the sale and delivery of the Shares, or in connection with the Registration
Statement or Prospectus.
11. Entire Agreement: This Agreement contains the entire
----------------
agreement and understanding among the parties hereto with respect to the subject
matter hereof and supersedes all prior oral and written agreements and
understandings (including, without limitation, the engagement letter dated July
24, 1996 between the Representative and the Company) relating to such subject
matter.
12. Notices: Except as otherwise herein provided, all
-------
statements, requests, notices and agreements shall be in writing or by telegram
and, if to the Underwriters, shall be sufficient in all respects if delivered to
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Compliance Department; if to the Company, shall be
sufficient in all respects if delivered to the Company at the offices of the
Company at ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ Attention. ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇.
13. GOVERNING LAW; HEADINGS: THIS AGREEMENT SHALL BE GOVERNED BY,
-----------------------
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES. The section headings in this Agreement
have been inserted as a matter of convenience of reference and are not a part of
this Agreement.
14. Parties at Interest: The Agreement herein set forth has
-------------------
been and is made solely for the benefit of the Underwriters, the Company and the
controlling persons, directors and officers referred to in Sections 9 and 10
hereof, and their respective successors, assigns, executors and administrators.
No other person, partnership, association or corporation (including a purchaser,
as such purchaser, from any of the Underwriters) shall acquire or have any right
under or by virtue of this Agreement.
15. Counterparts: This Agreement may be signed by the parties in
------------
counterparts which together shall constitute one and the same agreement among
the parties.
21
If the foregoing correctly sets forth the understanding among the Company
and the Underwriters, please so indicate in the space provided below for the
purpose, whereupon this Agreement shall constitute a binding agreement among the
Company and the Underwriters.
Very truly yours,
WILSHIRE FINANCIAL SERVICES GROUP INC.
By: ______________________________________
Title:
Accepted and agreed to as
of the date first above written:
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ &
CO., INC.
By: ________________________________
Title:
For themselves and as Representative
of the other Underwriters named on
Schedule I hereto.
22
Schedule I
Number of Firm
Underwriter Shares to be Purchased
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Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc............
Total............................................ 1,500,000
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