EXHIBIT 10.1
$50,000,000
STERLING BANK
(a Texas state chartered banking association)
7.375% Subordinated Notes due 2013
PURCHASE AGREEMENT
April 3, 2003
▇▇▇▇▇▇ BROTHERS INC.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Sterling Bank, a Texas state chartered banking association
(the "BANK") and an indirect wholly-owned subsidiary of Sterling Bancshares,
Inc. (the "CORPORATION"), confirms its agreement with ▇▇▇▇▇▇ Brothers Inc. and
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. (the "INITIAL PURCHASERS") with respect to the
offer for sale by the Bank to the Initial Purchasers of up to $50,000,000
aggregate principal amount of the Bank's 7.375% Subordinated Notes due 2013 (the
"SECURITIES") to be marketed by the Initial Purchasers on a best efforts basis.
The Securities will be issued under a Fiscal and Paying Agency Agreement, to be
dated as of April 10, 2003 (as the same may be supplemented and amended from
time to time, the "FPAA"), between the Bank and Deutsche Bank Trust Company
Americas, as Fiscal and Paying Agent (the "FISCAL AND PAYING AGENT").
SECTION 1. Agreements to Sell and Purchase. On the basis of
the representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained herein, the Bank agrees to issue
and sell to the Initial Purchasers, and each Initial Purchaser hereby, severally
and not jointly, agrees to purchase from the Bank on the Settlement Date (as
defined herein) for resale to prospective purchasers on such date that amount of
Securities at the Purchase Price (as herein defined) thereof for which such
Initial Purchaser is able to obtain Firm Commitments (as defined below) from
prospective purchasers after conducting a "best efforts" offering of the
Securities; provided however, that such Initial Purchaser shall not be obligated
pursuant to this Agreement to purchase any Securities that any prospective
purchaser does not actually purchase on the Settlement Date. In the event that a
prospective purchaser shall fail either to accept delivery of or to make payment
for the Securities on the Settlement Date, the applicable Initial Purchaser
shall promptly notify the Bank and
deliver such Securities to the Bank, and, if such Initial Purchaser has
theretofore paid the Bank for such Securities, the Bank will promptly return
such funds to such Initial Purchaser. A "Firm Commitment" means a firm
commitment from a prospective purchaser to purchase Securities from the Initial
Purchasers on the Settlement Date at a price per Security equal to the Purchase
Price.
SECTION 2. Representations and Warranties. (a) Bank's
Representations and Warranties. The Bank represents and warrants to and agrees
with the Initial Purchasers that:
(i) The Bank has prepared an offering circular to be used
by the Initial Purchasers in connection with the offering of the
Securities. As used herein, "OFFERING CIRCULAR" means the Offering
Circular dated the date hereof, as such Offering Circular may be
amended or supplemented after the date hereof, and shall be deemed to
refer to and include the documents incorporated by reference therein
(the "INCORPORATED DOCUMENTS"). The Offering Circular, as of the date
hereof, complies with and, as of the Settlement Date will comply with,
the requirements of the "Statement of Policy on the Use of Offering
Circulars" of the Federal Deposit Insurance Corporation ("FDIC") set
forth at 61 Fed. Reg. 46808 (the "DISCLOSURE POLICY").
(ii) The Incorporated Documents of the Bank, as amended
prior to the date hereof, at the time they were or hereafter are filed
with the applicable federal and state regulatory authorities
(including, without limitation, the FDIC and the Texas Department of
Banking (the "REGULATORY Authorities")), (v) were prepared, in all
material respects, in accordance with the regulatory instructions
applicable to such documents, (w) present fairly the information
required to be stated therein, (x) present fairly the consolidated
financial position of the Bank and its subsidiaries as of the dates
indicated and the consolidated results of operations and cash flows of
the Bank, for the periods specified, (y) were prepared, as specified in
the Offering Circular, in all material respects in accordance with
regulatory accounting principles, based on instructions issued by the
Regulatory Authorities ("REGULATORY ACCOUNTING PRINCIPLES"), in each
case applied on a consistent basis throughout the periods involved
except as otherwise disclosed in the Offering Circular and (z) when
read together with the other information in the Offering Circular, on
the date hereof and as of the Settlement Date (as defined below), do
not and will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The selected unaudited
consolidated financial information of the Bank included in the Offering
Circular presents fairly the information shown therein and has been
compiled on a basis consistent with that of the financial statements of
the Bank included in such Incorporated Documents, as amended prior to
the date hereof.
(iii) In the case of Incorporated Documents that were or
hereafter are filed with the Securities and Exchange Commission (the
"COMMISSION"), at the time they were or hereafter are filed with the
Commission, such Incorporated Documents complied and will comply in all
material respects with the requirements of the Securities Exchange Act
of 1934, as amended (the "EXCHANGE ACT"), and the rules and regulations
of the Commission thereunder, and such Incorporated Documents, when
read together, do not
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and, as of the Settlement Date, will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. The
historical consolidated financial statements of the Corporation and its
subsidiaries and any supporting schedules and related financial
information of the Corporation and its consolidated subsidiaries
included in such Incorporated Documents present fairly in all material
respects the consolidated financial position of the Corporation and its
subsidiaries as of the dates indicated and the consolidated results of
operations and cash flows of the Corporation and its subsidiaries for
the periods specified. Such financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved, except as disclosed
in the notes to such financial statements. The financial statement
schedules, if any, included in the Incorporated Documents present
fairly in all material respects the information required to be stated
therein.
(iv)The Offering Circular, as of its date, does not and, as
of the Settlement Date, will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading, except
that this representation and warranty does not apply to statements or
omissions made in reliance upon and in conformity with information
furnished to the Bank in writing by ▇▇▇▇▇▇ Brothers Inc., on behalf of
the Initial Purchasers, expressly for use therein.
(v) Since the date of the latest Call Report and audited
financial statements of the Corporation in the Offering Circular
(exclusive of amendments or supplements after the date hereof), except
as otherwise stated therein or contemplated thereby, there has not been
(x) any change, nor any development or event involving a prospective
change, in the condition (financial or otherwise), earnings, business,
properties or business prospects of the Bank and its subsidiaries,
considered as one enterprise, or of the Corporation and its
subsidiaries, considered as one enterprise, whether or not arising in
the ordinary course of business that could reasonably be expected to
result in a Material Adverse Effect (as defined below), (y) any
transaction entered into by the Bank or the Corporation or any of their
subsidiaries, other than those in the ordinary course of business, that
is material to the Bank and its subsidiaries, considered as one
enterprise, or to the Corporation and its subsidiaries, considered as
one enterprise, or (z) except for normal recurring dividends on the
common stock of the Bank or the Corporation, any dividend or
distribution of any kind declared, paid or made by the Bank or the
Corporation on their respective common stock.
(vi) Except as disclosed in the Offering Circular (exclusive
of amendments or supplements after the date hereof), there is no
action, suit or proceeding before or by any government, governmental
instrumentality or court, domestic or foreign, now pending or, to the
knowledge of the Bank, threatened against or affecting the Bank or its
subsidiaries that is required to be disclosed in the Offering Circular
or that could reasonably be expected to have a Material Adverse Effect
(as defined below). The aggregate liability or loss, if any, resulting
from the final outcome of all pending legal or governmental proceedings
to which the Bank or its subsidiaries is a party or which affect any of
their
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properties that are not described in the Offering Circular, including
ordinary routine litigation incidental to its business, would not
reasonably be expected to have any Material Adverse Effect. As used
herein, "MATERIAL ADVERSE EFFECT" means any material adverse effect on
the condition (financial or otherwise), earnings, results of
operations, business, properties or business prospects of the Bank and
its subsidiaries, considered as one enterprise, or on the ability of
the Bank to consummate the transactions contemplated by this Agreement,
the FPAA or the Securities or to perform its obligations thereunder.
(vii) The Bank is a duly organized and validly existing
banking association under the laws of the State of Texas, continues to
hold a valid certificate to do business as such, has full power and
authority as a banking association to conduct its business as such and
to own, lease and operate its properties and to conduct its business as
described in the Offering Circular and to enter into and perform its
obligations under this Agreement, the FPAA and the Securities. The Bank
is duly authorized to transact business and is in good standing in each
jurisdiction in which it owns or leases property of a nature, or
transacts business of a type, that would make such authorization
necessary, except to the extent that the failure to be so authorized or
be in good standing would not have a Material Adverse Effect.
(viii) Each of the Bank's subsidiaries which would constitute
a "significant subsidiary" as defined in Rule 1-02 of Regulation S-X
(each a "Subsidiary") has been duly organized and is validly existing
as a corporation in good standing under the laws of the jurisdiction of
its incorporation, has corporate power and authority to own, lease and
operate its properties and to conduct its business and is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in
good standing would not result in a Material Adverse Effect.
(ix) The Bank is an insured depositary institution under the
provisions of the Federal Deposit Insurance Act, as amended (the "FDI
ACT"). The deposit accounts at the Bank are insured by the FDIC to the
fullest extent permitted by law and the rules and regulations of the
FDIC, and no proceedings for the termination or revocation of such
insurance are pending, or to the knowledge of the Bank threatened.
(x) The shares of capital stock of the Bank have been duly
authorized and validly issued by the Bank and are fully paid and
non-assessable and are owned by the Corporation and are free and clear
of any pledge, lien, security interest, charge, claim, equity or
encumbrance of any kind, and none of such shares of capital stock was
issued in violation of preemptive or other similar rights of any
securityholder of the Bank. As of the date hereof, the Bank has
5,000,000 duly authorized and 1,200,000 issued and outstanding shares
of common stock. The "Capitalization" section of the Offering Circular
identifies in reasonable detail all outstanding consolidated
indebtedness and shareholders' equity of the Bank and its subsidiaries,
prior to and after giving pro forma effect to the consummation of the
offering of the Securities and the application of the net proceeds
therefrom.
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(xi) The Bank's ratio of earnings to fixed charges (actual and
pro forma) included in the Offering Circular under the caption " --
Ratio of Earnings to Fixed Charges," have been calculated in compliance
with Item 503(d) of the Commission's Regulation S-K. The other
financial and statistical information and data of the Bank included or
incorporated by reference in the Offering Circular, historical and pro
forma, are in all material respects accurately presented and prepared
on a basis consistent with the books and records of the Bank.
(xii) This Agreement has been duly authorized, executed and
delivered by the Bank.
(xiii) The Securities have been duly authorized for issuance,
sale and delivery pursuant to this Agreement and, when duly executed,
authenticated, issued and delivered as contemplated in the FPAA and
delivered against payment of the purchase price therefor in accordance
with this Agreement, will constitute valid and legally binding
obligations of the Bank entitled to the benefits of the FPAA and
enforceable against the Bank in accordance with their terms, except as
enforcement thereof may be limited by insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws affecting enforcement of creditors'
rights generally and except as enforcement thereof is subject to
general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and the availability of
equitable remedies. The FPAA has been duly authorized and when duly
executed and delivered by the Bank and the Fiscal and Paying Agent will
constitute a valid and legally binding obligation of the Bank
enforceable against the Bank in accordance with its terms, except as
enforcement thereof may be limited by insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws affecting enforcement of creditors'
rights generally and except as enforcement thereof is subject to
general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and the availability of
equitable remedies. The Securities and the FPAA conform in all material
respects to the summary descriptions thereof in the Offering Circular
and such summary descriptions conform to the rights set forth in and
applicable to the instruments defining the same.
(xiv) Neither the Bank nor any of its subsidiaries is in
violation of its Articles of Association or By-laws (or equivalent
documents) or, except as disclosed in the Offering Circular, in default
in the performance or observance of any material obligation, covenant
or condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound, except
where such violation or default could not reasonably be expected to
have a Material Adverse Effect. The execution and delivery of this
Agreement and the FPAA by the Bank, the execution, issuance and
delivery of the Securities by the Bank, the consummation by the Bank of
the transactions contemplated in this Agreement, the FPAA and the
Offering Circular, and the compliance by the Bank with the terms of
this Agreement, the FPAA and the Securities do not and will not result
in any violation of the provisions of the Articles of Association or
By-laws of the Bank or any of its subsidiaries, and do not and will not
conflict with, or result in a breach of any of the
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terms or provisions of, or constitute a default under or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Bank or any of its subsidiaries under (y) any
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument to which the Bank or any of its subsidiaries is a party or
by which any of them may be bound or to which any of their property may
be subject, except where such default could not reasonably be expected
to have a Material Adverse Effect, or (z) any existing applicable law,
rule or regulation, judgment, order or decree of any government,
governmental instrumentality (including, without limitation, the
Regulatory Authorities) or court having jurisdiction over the Bank or
any of its subsidiaries, except where such default could not reasonably
be expected to have a Material Adverse Effect.
(xv) No authorization, approval, consent, license, order,
registration or qualification of or filing with any government,
governmental instrumentality or court is required for the valid
authorization, issuance, sale and delivery of the Securities or the
execution, delivery or performance of this Agreement, except (v) for
the approval of the Banking Commissioner of Texas pursuant to Section
32.104 of the Texas Banking Act to issue the Securities, which approval
has been obtained, subject to the conditions set forth therein, (w) for
the approval of the FDIC, pursuant to Section 18(i) of the FDI Act, to
redeem the Securities at their stated maturity, which approval has been
obtained, subject to the conditions set forth therein, (x) for the
approval of the FDIC and the Banking Commissioner of Texas, subject to
the conditions set forth in those letters, to redeem the Securities at
any time prior to the stated maturity, (y) for consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the
solicitation and placement of the Securities by the Initial Purchasers
and (z) for the Bank, pursuant to Section 38(h)(2) of the FDI Act, to
make payment on the Securities in the event the Bank becomes
"critically undercapitalized" within the meaning of such section or
pursuant to Section 32.104(c) of the Texas Banking Act to pay interest
due or principal repayable on the Securities when the Bank is in a
"hazardous condition or insolvent" (as determined by the Banking
Commissioner of Texas).
(xvi) The Securities are exempted securities under Section
3(a)(2) of the Securities Act and the offer, sale, issuance and
delivery of the Securities in the manner contemplated by this Agreement
and the Offering Circular do not require registration under the
Securities Act of 1933, as amended (the "SECURITIES ACT") by reason of
such Section and Section 4(2) thereof. Qualification of an indenture
under the Trust Indenture Act of 1939, as amended (the "TRUST INDENTURE
ACT"), is not required in connection with the offer, sale, issuance or
delivery of the Securities as contemplated herein.
(xvii) Neither the Bank nor its subsidiaries nor any agent
acting on their behalf has taken or will take any action that is
reasonably likely to cause the issuance, sale or delivery of the
Securities or the application of the proceeds thereof by the Bank to
violate Regulation T, U or X of the Board of Governors of the Federal
Reserve System or any other regulation of such Board of Governors, in
each case as in effect, on the date hereof. The Bank does not, and
after giving effect to the use of proceeds from the issuance and sale
of the Notes, will not, own any "margin stock" as defined in such
Regulation U.
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(xviii) The Bank has good and marketable title to all
properties and assets described in the Offering Circular as owned by it
free and clear of all liens, charges, encumbrances or restrictions,
except mortgage liens in the ordinary course of business and liens
arising from borrowing activities in the ordinary course of business
and such as (y) are described in the Offering Circular or (z) are
neither material in amount nor materially significant in relation to
the business of the Bank and its subsidiaries, considered as one
enterprise; all of the leases and subleases material to the business of
the Bank and its subsidiaries, considered as one enterprise, and under
which the Bank holds properties are in full force and effect, and the
Bank does not have any notice of any material claim of any sort that
has been asserted by anyone adverse to the rights of the Bank under any
of the leases or subleases mentioned above, or affecting or questioning
the rights of the Bank to the continued possession of the leased or
subleased premises under any such lease or sublease.
(xix) To the knowledge of the Bank, no labor problem exists
with its employees or is imminent that could adversely affect the Bank
and its subsidiaries, considered as one enterprise, and the Bank is not
aware of any existing or imminent labor disturbance by the employees of
any of its or its subsidiaries' principal suppliers, contractors or
customers that could reasonably be expected to have a Material Adverse
Effect.
(xx) The Bank and each of its Subsidiaries owns, possesses or
has obtained all material governmental licenses, permits, certificates,
consents, orders, approvals and other authorizations necessary to own
or lease, as the case may be, and to operate its properties and to
carry on its business as presently conducted, and neither the Bank nor
any of its Subsidiaries has received any notice of proceedings relating
to revocation or modification of any such licenses, permits,
certificates, consents, orders, approvals or authorizations that, in
the aggregate, if the subject of an unfavorable decision, ruling or
finding, could reasonably be expected to have a Material Adverse
Effect.
(xxi) The Bank and each of its Subsidiaries owns or
possesses, or can acquire on reasonable terms, adequate patents, patent
licenses, trademarks, service marks and trade names necessary to carry
on its business as presently conducted and neither the Bank nor any of
its Subsidiaries has received any notice of infringement of or conflict
with asserted rights of others with respect to any patents, patent
licenses, trademarks, service marks or trade names that, in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, could reasonably be expected to have a Material Adverse
Effect.
(xxii) The Bank is not and, after giving effect to the
offer and sale of the Securities, will not be an "investment company"
or an entity "controlled" by an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended.
(xxiii) The Bank and its subsidiaries are in compliance
with all laws administered by and regulations of the Regulatory
Authorities applicable to it or to them, the failure to comply with
which would have a Material Adverse Effect. Except for the brokered
deposit waiver obtained from the FDIC and disclosed in the Offering
Circular, neither the Bank nor any of its subsidiaries is a party to
any agreement or memorandum of
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understanding with, or a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, or has adopted
any board resolutions at the request of, any of the Regulatory
Authorities which restricts materially the conduct of its business, or
in any manner relates to capital adequacy, its accounting practices,
its credit policies or its management, nor has the Bank been advised by
any of the Regulatory Authorities that it is contemplating issuing or
requesting (or considering the appropriateness of issuing or
requesting) any of the foregoing. The Bank is not operating in a
"hazardous condition" or "insolvent" (as defined in Section 31.002(a)
of the Texas Banking Act) and to the actual knowledge of the Bank, no
event has occurred or failed to occur that would cause the Bank to be
operating in a "hazardous condition" or to be "insolvent" as defined
therein.
(xxiv) The Securities are unsecured and subordinated debt
obligations of the Bank and rank pari passu among themselves and with
any other subordinated debt obligations of the Bank other than
subordinated debt obligations of the Bank that by their express terms
rank junior to the Securities.
(xxv) The Securities, when issued, will be eligible as Tier 2
capital of the Bank under the applicable capital regulations of the
FDIC.
(xxvi) The Bank has taken and will continue to take all
actions required by Section 13(e) of the FDI Act for this Agreement,
the Securities and the FPAA to be enforceable against the FDIC as
receiver or conservator of the Bank or in its corporate capacity.
(xxvii) The Corporation has established and maintains
disclosure controls and procedures (as such term is defined in Rule
13a-14 and 15d-14 under the 1934 Act) that (A) are designed to ensure
that material information relating to the Corporation, including its
consolidated subsidiaries, is made known to the Corporation's Chief
Executive Officer and its Chief Financial Officer by others within
those entities, particularly during the periods in which the filings
made by the Corporation with the Commission which it may make under
Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act are being prepared,
(B) have been evaluated for effectiveness as of a date within 90 days
prior to the filing of the Corporation's most recent Annual Report
filed with the Commission and (C) are effective to perform the
functions for which they were established.
The accountants and the Audit Committee of the Board of
Directors have been advised of (x) any significant deficiencies in the
design or operation of internal controls which could adversely affect
the Corporation's ability to record, process, summarize, and report
financial data and (y) any fraud, whether or not material, that
involves management or other employees who have a role in the
Corporation's internal controls; any material weaknesses in internal
controls have been identified for the accountants; and since the date
of the most recent evaluation of such disclosure controls and
procedures, there have been no significant changes in internal controls
or in other factors that could significantly affect internal controls,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
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(xxviii) The Offering Circular, as of its date, contains all
the information specified in, and meeting the requirements of, Rule
144A(d)(4) under the Securities Act.
(xxix) When the Securities are issued and delivered pursuant
to this Agreement, the Securities will not be of the same class (within
the meaning of Rule 144A under the Securities Act) as any security of
the Bank that is listed on a national securities exchange registered
under Section 6 of the Exchange Act or that is quoted in a United
States automated inter-dealer quotation system.
(xxx) No form of general solicitation or general advertising
(as defined in Regulation D under the Securities Act) was used by the
Bank or any of its respective representatives (other than the Initial
Purchasers, as to whom the Bank makes no representation) in connection
with the offer and sale of the Securities contemplated hereby,
including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium
or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising.
(xxxi) No securities of the same class as the Securities have
been issued and sold by the Bank within the six month period
immediately prior to the date hereof. Neither the Bank nor any of its
affiliates, as such term is defined in Rule 501(b) under the Securities
Act (each, an "Affiliate"), has, directly or indirectly, solicited any
offer to buy, sold or offered to sell or otherwise negotiated in
respect of, or will solicit any offer to buy, sell or offer to sell or
otherwise negotiate in respect of, in the United States or to any
United States citizen or resident, any security which is or would be
integrated with the sale of the Securities in a manner that would
require the Securities to be registered under the Securities Act.
(b) Additional Certificates. Any certificates signed by any
officer of the Bank in his or her capacity as an officer and delivered to the
Initial Purchasers or to counsel for the Initial Purchasers in connection with
the transactions contemplated by this Agreement shall be deemed a representation
and warranty by the Bank to the Initial Purchasers as to the matters covered
thereby on the date of such certificate.
SECTION 3. Terms of Offering.
(a) Offers and sales of the Securities by the Bank to the
Initial Purchasers shall be effected pursuant to an exemption from the
registration requirements of the Securities Act. The Securities may be resold or
otherwise transferred by the holders thereof only if they are registered under
the Securities Act or if an exemption (including the exemption afforded by Rule
144A) from the registration requirements of the Securities Act other than that
contained in Section 3(a)(2) of the Securities Act is available.
(b) Each of the Initial Purchasers, severally and not jointly,
represents and warrants to and agrees with the Bank that:
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(i) It is an Institutional Accredited Investor (as defined
below), with such knowledge and experience in financial and business
matters as is necessary in order to evaluate the merits and risks of an
investment in the Securities.
(ii) Offers and sales of the Securities pursuant to this
Agreement will be made only to (i) institutional purchasers that it
reasonably believes to be "Qualified Institutional Buyers" within the
meaning of Rule 144A (a "QIB") or (ii) not more than fifty (50)
institutions that are "accredited investors" as defined in
subparagraphs (a)(1), (2), (3) or (7) of Rule 501 under the Securities
Act (each, an "INSTITUTIONAL ACCREDITED INVESTOR") that execute and
deliver a letter containing certain representations and agreements in
the form attached as Annex A to the Offering Circular. In connection
with offers and sales of the Securities made through the Initial
Purchasers, each of them agrees to notify the related purchaser of any
such Securities of the private offering nature of such purchase and,
accordingly, that such Securities are subject to resale and other
transfer restrictions.
(iii) No general solicitation or general advertising within
the meaning of Rule 502(c) of the Securities Act has been or will be
used in connection with any solicitation of offers to purchase the
Securities.
(iv) It will take reasonable steps to inform, and cause each
of its affiliates to take reasonable steps to inform, persons acquiring
Securities from it or its affiliate, as the case may be, that the
Securities (A) have not been and will not be registered under the
Securities Act, (B) are being sold to them without registration under
the Securities Act in reliance on Rule 144A or in accordance with
another exemption from registration under the Securities Act, as the
case may be, and (C) may not be offered, sold or otherwise transferred
except (1) to the Bank, (2) in accordance with Rule 144A to a person
whom the seller reasonably believes is a QIB that is purchasing such
Securities for its own account or for the account of a QIB to whom
notice is given that the offer, sale or transfer is being made in
reliance on Rule 144A, (3) to an Institutional Accredited Investor
acquiring such Securities for its own account or as a fiduciary for
others (which others must also be Institutional Accredited Investors
unless such transferee is a bank acting in its fiduciary capacity) for
investment purposes and not for distribution in violation of the
Securities Act or (4) pursuant to another available exemption (other
than Section 3(a)(2) of the Securities Act) from registration under the
Securities Act.
(v) The provisions set forth in the Offering Circular under
the heading "Notice to Investors," including the legend required
thereby, shall apply to the Securities.
Purchasers of the Securities will be deemed, by reason of the
purchase or acceptance of such Securities, to have acknowledged and agreed to
the foregoing restrictions on resales and other transfers thereof.
Except as otherwise provided in the FPAA, Securities offered
and sold as part of their initial offering and sale to QIBs shall be issued in
the form of one or more global certificates in definitive, fully registered form
without coupons in minimum denominations of $250,000 and any amount in excess
thereof which is an integral multiple of $1,000. Securities offered and sold as
part of their initial offering and sale to Institutional Accredited Investors
who
10
are not QIBs shall be issued in the form of certificated notes in definitive,
fully registered form without coupons, registered in the name of the purchaser
thereof, in minimum denominations of $250,000 and in any amount in excess
thereof which is an integral multiple of $1,000.
SECTION 4. Delivery of and Payment for the Securities.
(a) Delivery of, and payment of the purchase price for, the
Securities shall be made at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ llp, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or at such other place as shall be
agreed upon by the Bank and the ▇▇▇▇▇▇ Brothers Inc., at 9:30 A.M. (Eastern
Standard Time), on April 10, 2003. Such date and time are referred to herein as
the "SETTLEMENT DATE."
(b) On the Settlement Date, the Bank shall deliver or cause to
be delivered to ▇▇▇▇▇▇ Brothers Inc., on behalf of the Initial Purchasers, the
Securities to be sold on such Settlement Date against payment to or upon the
order of the Bank of the purchase price of 99.879% of the principal amount of
such Securities (the "Purchase Price") less the placement fee payable pursuant
to Section 4(c), by wire transfer to such account as the Bank shall specify.
Time shall be of the essence, and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obligation of the
Initial Purchasers hereunder. Upon delivery, the Securities to be sold on the
Settlement Date shall be in fully registered form in such denominations
permitted by the FPAA and registered in the name of Cede & Co., as nominee of
The Depository Trust Company, or if such Securities are to be issued in the form
of Certificated Notes, such other names as the Initial Purchasers may request in
writing at least one full business day before the Settlement Date. The
Securities will be made available for examination by the Initial Purchasers in
New York City not later than 10:00 A.M. on the last business day prior to the
Settlement Date.
(c) On the Settlement Date, the Bank agrees to pay the Initial
Purchasers by wire transfer a placement fee in an amount equal to (A) 1.40% of
the gross proceeds from the placement of the Securities if the gross proceeds
raised are up to $50,000,000; or (B) a $700,000 flat fee if the gross proceeds
raised from the placement of the Securities are between $50,000,000 and
$70,000,000; or (C) $700,000 plus 1.00% of the gross proceeds in excess of
$70,000,000.
SECTION 5. Covenants of the Bank. The Bank covenants with the
Initial Purchasers as follows:
(a) If any event shall occur or condition exist as a result of
which it is necessary, in the opinion of counsel for the Initial Purchasers or
counsel for the Bank, to amend or supplement the Offering Circular in order that
the Offering Circular will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein
not misleading in light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion of either
such counsel, at any such time to amend the Offering Circular in order to comply
with the requirements of the Regulatory Authorities, the Bank will forthwith
prepare any such amendment or supplement to the Offering Circular (and will file
the same with the Regulatory Authorities if required) so that, as so amended or
supplemented, the Offering Circular will not include an untrue statement of a
11
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances existing at the time it is
delivered to a purchaser, not misleading and the Offering Circular will comply
with such requirements. The Bank will furnish to the Initial Purchasers as many
copies of such amendment or supplement as the Initial Purchasers shall
reasonably request.
(b) The Bank will notify the Initial Purchasers immediately,
and confirm the notice in writing, of the institution or threatened institution
by any Federal or state bank or securities regulatory authority of any
proceedings in respect of the Offering Circular, or the offering of the
Securities (including, without limitation, any suspension of the qualification
of the Securities for offering or sale in any jurisdiction) and will use every
commercially reasonable effort to prevent the issuance of any order preventing
or interfering with the offering of the Securities or the use of the Offering
Circular and, if any such order is issued, to obtain the lifting thereof at the
earliest possible moment.
(c) The Bank (i) will inform the Initial Purchasers of its and
the Corporation's intention to make or file any amendment or supplement to the
Offering Circular, (ii) will furnish the Initial Purchasers with copies of any
such proposed amendment, supplement or other document and (iii) will not file or
permit the filing of any such amendment, supplement or other document in a form
to which ▇▇▇▇▇▇ Brothers Inc., on behalf of the Initial Purchasers, or counsel
for the Initial Purchasers shall reasonably object.
(d) The Bank will furnish to the Initial Purchasers, without
charge, as many copies of the Offering Circular (including, without limitation,
the Incorporated Documents) and each amendment or supplement thereto as ▇▇▇▇▇▇
Brothers Inc., on behalf of the Initial Purchasers, may reasonably request from
time to time.
(e) The Bank will use its reasonable best efforts, in
cooperation with the Initial Purchasers, to qualify the Securities for offering
and sale under the applicable securities laws of such states and other
jurisdictions as ▇▇▇▇▇▇ Brothers Inc., on behalf of the Initial Purchasers, may
designate and to maintain such qualifications in effect; provided, however, that
the Bank shall not be obligated to file any general consent to service of
process or to qualify as a foreign corporation or as a dealer in securities in
any jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is not
otherwise so subject. The Bank will file such statements and reports as may be
required by the laws of each jurisdiction in which the Securities have been
qualified as above provided. The Bank will also supply the Initial Purchasers
with such information as is necessary for the determination of the legality of
the Securities for investment under the laws of such jurisdictions as ▇▇▇▇▇▇
Brothers Inc., on behalf of the Initial Purchasers, may request.
(f) So long as the Securities are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) of the Securities
Act and the rules and regulations of the Commission promulgated thereunder (the
"SECURITIES ACT REGULATIONS"), to furnish to holders of the Securities and
prospective purchasers of the Securities designated by such holders, upon
request of such holders or such prospective purchasers, the information required
to be delivered pursuant to Rule 144A(d)(4) of the Securities Act Regulations
("RULE 144A INFORMATION"). If at any time an event occurs or conditions exist as
a result of which any Rule 144A Information or
12
any amendment or supplement thereto would not comply with the requirements of
Rule 144A or would include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, the Bank
will promptly notify ▇▇▇▇▇▇ Brothers Inc., by telephone (with confirmation in
writing) and will promptly prepare an amendment or supplement to such Rule 144A
Information which will correct such non-compliance, untrue statement or
omission.
(g) The Bank will obtain on or prior to the Settlement Date
all necessary governmental authorizations, and all approvals or consents of
third parties, if any, required of it in connection with the issuance, sale and
delivery of the Securities and the performance of its obligations hereunder and
thereunder, and to cause such authorizations, approvals and consents to be
continued in effect so long as any of the Securities remain outstanding;
provided, that the foregoing shall not be applicable to any governmental
authorizations, approvals or consents for the Bank (i) pursuant to Section
38(h)(2) of the FDI Act, to make any payment on the Securities in the event the
Bank become critically undercapitalized within the meaning of such section, or
(ii) pursuant to Section 32.104(c) of the Texas Banking Act to pay interest due
or principal repayable on the Securities when the Bank is in a "hazardous
condition" or "insolvent" or to the extent that payment would cause the Bank to
be in a "hazardous condition" or "insolvent," each within the meaning of such
section.
(h) During the period beginning on the date of this Agreement
through and including the six month period after the Settlement Date, neither
the Bank nor the Corporation will, without the prior written consent of the
▇▇▇▇▇▇ Brothers Inc., directly or indirectly, (1) offer, sell, contract to sell
or otherwise dispose of any Securities or any debt securities of the Bank which
are substantially similar to the Securities (the "SIMILAR SECURITIES") or
securities convertible into or exchangeable for the Securities or Similar
Securities or sell or grant options, rights or warrants with respect to the
Securities or Similar Securities or (2) enter into any swap or other derivatives
transaction (other than an interest rate hedge) that transfers to another, in
whole or in part, any of the economic benefits or risks of ownership of the
Securities or Similar Securities, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of the Securities, Similar
Securities or other securities, in cash or otherwise.
(i) The Bank will apply the net proceeds received by it from
the sale of the Securities in substantially the manner specified in the Offering
Circular under the caption "Use of Proceeds."
(j) The Bank will not sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in the
Securities Act) that would be integrated with the sale of the Securities to the
Initial Purchasers in a manner that would require the registration of any such
sale of the Securities under the Securities Act.
(k) Neither the Bank, nor any of its Affiliates, nor any
person acting on its or their behalf will, directly or indirectly, make offers
or sales of any security, or solicit offers to buy any security, under
circumstances that would require the registration of the Securities under the
Act.
(l) Neither the Bank, nor any of its Affiliates, nor any
person acting on its or their behalf will engage in any form of general
solicitation or general advertising within the meaning
13
of Rule 502(c) of the Securities Act in connection with any solicitation of
offers to purchase the Securities.
(m) Until the expiration of two years after the original
issuance of the Securities, the Bank will not, and will cause its Affiliates not
to, resell any Securities which are "restricted securities" (as such term is
defined under Rule 144(a)(3) under the Securities Act), whether as beneficial
owner or otherwise (except as agent acting as a securities broker on behalf of
and for the account of customers in the ordinary course of business in
unsolicited broker's transactions).
SECTION 6. Payment of Expenses. The Bank will pay or bear all
costs and expenses incident to the performance of its obligations under this
Agreement, including (a) the preparation, printing and filing of the Offering
Circular and any amendments and supplements thereto, and the cost of furnishing
copies thereof to the Initial Purchasers, (b) the preparation, printing and
distribution of this Agreement, the FPAA and the Securities, (c) the issuance
and delivery of the Securities to the Initial Purchasers, (d) the fees and
disbursements of the Bank's counsel and accountants, (e) the fees and
disbursements of counsel to the Initial Purchasers, such counsel fees not to
exceed $75,000, (f) the qualification of the Securities under the applicable
securities laws in accordance with Section 5(e) hereof, including filing fees
and fees and disbursements of counsel for the Initial Purchasers in connection
with such qualification and the Blue Sky survey and any legal investment survey,
and (g) the fees and expenses of the Fiscal and Paying Agent and the fees and
disbursements of counsel for the Fiscal and Paying Agent.
If this Agreement is terminated by the Initial Purchasers in
accordance with the provisions of Section 7 or Section 11(a)(i) hereof, the Bank
shall reimburse the Initial Purchasers for all of its out-of-pocket expenses,
including the fees and disbursements of counsel for the Initial Purchasers not
to exceed $75,000.
SECTION 7. Conditions of Initial Purchaser's Obligations. The
obligations of the Initial Purchasers in connection with the solicitation and
placement of the Securities hereunder are subject to the accuracy of the
representations and warranties of the Bank contained herein at and as of the
date hereof and the Settlement Date, to the accuracy of the representations and
warranties of the Corporation contained in the letter agreement, dated the date
hereof (the "PARENT AGREEMENT"), among the Corporation and the Initial
Purchasers at and as of the date hereof and the Settlement Date, to the accuracy
of the statements contained in certificates of any officer of the Bank or the
Corporation pursuant to the provisions hereof or of the Parent Agreement, to the
performance by the Bank in all material respects of its obligations hereunder,
to the performance by the Corporation in all material respects of its
obligations under the Parent Agreement, and to the following further conditions:
(a) The Offering Circular as amended or supplemented and the
offering of the Securities shall not be subject to any proceeding by any federal
bank or securities regulatory authority, which in the reasonable opinion of
▇▇▇▇▇▇ Brothers Inc., on behalf of the Initial Purchasers, would impair the
offering of the Securities.
(b) At the Settlement Date, the Initial Purchasers, shall have
received signed opinions of ▇▇▇▇▇▇▇ & ▇▇▇▇▇, L.L.P., counsel to the Bank and the
Corporation, and ▇▇▇▇▇
14
Liddell & ▇▇▇▇ LLP, special counsel to the Bank and the Corporation, dated as of
the Settlement Date, in substantially the form attached hereto as Exhibits A and
B.
(c) ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the Initial
Purchasers, shall have furnished to the Initial Purchasers its favorable opinion
dated as of the Settlement Date, responsive to the requirements with respect to
such matters as the Initial Purchasers may require. In giving such opinion, such
counsel may rely, as to all matters governed by the laws of jurisdictions other
than the law of the State of New York and the federal law of the United States,
upon the opinions of counsel satisfactory to Initial Purchasers.
(d) At the Settlement Date, there shall not have been since
the Bank's Consolidated Report of Condition and Income on Federal Financial
Institutions Examination Council Form 041, for the year ended December 31, 2002,
any material adverse change in the condition (financial or otherwise) or in the
earnings, business affairs or business prospects of the Bank and its
subsidiaries, considered as one enterprise, whether or not arising in the
ordinary course of business, and the Initial Purchasers shall have received a
certificate of the Chairman, President, Chief Executive Officer or any Executive
Vice President or person holding a functional title of equivalent rank, and the
chief financial or chief accounting officer of the Bank, dated as of the
Settlement Date, to the effect that (i) there has been no such material adverse
change, (ii) the representations and warranties of the Bank contained in Section
2 hereof are true and correct with the same force and effect as though expressly
made at and as of the Settlement Date and (iii) the Bank has complied with all
agreements and satisfied all conditions on its part to be complied with or
satisfied at or prior to the Settlement Date. At the Settlement Date, the
Initial Purchasers shall have received the certificate required to be delivered
to the Initial Purchasers pursuant to Section 2(b)(ii) of the Parent Agreement.
(e) On the date hereof and at the Settlement Date, Deloitte &
Touche LLP, the independent accountants of the Corporation who have audited the
financial statements and schedules of the Corporation included or incorporated
by reference in the Offering Circular, as amended or supplemented, shall have
furnished to the Initial Purchasers a letter or letters dated such dates, as to
such matters relating to the Corporation and the Bank as the Initial Purchasers
may request and in form and substance satisfactory to the Initial Purchasers.
(f) Between the date hereof and the Settlement Date, (i) no
downgrading shall have occurred in the rating accorded the Bank's or the
Corporation's debt securities or preferred stock by any "nationally recognized
statistical rating organization," as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Securities Act, and (ii) no such
organization shall have given any notice of any intended or potential
downgrading or of any surveillance or review, with possible negative
implications, of its rating of any of the Bank's or the Corporation's debt
securities or preferred stock.
(g) At the Settlement Date, counsel for the Initial Purchasers
shall have been furnished with all such documents, certificates and opinions as
they may require for the purpose of enabling them to pass upon the issuance,
sale and delivery of the Securities as herein contemplated and related
proceedings, or in order to evidence the accuracy and completeness of any of the
representations, warranties or statements, the performance of any of the
covenants, or the fulfillment of any of the conditions, contained herein or in
the Parent Agreement; and all
15
proceedings taken by the Bank at or prior to the Settlement Date in connection
with the authorization, issuance, sale and delivery of the Securities as herein
contemplated shall be satisfactory in form and substance to the Initial
Purchasers and counsel for the Initial Purchasers.
(h) No order shall have been issued and be continuing by any
federal banking or securities regulatory authority in respect of the Offering
Circular or the offering of the Securities which would interfere with the
offering of the Securities and no proceedings for that purpose shall have been
instituted and be continuing or, to the knowledge of the Bank or the Initial
Purchasers, shall be contemplated by any such authority.
(i) At the Settlement Date, the Initial Purchasers shall have
been furnished with a certificate of the chief financial or chief accounting
officer of the Bank identifying the "significant subsidiaries" of the Bank,
based upon the criteria contained in Section 1-02(w) (applied on an annualized
basis with respect to the net income of the Bank and its subsidiaries for the
year ended December 31, 2002) of Regulation S-X under the Securities Act.
If any condition specified in this Section 7 shall not have
been fulfilled when and as required to be fulfilled by this Agreement, this
Agreement may be terminated by ▇▇▇▇▇▇ Brothers Inc., on behalf of the Initial
Purchasers, by notice to the Bank at any time at or prior to Settlement Date,
and such termination shall be without liability of any party to any other party
except as provided in Section 6 hereof. Notwithstanding any such termination,
the provisions of Sections 8, 9 and 10 shall remain in effect.
SECTION 8. Indemnification. (a) The Bank agrees to indemnify
and hold harmless each of the Initial Purchasers, their respective directors and
each person, if any, who controls such Initial Purchaser within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of an untrue statement or
alleged untrue statement of a material fact contained in any
preliminary Offering Circular (or amendment or supplement thereto) or
the Offering Circular (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission; provided that (subject to
Section 8(d) below) any such settlement is effected with the written
consent of the Bank; and
(iii) against any and all expense whatsoever (including
fees and disbursements of counsel chosen by the Initial Purchaser), as
incurred, reasonably incurred in investigating, preparing or defending
against any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever
16
based upon any such untrue statement or omission, or any such alleged
untrue statement or omission, to the extent that any such expense is
not paid under subparagraph (i) or (ii) above;
provided, however, that this indemnity agreement does not apply (i) to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Bank by ▇▇▇▇▇▇
Brothers Inc., on behalf of the Initial Purchasers, expressly for use in the
Offering Circular (or any amendment or supplement thereto) or (ii) to any
Initial Purchasers in connection with any preliminary Offering Circular to the
extent that any such loss, claim, damage or liability of such Initial Purchasers
results solely from the fact that such Initial Purchasers sold Securities to a
person to whom it is established that there was not sent or given, at or prior
to the written confirmation of such sale, a copy of the Offering Circular
(excluding documents incorporated by reference), if the Bank has previously
furnished to the Initial Purchasers, the copies thereof theretofore requested by
the Initial Purchasers, the Initial Purchasers had sufficient time to distribute
such Offering Circular, and the loss, claim, damage or liability of such Initial
Purchasers results from an untrue statement or omission of a material fact
contained in a preliminary Offering Circular that was corrected in any final
Offering Circular.
(b) The Initial Purchasers, severally and not jointly, agree
to indemnify and hold harmless the Bank, its directors and each person, if any,
who controls the Bank within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, against any and all loss, liability, claim,
damage and expense described in the indemnity contained in Section 8(a), as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Offering Circular (or any amendment
or supplement thereto) in reliance upon and in conformity with written
information furnished to the Bank by ▇▇▇▇▇▇ Brothers Inc., on behalf of the
Initial Purchasers, expressly for use in the Offering Circular (or any amendment
or supplement thereto).
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve it from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 8(a) above,
counsel to the indemnified parties shall be selected by the Initial Purchasers,
and, in the case of parties indemnified pursuant to Section 8(b) above, counsel
to the indemnified parties shall be selected by the Bank. An indemnifying party
may participate at its own expense in the defense of such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying party or parties be liable for the fees and
expenses of more than one counsel (in addition to any local counsel) separate
from its or their own counsel for all indemnified parties in connection with any
one action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances. No indemnifying
party shall, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental
17
agency or body, commenced or threatened, or any claim whatsoever in respect of
which indemnification or contribution could be sought under this Section 8 or
Section 9 hereof (whether or not the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for the reasonable fees and expenses of counsel,
such indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 8(a)(ii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
SECTION 9. Contribution. If the indemnification provided for
in Section 8 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then the Bank on the one hand, and each
of the Initial Purchasers, on the other, shall contribute to the aggregate
amount of such losses, liabilities, claims, damages and expenses of the nature
contemplated by said indemnification incurred by the Bank and the Initial
Purchasers, (i) in such proportion as shall be appropriate to reflect the
relative benefit received by such Initial Purchaser, as represented by the
proportion that the total commissions received by such Initial Purchaser bears
to the total gross proceeds from the placement of the Securities as set forth in
the Offering Circular, and the Bank shall be responsible for the balance, or
(ii) if the allocation provided by clause (i) 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 Bank
on the one hand and of such Initial Purchaser on the other hand in connection
with the statements or omissions which resulted in such losses, liabilities,
claims, damages or expenses, as well as any other relevant equitable
considerations.
The relative fault of the Bank on the one hand and each
Initial Purchaser on the other hand shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Bank or by such Initial Purchaser and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Bank and the Initial Purchasers agree that it would not be
just and equitable if contribution pursuant to this Section 9 were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 9. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 9 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in
18
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 9, each Initial
Purchaser shall not be required to contribute any amount in excess of the
commission applicable to the Securities sold by such Initial Purchaser
hereunder.
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.
For purposes of this Section 9, each person, if any, who
controls an Initial Purchasers within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as such Initial Purchaser, and each director of the Bank and each
person, if any, who controls the Bank within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Bank. The Initial Purchasers' respective obligations to
contribute pursuant to this Section 9 are several in proportion to the principal
amount of Securities purchased by each Initial Purchaser.
SECTION 10. Representations, Warranties and Agreements to
Survive Delivery. All representations, warranties, indemnities, agreements and
other statements of the Bank or its officers and the Initial Purchasers set
forth in or made pursuant to this Agreement shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of the
Bank or the Initial Purchasers or controlling person and shall survive delivery
of the Securities to the Initial Purchasers and payment therefor.
SECTION 11. Termination of Agreement.
(a) The Initial Purchasers may terminate this Agreement,
immediately upon notice to the Bank, at any time at or prior to the Settlement
Date (i) if there shall have been, since the date of this Agreement or since the
respective dates as of which information is given in the Offering Circular
(exclusive of amendments or supplements after the date hereof), any material
adverse change in the condition (financial or otherwise), earnings, business
affairs or business prospects of either the Bank or the Corporation and its
subsidiaries, considered as one enterprise, whether or not arising in the
ordinary course of business or (ii) if there has occurred a material disruption
in commercial banking or securities settlement or clearance services in the
United States or (iii) if there has occurred any material adverse change in the
financial markets in the United States or, the United States shall have become
engaged in hostilities or there shall have been an escalation in hostilities
involving the United States or, there shall have been a declaration of national
emergency or war by the United States or other national or international
calamity or crisis (including, without limitation, an act of terrorism) or any
change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the ▇▇▇▇▇▇ Brothers,
Inc., impracticable to market the Securities or to enforce contracts for the
sale of the Securities or (iv) if trading in any securities of the Corporation
has been suspended by the Commission or the NASD, or if trading generally on the
Nasdaq, New York Stock Exchange
19
or the American Stock Exchange or in the over-the-counter market has been
suspended, or minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities have been required, by such exchanges
or by order of the Commission, any exchange on which securities are listed or
any other governmental authority with appropriate jurisdiction over such matters
or (v) if a banking moratorium has been declared by either federal, New York, or
Texas authorities.
(b) If this Agreement is terminated pursuant to this Section
11, such termination shall be without liability of any party to any other party,
except to the extent provided in Section 6. Notwithstanding any such
termination, the provisions of Sections 2, 8, 9 and 10 shall remain in effect.
SECTION 12. Notices. All notices and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given if delivered, mailed or transmitted by any standard form of
telecommunication. Notices to the Initial Purchasers shall be directed to ▇▇▇▇▇▇
Brothers Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇: Debt
Capital Markets, Financial Institutions Group, with a copy to the general
counsel and to ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ - 4th Floor, attention: Debt Capital Markets; and notices to the Bank
shall be directed to it at Sterling Bank, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chief Financial Officer.
SECTION 13. Parties. This Agreement is made solely for the
benefit of the Initial Purchasers, the Bank and, to the extent expressed, any
person who controls the Bank or the Initial Purchasers within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, and the
directors of the Initial Purchasers and the Bank, and their respective
executors, administrators, successors and assigns and, no other person shall
acquire or have any right under or by virtue of this Agreement. The term
"successors and assigns" shall not include any purchaser through the Initial
Purchasers of the Securities.
SECTION 14. Governing Law and Time. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
New York applicable to agreements made and to be performed in said State. Except
as otherwise set forth herein, specified times of day refer to New York City
time.
SECTION 15. Counterparts. This Agreement may be executed in
one or more counterparts and when a counterpart has been executed by each party,
all such counterparts taken together shall constitute one and the same
agreement.
SECTION 16. Effect of Headings. The Section headings herein
are for convenience only and shall not affect the construction hereof.
20
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Bank a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Initial Purchasers and the Bank in accordance with its
terms.
Very truly yours,
STERLING BANK
By: /s/ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇ BROTHERS INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Senior Vice President
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇
Title: Managing Director
