EXHIBIT 1.1
4,375,000 SHARES
DELTA FINANCIAL CORPORATION
COMMON STOCK
UNDERWRITING AGREEMENT
DATED JULY 20, 2004
JMP SECURITIES LLC
SUNTRUST CAPITAL MARKETS, INC.
XXXX CAPITAL PARTNERS, LLC
UNDERWRITING AGREEMENT
July 20, 2004
JMP Securities LLC
SunTrust Capital Markets, Inc.
Xxxx Capital Partners, LLC
As Representatives of the several Underwriters
c/o JMP Securities LLC
Xxx Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
INTRODUCTORY. Delta Financial Corporation, a Delaware corporation (the
"COMPANY"), proposes to issue and sell to the several underwriters named in
SCHEDULE A (the "List of the Underwriters") attached hereto (collectively, the
"UNDERWRITERS") an aggregate of 3,137,597 shares of its common stock, par value
$0.01 per share (the "COMMON Stock"); and the stockholders of the Company named
in SCHEDULE B (the "List of the Selling Stockholders") attached hereto
(collectively, the "SELLING STOCKHOLDERS") severally propose to sell to the
Underwriters an aggregate of 1,237,403 shares of Common Stock in accordance with
the terms and conditions of this Underwriting Agreement (this "AGREEMENT"). The
3,137,597 shares of Common Stock to be sold by the Company and the 1,237,403
shares of Common Stock to be sold by the Selling Stockholders are collectively
called the "FIRM OFFERED SHARES." In addition, two of the Selling Stockholders
have severally granted to the Underwriters an option to purchase up to an
additional 656,250 shares of Common Stock, each Selling Stockholder selling up
to the amount set forth opposite such Selling Stockholder's name in SCHEDULE B
attached hereto, all as provided in Section 2 (the "Purchase, Sale, and Delivery
of the Offered Shares"). The additional 656,250 shares to be sold by the Selling
Stockholders pursuant to such option are collectively called the "OPTIONAL
OFFERED SHARES." The Firm Offered Shares and, if and to the extent such option
is exercised, the Optional Common Shares are collectively called the "OFFERED
SHARES." JMP Securities LLC ("JMP"), SunTrust Capital Markets, Inc. and Xxxx
Capital Partners, LLC have agreed to act as representatives of the several
Underwriters (in such capacity, the "REPRESENTATIVES") in connection with the
offering and sale of the Offered Shares.
The Company has prepared and filed with the Securities and Exchange
Commission (the "COMMISSION") a registration statement on Form S-2 (File No.
333-114896), which contains a form of prospectus to be used in connection with
the public offering and sale of the Offered Shares. Such registration statement,
as amended, including the financial statements, exhibits, and schedules thereto,
in the form in which it was declared effective by the Commission under the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (collectively, the "SECURITIES ACT"), including all documents
incorporated or deemed to be incorporated by reference therein and any
information deemed to be a part thereof at the time of effectiveness pursuant to
Rule 430A or Rule 434 under the Securities Act or the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder
(collectively, the "EXCHANGE ACT") is called the "REGISTRATION STATEMENT." Any
registration statement filed by the Company pursuant to Rule 462(b) under the
Securities Act is called the "RULE 462(b) REGISTRATION STATEMENT," and from and
after the date and time of filing of the Rule 462(b) Registration Statement, the
term "Registration Statement" shall include the Rule 462(b) Registration
Statement. Such prospectus, in the form first used by the Underwriters to
confirm sales of the Offered Shares, is called the "PROSPECTUS"; PROVIDED,
HOWEVER, if the Company has, with the consent of JMP, elected to rely upon Rule
434 under the Securities Act, the term "PROSPECTUS" shall include the Company's
prospectus subject to completion dated July 7, 2004 (the "PRELIMINARY
PROSPECTUS"), together with the applicable term sheet (the "TERM SHEET")
prepared and filed by the Company with the Commission under Rules 434 and 424(b)
under the Securities Act and all references in this Agreement to the date of the
Prospectus shall mean the date of the Term Sheet. All references in this
Agreement to the Registration Statement, the Rule 462(b) Registration Statement,
a preliminary prospectus, the Prospectus or the Term Sheet, or any amendments or
supplements to any of the foregoing, shall include any copy thereof filed with
the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
System ("XXXXX"). All references in this Agreement to financial statements and
schedules and other information which is "contained," "included," or "stated" in
the Registration Statement or the Prospectus (and all other references of like
import) shall be deemed to mean and include all such financial statements and
schedules and other information which is or is deemed to be incorporated by
reference in the Registration Statement or the Prospectus, as the case may be;
and all references in this Agreement to amendments or supplements to the
Registration Statement or the Prospectus shall be deemed to mean and include the
filing of any document under the Exchange Act which is or is deemed to be
incorporated by reference in the Registration Statement or the Prospectus, as
the case may be.
The Company and each of the Selling Stockholders hereby confirm their
respective agreements with the Underwriters as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES.
A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents, warrants, and covenants to each Underwriter as follows:
(a) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The
Registration Statement and any Rule 462(b) Registration Statement have
been declared effective by the Commission under the Securities Act. The
Company has complied to the Commission's satisfaction with all requests
of the Commission for additional or supplemental information. No stop
order suspending the effectiveness of the Registration Statement or any
Rule 462(b) Registration Statement is in effect and no proceedings for
such purpose have been instituted or are pending or, to the knowledge
of the Company, are contemplated or threatened by the Commission.
Each preliminary prospectus and the Prospectus, when filed,
complied in all material respects with the Securities Act and, if filed
by electronic transmission pursuant to XXXXX (except as may be
permitted by Regulation S-T under the Securities Act), was identical to
the copy thereof delivered to the Underwriters for use in connection
with the offer and sale of the Offered Shares. Each of the Registration
Statement, any Rule 462(b) Registration Statement and any
post-effective amendment thereto, at the time it became effective and
at all subsequent times, complied and will comply in all material
respects with the Securities Act and did not and will not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. Each preliminary prospectus, as of its date and
at all subsequent times, and the Prospectus, as amended or
supplemented, as of its date and at all subsequent times, did not and
will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading. The representations and warranties set
forth in the two immediately preceding sentences do not apply to
statements in or omissions from the Registration Statement, any Rule
462(b) Registration Statement, or any post-effective amendment thereto,
the preliminary prospectus, the Prospectus,
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or any amendments or supplements thereto, made in reliance upon and in
conformity with information relating to any Underwriter furnished to the
Company in writing by the Representatives expressly for use therein.
There are no contracts or other documents required to be described in
the Prospectus or to be filed as exhibits to the Registration Statement
which have not been described or filed as required.
(b) OFFERING MATERIALS FURNISHED TO THE UNDERWRITERS. The
Company has delivered to each of the Representatives three (3) complete
manually signed copies of the Registration Statement and of each consent
and certificate of experts filed as a part thereof, conformed copies of
the Registration Statement (without exhibits), preliminary prospectuses,
and the Prospectus, as amended or supplemented, in such quantities and
at such places as the Representatives have requested for each of the
Underwriters.
(c) DISTRIBUTION OF OFFERING MATERIAL BY THE COMPANY. The
Company has not distributed and will not distribute, prior to the later
of the Second Closing Date (as hereinafter defined) or the completion of
the Underwriters' distribution of the Offered Shares, any offering
material in connection with the offering and sale of the Offered Shares
other than a preliminary prospectus, the Prospectus, or the Registration
Statement.
(d) THE UNDERWRITING AGREEMENT. This Agreement has been duly
authorized, executed, and delivered by, and is a valid and binding
agreement of, the Company, enforceable in accordance with its terms,
except as (i) rights to indemnification hereunder may be limited by
applicable law, and (ii) the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, or other similar
laws relating to or affecting the rights and remedies of creditors or by
general equitable principles.
(e) AUTHORIZATION OF THE OFFERED SHARES TO BE SOLD BY THE
COMPANY. The Offered Shares to be purchased by the Underwriters from the
Company have been duly authorized for issuance and sale pursuant to this
Agreement and, when issued and delivered by the Company pursuant to this
Agreement, will be validly issued, fully paid, and non-assessable.
(f) AUTHORIZATION OF THE OFFERED SHARES TO BE SOLD BY THE
SELLING STOCKHOLDERS. The Offered Shares to be purchased by the
Underwriters from the Selling Stockholders (other than the Offered
Shares to be purchased by the Underwriters from Messrs. Xxxxxxx Xxxxx
and Xxxxxxx X. Xxxxxxxx), when issued, were validly issued, fully paid,
and non-assessable. The Offered Shares to be purchased by the
Underwriters from Messrs. Xxxxxxx Xxxxx and Xxxxxxx X. Xxxxxxxx, when
issued, will be validly issued, fully paid, and non-assessable.
(g) NO APPLICABLE REGISTRATION OR OTHER SIMILAR RIGHTS. There
are no persons with registration or other similar rights to have any
equity or debt securities registered for sale under the Registration
Statement or included in the offering contemplated by this Agreement,
other than the Selling Stockholders with respect to the Offered Shares
included in the Registration Statement, except for such rights as have
been duly waived or satisfied through the delivery of proper notice,
with a copy to the Underwriters.
(h) NO MATERIAL ADVERSE CHANGE. Subsequent to the respective
dates as of which information is given in the Prospectus: (i) there has
been no material adverse change, or any development that could
reasonably be expected to result in a material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations, whether or not arising from transactions in the ordinary
course of business, of the Company and its subsidiaries, considered as
one entity (any such change is called a "MATERIAL ADVERSE CHANGE"); (ii)
the
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Company and its subsidiaries, considered as one entity, have not
incurred any material liability or obligation, indirect, direct, or
contingent, not in the ordinary course of business nor entered into any
material transaction or agreement not in the ordinary course of
business; and (iii) there has been no dividend or distribution of any
kind declared, paid, or made by the Company or, except for dividends
paid to the Company or its other subsidiaries, any of its subsidiaries
on any class of capital stock, or repurchase or redemption by the
Company or any of its subsidiaries of any class of capital stock.
(i) INDEPENDENT ACCOUNTANTS. KPMG LLP, who have expressed
their opinion with respect to the financial statements (which term as
used in this Agreement includes the related notes thereto) and
supporting schedules filed with the Commission as a part of the
Registration Statement and included in the Prospectus, are independent
public or certified public accountants as required by the Securities Act
and the Exchange Act.
(j) PREPARATION OF THE FINANCIAL STATEMENTS. The financial
statements filed with the Commission as a part of the Registration
Statement and included in the Prospectus present fairly the consolidated
financial position of the Company and its subsidiaries as of and at the
dates indicated and the results of their operations and cash flows for
the periods specified. Such financial statements have been prepared in
conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved, except as
may be expressly stated in the related notes thereto. No other financial
statements or supporting schedules are required to be included in the
Registration Statement. The financial data set forth in the Prospectus
under the captions "Prospectus Summary--Summary Consolidated Financial
Data," "Selected Financial Data," and "Capitalization" fairly present
the information set forth therein on a basis consistent with that of the
audited financial statements contained in the Registration Statement.
(k) INCORPORATION AND GOOD STANDING OF THE COMPANY AND ITS
SUBSIDIARIES. Each of the Company and its subsidiaries has been duly
incorporated or formed and is validly existing as a corporation, limited
liability company, or trust, as applicable, in good standing under the
laws of the jurisdiction of its incorporation or formation and has
corporate power and authority to own, lease, and operate its properties
and to conduct its business as described in the Prospectus and, in the
case of the Company, to enter into and perform its obligations under
this Agreement. Each of the Company and each subsidiary is duly
qualified as a foreign corporation, limited liability company, or trust,
as applicable, 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 for such jurisdictions where the failure to so qualify or to be
in good standing would not, individually or in the aggregate, result in
a Material Adverse Change. All of the issued and outstanding capital
stock of each subsidiary has been duly authorized and validly issued, is
fully paid and non-assessable and is owned by the Company, directly or
through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, or claim.
(l) SUBSIDIARIES OF THE COMPANY. The Company does not own or
control, directly or indirectly, any corporation, limited liability
company, trust, association, or other entity other than the subsidiaries
listed in Exhibit 21.1 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2003 and the subsidiaries listed on
SCHEDULE C (the "List of the Additional Subsidiaries") attached hereto.
(m) NO PROHIBITION ON SUBSIDIARIES FROM PAYING DIVIDENDS OR
MAKING OTHER DISTRIBUTIONS. No subsidiary of the Company is currently
prohibited, directly or indirectly, from
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paying any dividends to the Company, from making any other distribution
on such subsidiary's capital stock, from repaying to the Company any
loans or advances to such subsidiary from the Company or from
transferring any of such subsidiary's property or assets to the Company
or any other subsidiary of the Company, except as described in or
contemplated by the Prospectus.
(n) CAPITALIZATION AND OTHER CAPITAL STOCK MATTERS. The
authorized, issued, and outstanding capital stock of the Company is as
set forth in the Prospectus under the caption "Capitalization" (other
than for subsequent issuances, if any, pursuant to employee benefit
plans described in the Prospectus or upon exercise of outstanding
options or warrants described in the Prospectus). The Common Stock
(including the Offered Shares) conforms in all material respects to the
description thereof contained in the Prospectus. All of the issued and
outstanding shares of Common Stock (including the shares of Common Stock
owned by Selling Stockholders) have been duly authorized and validly
issued, are fully paid and non-assessable and have been issued in
compliance with federal and state securities laws. None of the
outstanding shares of Common Stock were issued in violation of any
preemptive rights, rights of first refusal, or other similar rights to
subscribe for or purchase securities of the Company. There are no
authorized or outstanding options, warrants, preemptive rights, rights
of first refusal, or other rights to purchase, or equity or debt
securities convertible into, exchangeable or exercisable for, any
capital stock of the Company or any of its subsidiaries other than those
accurately described in the Prospectus. The description of the Company's
stock option, stock bonus, and other stock plans or arrangements, and
the options or other rights granted thereunder, set forth in the
Prospectus accurately and fairly presents the information required to be
shown with respect to such plans, arrangements, options, and rights.
(o) LOCK-UP AGREEMENTS. Each director and executive officer of
the Company and each Selling Stockholder has agreed to sign an agreement
(the "LOCK-UP AGREEMENT") substantially in the form attached hereto as
EXHIBIT B (the "Form of Lock-up Agreement"). The Company has provided to
counsel for the Underwriters true, accurate, and complete copies of all
of the Lock-up Agreements presently in effect or effected hereby. The
Company hereby represents and warrants that it will not release any of
its executive officers, directors, or other stockholders from any
Lock-up Agreements currently existing or hereafter effected without the
prior written consent of JMP.
(p) STOCK EXCHANGE LISTING. The Common Stock (including the
Offered Shares) is registered pursuant to Section 12(b) of the Exchange
Act, and is listed on the American Stock Exchange (the "AMEX"), and the
Company has taken no action designed to, or likely to have the effect
of, terminating the registration of the Common Stock under the Exchange
Act or delisting the Common Stock from the AMEX nor has the Company
received any notification that the Commission or the AMEX is
contemplating terminating such registration or listing.
(q) NON-CONTRAVENTION OF EXISTING INSTRUMENTS; NO FURTHER
AUTHORIZATIONS OR APPROVALS REQUIRED. Neither the Company nor any of its
subsidiaries is in violation of its charter, by-laws or other
organizational documents or is in default (or, with the giving of notice
or lapse of time, would be in default) ("DEFAULT") under any indenture,
mortgage, loan or credit agreement, note, contract, franchise, lease or
other instrument to which the Company or any of its subsidiaries is a
party or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any of its subsidiaries is subject,
including, without limitation, any agreements pertaining to, relating to
or arising in connection with, any of the securitization transactions of
the Company or any of its subsidiaries (each, an "EXISTING INSTRUMENT"),
except for such Defaults as would not, individually or in the aggregate,
result in a Material Adverse Change. The Company and its subsidiaries
are in compliance with all statutes,
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laws, rules, regulations, judgments, orders and decrees of all courts,
regulatory bodies, administrative agencies, governmental bodies,
arbitrators or other authorities having jurisdiction over the Company or
such subsidiaries or any of their respective properties, as applicable,
including, without limitation, the provisions of the Xxxxxxxx-Xxxxx Act
of 2002, as amended ("XXXXXXXX-XXXXX ACT") and the rules and regulations
of the National Association of Securities Dealers, Inc. ("NASD") and the
AMEX, except where such non-compliance would not, individually or in the
aggregate, result in a Material Adverse Change. The Company's execution,
delivery, and performance of this Agreement and consummation of the
transactions contemplated hereby and by the Prospectus (i) have been
duly authorized by all necessary corporate action and will not result in
any violation of the provisions of the charter or by-laws of the Company
or any subsidiary, (ii) will not conflict with or constitute a breach
of, or Default under, or result in the creation or imposition of any
lien, charge, or encumbrance upon any property or assets of the Company
or any of its subsidiaries pursuant to, or require the consent of any
other party to, any Existing Instrument, except for such conflicts,
breaches, Defaults, liens, charges, or encumbrances as would not,
individually or in the aggregate, result in a Material Adverse Change,
and (iii) will not result in any violation of any statute, law, rule,
regulation, judgment, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority
having jurisdiction over the Company or such subsidiary or any of its
properties, as applicable. No consent, approval, authorization or other
order of, or registration or filing with, any court or other
governmental or regulatory authority or agency, is required for the
Company's execution, delivery, and performance of this Agreement and
consummation of the transactions contemplated hereby and by the
Prospectus, except such as have been obtained or made by the Company and
are in full force and effect under the Securities Act, applicable state
securities or blue sky laws and from the NASD.
(r) NO MATERIAL ACTIONS OR PROCEEDINGS. Except as otherwise
disclosed in the Prospectus, there is no legal or governmental action,
suit or proceeding pending or, to the knowledge of the Company,
threatened (i) against or affecting the Company or any of its
subsidiaries, (ii) which has as the subject thereof any officer or
director of, or property owned or leased by, the Company or any of its
subsidiaries or (iii) relating to environmental or discrimination
matters, which in the case of clauses (i), (ii) or (iii) could
reasonably be expected to result in a Material Adverse Change or
adversely affect the consummation of the transactions contemplated
hereby.
(s) LABOR MATTERS. No material labor dispute with the
employees of the Company or any of its subsidiaries exists or, to the
knowledge of the Company, is threatened or imminent. The Company is not
aware of any existing or imminent labor disturbance by the employees of
any of its third-party contractors, that might be expected to result in
a Material Adverse Change.
(t) INTELLECTUAL PROPERTY RIGHTS. The Company and its
subsidiaries own or possess sufficient trademarks, trade names, patent
rights, patents, know-how, collaborative research agreements,
inventions, servicemarks, copyrights, licenses, approvals, trade
secrets, and other similar rights (collectively, "INTELLECTUAL PROPERTY
RIGHTS") necessary to conduct their businesses as now conducted, as
proposed to be conducted, as described in the Registration Statement,
the Prospectus, and any respective amendments or supplements thereto.
The expiration of any of such Intellectual Property Rights would not be
reasonably expected to result in a Material Adverse Change. Neither the
Company nor any of its subsidiaries has received any notice of, and has
no knowledge of, any infringement of or conflict with asserted rights of
the Company by others with respect to any Intellectual Property Rights,
other than with respect to any infringement that would not reasonably be
expected to result in a Material Adverse Change. There is no claim being
made against the Company or any of its subsidiaries regarding any kind
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of Intellectual Property Right. The Company and its subsidiaries do not,
in the conduct of their business as now or proposed to be conducted as
described in the Prospectus, infringe or conflict with any right or
patent of any third party, or any discovery, invention, product, or
process which is the subject of a patent application filed by any third
party, known to the Company or any of its subsidiaries, which such
infringement or conflict is reasonably likely to result in a Material
Adverse Change.
(u) ALL NECESSARY PERMITS, ETC. The Company and each
subsidiary possess such valid and current certificates, authorizations,
or permits issued by the appropriate state, federal, or foreign
regulatory agencies or bodies necessary to conduct their respective
businesses except to the extent that the failure to possess such
certificates, authorizations or permits would not result in a Material
Adverse Change, and neither the Company nor any subsidiary has received
any notice of proceedings relating to the revocation or modification of,
or non-compliance with, any such certificate, authorization or permit,
except to the extent that such revocation, modification or
non-compliance, individually or in the aggregate, would not result in a
Material Adverse Change.
(v) TITLE TO PROPERTIES. The Company and each of its
subsidiaries has good and marketable title to all the properties and
assets reflected as owned in the financial statements referred to in
Section 1(A)(j) above (or elsewhere in the Prospectus), in each case
free and clear of any security interests, mortgages, liens,
encumbrances, equities, claims, and other defects except as described in
the Registration Statement. The real property, improvements, equipment,
and personal property held under lease by the Company or any subsidiary
are held under valid and enforceable leases, with such exceptions as are
not material and do not materially interfere with the use made or
proposed to be made of such real property, improvements, equipment, or
personal property by the Company or such subsidiary.
(w) TAX LAW COMPLIANCE. The Company and its subsidiaries have
filed all necessary federal, state, and foreign income and franchise tax
returns or have duly requested extensions thereof and have paid all
taxes required to be paid by any of them and, if due and payable, any
related or similar assessment, fine, or penalty levied against any of
them, except for any such tax, assessment, fine or penalty that is being
contested in good faith and by appropriate proceedings and for which
adequate reserves have been provided. The Company has made adequate
charges, accruals, and reserves in the applicable financial statements
referred to in Section 1(A)(j) above in respect of all federal, state,
and foreign income and franchise taxes for all periods as to which the
tax liability of the Company or any of its subsidiaries has not been
finally determined. The Company is not aware of any tax deficiency that
has been or might be asserted or threatened against the Company.
(x) NO TRANSFER TAXES OR OTHER FEES. There are no transfer
taxes or other similar fees or charges under Federal law or the laws of
any state, or any political subdivision thereof, required to be paid in
connection with the execution and delivery of this Agreement or the
issuance and sale by the Company and the Selling Stockholders of the
Offered Shares.
(y) COMPANY NOT AN "INVESTMENT COMPANY". The Company is not,
and after receipt of payment for the Offered Shares will not be, an
"investment company," or an entity "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as
amended, and the rules and regulations promulgated thereunder (the
"INVESTMENT COMPANY ACT").
(z) INSURANCE. Each of the Company and its subsidiaries are
insured by recognized, financially sound, and reputable institutions
with policies in such amounts and with such
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deductibles and covering such risks as are generally deemed adequate and
customary for their businesses including, but not limited to, policies
covering real and personal property owned or leased by the Company and
its subsidiaries against theft, damage, destruction, acts of vandalism,
earthquakes, general liability, and Directors' and Officers' liability.
The Company and each of its subsidiaries reasonably expect they will be
able, and will use their reasonable best efforts, (i) to renew its
existing insurance coverage as and when such policies expire, or (ii) to
obtain comparable coverage from similar institutions as may be necessary
or appropriate to conduct its business as now conducted and at a cost
that would not result in a Material Adverse Change. Neither of the
Company nor any subsidiary has been denied any insurance coverage which
it has sought or for which it has applied.
(aa) NO PRICE STABILIZATION OR MANIPULATION. The Company has
not taken and will not take, directly or indirectly, any action which
was designed to, or that might be expected to cause or result in,
stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Offered Shares. The Company has not
taken, directly or indirectly, any action that stabilized or manipulated
the price of any security of the Company.
(bb) RELATED PARTY TRANSACTIONS. There are no business
relationships or related-party transactions involving the Company or any
subsidiary or any other person required to be described in the
Prospectus which have not been described as required.
(cc) EXCHANGE ACT AND XXXXXXXX-XXXXX ACT COMPLIANCE. The
documents incorporated or deemed to be incorporated by reference in the
Prospectus, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the Exchange Act and the Xxxxxxxx-Xxxxx Act and, when
read together with the other information in the Prospectus, at the time
the Registration Statement and any amendments thereto become effective,
at the First Closing Date, and at the Second Closing Date, as the case
may be, will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
(dd) COMPANY'S ACCOUNTING SYSTEM. The Company and each of its
subsidiaries maintain a system of accounting controls sufficient to
provide reasonable assurances that (i) transactions are executed in
accordance with management's general or specific authorization, (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain
accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv)
the recorded accountability for assets is compared with existing assets
at reasonable intervals and appropriate action is taken with respect to
any differences.
(ee) NO UNLAWFUL CONTRIBUTIONS OR OTHER PAYMENTS. Neither the
Company nor any of its subsidiaries nor, to the knowledge of the
Company, any employee or agent of the Company or any subsidiary, has
made any contribution or other payment to any official of, or candidate
for, any federal, state, or foreign office in violation of any law or of
the character required to be disclosed in the Prospectus.
(ff) COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as would not,
individually or in the aggregate, result in a Material Adverse Change
(i) the Company and its subsidiaries are in compliance with all federal,
state, local, or foreign law or regulation relating to pollution or
protection of human health or the environment (including, without
limitation, ambient air, surface
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water, groundwater, land surface or subsurface strata) or wildlife,
including, without limitation, laws and regulations relating to
emissions, discharges, releases or threatened releases of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum, and petroleum products (collectively, the
"MATERIALS OF ENVIRONMENTAL CONCERN"), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of Materials of Environment Concern
(collectively, the "ENVIRONMENTAL LAWS"), which includes, but is not
limited to, compliance with any permits or other governmental
authorizations required for the operation of the business of the Company
or its subsidiaries under applicable Environmental Laws, or compliance
with the terms and conditions thereof, and neither the Company nor any
of its subsidiaries has received any written communication, whether from
a governmental authority, citizens group, employee, or otherwise, that
alleges that the Company or any of its subsidiaries is in violation of
any Environmental Law; (ii) there is no claim, action, or cause of
action filed with a court or governmental authority, no investigation
with respect to which the Company has received written notice, and no
written notice by any person or entity alleging potential liability for
investigatory costs, cleanup costs, governmental responses costs,
natural resources damages, property damages, personal injuries,
attorneys' fees, or penalties arising out of, based on or resulting from
the presence, or release into the environment, of any Material of
Environmental Concern at any location owned, leased or operated by the
Company or any of its subsidiaries, now or in the past (collectively,
the "ENVIRONMENTAL CLAIMS"), pending or threatened against the Company
or any of its subsidiaries or any person or entity whose liability for
any Environmental Claim the Company or any of its subsidiaries has
retained or assumed either contractually or by operation of law; and
(iii) there are no past or present actions, activities, circumstances,
conditions, events, or incidents, including, without limitation, the
release, emission, discharge, presence, or disposal of any Material of
Environmental Concern, that would reasonably be expected to result in a
violation of any Environmental Law or form the basis of a potential
Environmental Claim against the Company or any of its subsidiaries or
against any person or entity whose liability for any Environmental Claim
the Company or any of its subsidiaries has retained or assumed either
contractually or by operation of law. The Company is not currently aware
that it will be required to make future material capital expenditures to
comply with Environmental Laws.
(gg) ERISA COMPLIANCE. The Company and its subsidiaries and
any "employee benefit plan" (as defined under the Employee Retirement
Income Security Act of 1974, as amended, and the regulations and
published interpretations thereunder (collectively, "ERISA"))
established or maintained by the Company, its subsidiaries, or their
"ERISA AFFILIATES" (as hereinafter defined) are in compliance in all
material respects with ERISA. "ERISA Affiliate" means, with respect to
the Company or a subsidiary, any member of any group of organizations
described in Sections 414(b), (c), (m) or (o) of the Internal Revenue
Code of 1986, as amended, and the regulations and published
interpretations thereunder (collectively, the "CODE") of which the
Company or such subsidiary is a member. No "reportable event" (as
defined under ERISA) has occurred or is expected to occur with respect
to any "employee benefit plan" established or maintained by the Company,
its subsidiaries or any of their ERISA Affiliates. No "employee benefit
plan" established or maintained by the Company, its subsidiaries, or any
of their ERISA Affiliates, if such "employee benefit plan" were
terminated, would have any "amount of unfunded benefit liabilities" (as
defined under ERISA). None of the Company, its subsidiaries, or any of
their ERISA Affiliates has incurred or expects to incur any material
liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "employee benefit plan" or (ii) Sections 412, 4971,
4975, or 4980B of the Code. Each "employee benefit plan" established or
maintained by the Company, its subsidiaries, or any of their ERISA
Affiliates that is intended to be qualified under Section 401(a) of the
Code has been determined by the Internal Revenue
9
Service to be so qualified and nothing has occurred, whether by action
or failure to act, which would reasonably be expected to cause the loss
of such qualification.
(hh) CONDITIONS FOR USE OF FORM S-2. The Company has satisfied
the conditions for the use of Form S-2, as set forth in the general
instructions thereto, with respect to the Registration Statement.
(ii) COMMODITIES EXCHANGE ACT. The Company will not, and will
not permit any of its subsidiaries to, invest in futures contracts,
options on futures contracts or options on commodities unless such
entities are exempt from the registration requirements of the Commodity
Exchange Act, as amended, and the rules and regulations promulgated
thereunder (the "COMMODITY EXCHANGE ACT") or otherwise comply with the
Commodity Exchange Act.
(jj) TAXABLE MORTGAGE POOL. Neither the Company, any of its
subsidiaries nor any of their assets will be treated as a taxable
mortgage pool.
(kk) INVESTMENT AND RISK-ADJUSTED CAPITAL GUIDELINES. The
Company is, and at all times has been, in compliance with its investment
and risk-adjusted capital guidelines to the extent applicable.
(ll) OFF-BALANCE SHEET ARRANGEMENTS. There is no transaction,
arrangement or other relationship between the Company and/or any of its
subsidiaries and an unconsolidated or other off-balance sheet entity
that is required to be disclosed by the Company in its Commission
filings and is not so disclosed. There are no such transactions,
arrangements or other relationships with the Company or any of its
subsidiaries that may create contingencies or liabilities that are not
otherwise disclosed by the Company in its Commission filings.
(mm) DISCLOSURE CONTROLS AND PROCEDURES. The principal
executive and principal financial officers are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company
and have (i) designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under their
supervision, to ensure that material information relating to the
Company, including its consolidated subsidiaries, is made known to them
by others within those entities, particularly during the periods in
which the Annual Report on Form 10-K for the year ended December 31,
2003 and the Quarterly Report on Form 10-Q for the quarter ended March
31, 2004 that are incorporated by reference in the Prospectus were being
prepared, (ii) evaluated the effectiveness of the Company's disclosure
controls and procedures and presented in the Annual Report on Form 10-K
for the year ended December 31, 2003 and the Quarterly Report on Form
10-Q for the quarter ended March 31, 2004 that are incorporated by
reference in the Prospectus their conclusions about the effectiveness of
the disclosure controls and procedures as of the end of the applicable
periods based on such evaluation and (iii) disclosed in the Annual
Report on Form 10-K for the year ended December 31, 2003 and the
Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 that
are incorporated by reference in the Prospectus whether any change in
the Company's internal control over financial reporting that occurred
during the applicable periods that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting.
Any certificate signed by an officer of the Company
and delivered to the Representatives or to counsel for the Underwriters
in connection with this Agreement and the transactions contemplated
hereby shall be deemed to be a representation and warranty by the
Company to each Underwriter as to the matters set forth therein.
10
B. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS.
Each Selling Stockholder, severally and not on behalf of or with respect to the
Company or any other Selling Stockholder, represents, warrants and covenants to
each Underwriter as follows:
(a) THE UNDERWRITING AGREEMENT. This Agreement has been duly
authorized, executed, and delivered by or on behalf of such Selling
Stockholder and is a valid and binding agreement of such Selling
Stockholder, enforceable in accordance with its terms, except as rights
to indemnification hereunder may be limited by applicable law and except
as the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles.
(b) THE CUSTODY AGREEMENT AND THE POWER OF ATTORNEY. Each of
the (i) Custody Agreement signed by such Selling Stockholder and Mellon
Investor Services LLC, as custodian (the "CUSTODIAN"), relating to the
deposit of the Offered Shares to be sold by such Selling Stockholder
(the "CUSTODY AGREEMENT"), and (ii) Power of Attorney appointing certain
individuals named therein as such Selling Stockholder's
attorneys-in-fact (each, an "ATTORNEY-IN-FACT") to the extent set forth
therein relating to the transactions contemplated hereby and by the
Prospectus (the "POWER OF ATTORNEY"), of such Selling Stockholder has
been duly authorized, executed, and delivered by such Selling
Stockholder and is a valid and binding agreement of such Selling
Stockholder, enforceable in accordance with its terms, except as rights
to indemnification thereunder may be limited by applicable law and
except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium, or other similar laws relating
to or affecting the rights and remedies of creditors or by general
equitable principles. Each Selling Stockholder agrees that the Offered
Shares to be sold by such Selling Stockholder on deposit with the
Custodian are subject to the interests of the Underwriters, that the
arrangements made for such custody are to that extent irrevocable, and
that the obligations of such Selling Stockholder hereunder shall not be
terminated, except as provided in this Agreement or in the Custody
Agreement, by any act of the Selling Stockholder, by operation of law,
death, or incapacity of such Selling Stockholder or by the occurrence of
any other event. If such Selling Stockholder should die or become
incapacitated, or if any other unexpected event should occur, before the
delivery of the Offered Shares to be sold by such Selling Stockholder
hereunder, the certificates evidencing the Offered Shares to be sold by
such Selling Stockholder then on deposit with the Custodian shall be
delivered by the Custodian in accordance with the terms and conditions
of this Agreement as if such death, incapacity, or other unexpected
event had not occurred, regardless of whether or not the Custodian shall
have received notice thereof.
(c) TITLE TO AND DELIVERY OF THE OFFERED SHARES TO BE SOLD.
Such Selling Stockholder has, and on the First Closing Date and the
Second Closing Date (as hereinafter defined) will have, good and valid
title to all of the Offered Shares which may be sold by such Selling
Stockholder pursuant to this Agreement on such date. Delivery of the
Offered Shares which are sold by such Selling Stockholder pursuant to
this Agreement will pass good and valid title to such Offered Shares,
free and clear of any security interest, mortgage, pledge, lien,
encumbrance, or other claim.
(d) NO FURTHER CONSENTS, AUTHORIZATION, OR APPROVALS. Except
for the exercise by such Selling Stockholder of certain registration
rights pursuant to the Registration Rights Agreement dated as of
December 21, 2000 (which registration rights have been duly exercised
pursuant thereto), no consent, approval, or waiver is required under any
instrument or agreement to which such Selling Stockholder is a party or
by which it is bound or under which it is entitled to any right or
benefit, in connection with the offering, sale, or purchase by the
Underwriters of
11
any of the Offered Shares which may be sold by such Selling Stockholder
under this Agreement or the consummation by such Selling Stockholder of
any of the other transactions contemplated hereby.
(e) NON-CONTRAVENTION; NO FURTHER AUTHORIZATIONS OR APPROVALS
REQUIRED. The execution and delivery by such Selling Stockholder of, and
the performance by such Selling Stockholder of its obligations under,
this Agreement, the Custody Agreement, and the Power of Attorney will
not contravene or conflict with, result in a breach of, or constitute a
Default under, or require the consent of any other party to, the charter
or by-laws, partnership agreement, trust agreement or other
organizational documents of such Selling Stockholder or any other
agreement or instrument to which such Selling Stockholder is a party or
by which it is bound or under which it is entitled to any right or
benefit, any provision of applicable law or any judgment, order, decree,
or regulation applicable to such Selling Stockholder of any court,
regulatory body, administrative agency, governmental body, or arbitrator
having jurisdiction over such Selling Stockholder. No consent, approval,
authorization or other order of, or registration or filing with, any
court or other governmental authority or agency, is required for the
consummation by such Selling Stockholder of the transactions
contemplated in this Agreement, except such as have been obtained or
made and are in full force and effect under the Securities Act,
applicable state securities or blue sky laws and from the NASD.
(f) NO REGISTRATION OR OTHER SIMILAR RIGHTS. Such Selling
Stockholder does not have any registration or other similar rights to
have any equity or debt securities registered for sale by the Company
under the Registration Statement or included in the offering
contemplated by this Agreement, except for (i) shares that are included
in the Registration Statement, and (ii) shares covered by registration
rights that have been duly waived or satisfied by the delivery of proper
notice, with a copy to the Underwriters.
(g) NO PREEMPTIVE, CO-SALE, OR OTHER RIGHTS. Such Selling
Stockholder does not have, or has waived prior to the date hereof, any
preemptive right, co-sale right, right of first refusal, or other
similar right to purchase any of the Offered Shares that are to be sold
by the Company or any of the other Selling Stockholders to the
Underwriters pursuant to this Agreement. Such Selling Stockholder does
not own any warrants, options, or similar rights to acquire, and does
not have any right or arrangement to acquire, any capital stock, right,
warrants, options, or other securities from the Company, other than
those described in the Prospectus.
(h) DISCLOSURE MADE BY THE SELLING STOCKHOLDERS IN THE
PROSPECTUS. All information furnished by or on behalf of such Selling
Stockholder in writing expressly for use in the (i) Registration
Statement is, and on the First Closing Date and the Second Closing Date
will be, true, correct, and complete in all material respects, and does
not, and on the First Closing Date and the Second Closing Date will not,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) Prospectus is, and on the
First Closing Date and the Second Closing Date will be, true, correct,
and complete in all material respects, and does not, and on the First
Closing Date and the Second Closing Date will not, contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Such Selling Stockholder confirms as accurate the number of shares of
Common Stock set forth opposite such Selling Stockholder's name in the
Prospectus under the caption "Principal and Selling Stockholders" (both
prior to and after giving effect to the sale of the Offered Shares).
12
(i) NO PRICE STABILIZATION OR MANIPULATION. The Selling
Stockholder has not taken and will not take, directly or indirectly, any
action which was designed to, or that might be expected to cause or
result in, stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Offered Shares. The
Selling Stockholder has not taken, directly or indirectly, any action
that stabilized or manipulated the price of any security of the Company.
(j) CONFIRMATION OF THE COMPANY'S REPRESENTATIONS AND
WARRANTIES. Each of the Xxxxxx X. Xxxxxx 2001 Family Trust, the Xxxx X.
Xxxxxx 2001 Family Trust and Messrs. Xxxxxxx Xxxxx and Xxxxxxx X.
Xxxxxxxx represents on its own behalf that it has no reason to believe
that the representations and warranties of the Company contained in
Section 1(A) (the "Representations and Warranties of the Company and the
Selling Stockholders") hereof are not true and correct, is familiar with
the Registration Statement and the Prospectus and has no knowledge of
any material fact, condition, or information not disclosed in the
Registration Statement or the Prospectus which has had or may have a
Material Adverse Change and is not prompted to sell shares of Common
Stock by any information concerning the Company which is not set forth
in the Registration Statement and the Prospectus.
(k) NO TRANSFER TAXES OR OTHER FEES. There are no transfer
taxes or other similar fees or charges under federal law or the laws of
any state, or any political subdivision thereof, required to be paid in
connection with such Selling Stockholder's execution and delivery of
this Agreement or the sale by such Selling Stockholder of the Offered
Shares.
(l) DISTRIBUTION OF OFFERING MATERIALS BY THE SELLING
STOCKHOLDERS. Such Selling Stockholder has not distributed and will not
distribute, prior to the later of the Second Closing Date (as defined
below) and the completion of the Underwriters' distribution of the
Offered Shares, any offering material in connection with the offering
and sale of the Offered Shares other than a preliminary prospectus, the
Prospectus, or the Registration Statement.
Any certificate signed by or on behalf of any Selling
Stockholder and delivered to the Representatives or to counsel for the
Underwriters in connection with this Agreement and the transactions contemplated
hereby shall be deemed to be a representation and warranty by such Selling
Stockholder to each Underwriter as to the matters covered thereby.
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE OFFERED SHARES.
(a) THE FIRM OFFERED SHARES. Upon the terms herein set forth,
(i) the Company agrees to issue and sell to the several Underwriters an
aggregate of 3,137,597 Firm Offered Shares and (ii) the Selling
Stockholders agree to sell to the several Underwriters an aggregate of
1,237,403 Firm Offered Shares, and each Selling Stockholder agrees to
sell that number of Firm Offered Shares set forth opposite such Selling
Stockholder's name on SCHEDULE B (the "List of the Selling
Stockholders") attached hereto. On the basis of the representations,
warranties, and agreements herein contained, and upon the terms but
subject to the conditions herein set forth, the Underwriters agree,
severally and not jointly, to purchase from the Company and the Selling
Stockholders the respective number of Firm Offered Shares set forth
opposite their names on SCHEDULE A (the "List of Underwriters") attached
hereto. The purchase price per Firm Offered Share to be paid by the
several Underwriters to the Company and the Selling Stockholders shall
be $6.11 per share.
(b) THE FIRST CLOSING DATE. Delivery of certificates for the
Firm Offered Shares to be purchased by the Underwriters and payment
therefor shall be made at the offices of JMP Securities LLC, Xxx
Xxxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 (or such
13
other place as may be agreed to by the Company and the Representatives)
at 6:00 a.m. San Francisco time, on the fourth full business day after
the date of this Agreement, unless the pricing occurs at a time earlier
than 4:30 p.m., East Coast time, in which case it shall be on the third
full business day after the date of this Agreement, or such other time
and date not later than 10:30 a.m. San Francisco time, on August 9, 2004
as the Representatives shall designate by notice to the Company (the
time and date of such closing are called the "FIRST CLOSING DATE");
PROVIDED, HOWEVER, that if the Company has not made available to the
Representatives copies of the Prospectus within the time provided in
Section 2(e) ("Payment for the Offered Shares") and Section 3A(d) (the
"Copies of Any Amendments and Supplements to the Prospectus") hereof,
the Representatives may, in their sole discretion, postpone the First
Closing Date until no later that two (2) full business days following
delivery of copies of the Prospectus to the Representatives. The Company
and the Selling Stockholders hereby acknowledge that circumstances under
which the Representatives may provide notice to postpone the First
Closing Date as originally scheduled include, but are in no way limited
to, any determination by the Company, the Selling Stockholders or the
Representatives to recirculate to the public copies of an amended or
supplemented Prospectus or a delay as contemplated by the provisions of
Section 10 (the "Default of One or More of the Several Underwriters").
(c) THE OPTIONAL OFFERED SHARES; THE SECOND CLOSING DATE. In
addition, on the basis of the representations, warranties, and
agreements herein contained, and upon the terms but subject to the
conditions herein set forth, the Xxxxxx X. Xxxxxx 2001 Family Trust and
the Xxxx X. Xxxxxx 2001 Family Trust hereby grant an option to the
several Underwriters to purchase, severally and not jointly, up to an
aggregate of 656,250 Optional Offered Shares from the Xxxxxx X. Xxxxxx
2001 Family Trust and the Xxxx X. Xxxxxx 2001 Family Trust at the
purchase price per share to be paid by the Underwriters for the Firm
Offered Shares. The option granted hereunder is for use by the
Underwriters solely in covering any over-allotments in connection with
the sale and distribution of the Firm Offered Shares. The option granted
hereunder may be exercised at any time (but not more than once) upon
notice by the Representatives to the Company and the Selling
Stockholders, which notice may be given at any time within thirty (30)
days from the date of this Agreement. Such notice shall set forth (i)
the aggregate number of Optional Offered Shares as to which the
Underwriters are exercising the option, (ii) the names and denominations
in which the certificates for the Optional Offered Shares are to be
registered, and (iii) the time, date, and place at which such
certificates will be delivered (which time and date may be simultaneous
with, but not earlier than, the First Closing Date, and in such case the
term "First Closing Date" shall refer to the time and date of delivery
of certificates for the Firm Offered Shares and the Optional Offered
Shares). Such time and date of delivery of the Optional Offered Shares,
if subsequent to the First Closing Date, is called the "SECOND CLOSING
DATE" and shall be determined by the Representatives and shall not be
earlier than three (3) nor later than five (5) full business days after
delivery of such notice of exercise. If any Optional Offered Shares are
to be purchased, (a) each Underwriter agrees, severally and not jointly,
to purchase the number of Optional Offered Shares (subject to such
adjustments to eliminate fractional shares as the Representatives may
determine) that bears the same proportion to the total number of
Optional Offered Shares to be purchased as the number of Firm Offered
Shares set forth on SCHEDULE A (the "List of the Underwriters") attached
hereto opposite the name of such Underwriter bears to the total number
of Firm Offered Shares and (b) each of the Xxxxxx X. Xxxxxx 2001 Family
Trust and the Xxxx X. Xxxxxx 2001 Family Trust agree, severally and not
jointly, to sell the number of Optional Offered Shares (subject to such
adjustments to eliminate fractional shares as the Representatives may
determine) that bears the same proportion to the total number of
Optional Offered Shares to be sold as the number of Optional Offered
Shares set forth in SCHEDULE B (the "List of the Selling Stockholders")
attached hereto opposite the name of such Selling Stockholder bears to
the total number of Optional Offered Shares. The Representatives may
cancel the option
14
at any time prior to its expiration by giving written notice of such
cancellation to the Company and the Selling Stockholders.
(d) PUBLIC OFFERING OF THE OFFERED SHARES. The Representatives
hereby advise the Company and the Selling Stockholders that the
Underwriters intend to offer for sale to the public, as described in the
Prospectus, their respective portions of the Offered Shares as soon
after this Agreement has been executed and the Registration Statement
has been declared effective as the Representatives, in their sole
judgment, have determined is advisable and practicable.
(e) PAYMENT FOR THE OFFERED SHARES. Payment for the Offered
Shares to be sold by the Company shall be made at the First Closing Date
(and, if applicable, at the Second Closing Date) by wire transfer of
immediately available funds to the order of the Company. Payment for the
Offered Shares to be sold by the Selling Stockholders shall be made at
the First Closing Date (and, if applicable, at the Second Closing Date)
by wire transfer of immediately available funds to the order of the
Custodian.
It is understood that the Representatives have been
authorized, for their own accounts and the accounts of the several
Underwriters, to accept delivery of and receipt for, and make payment
of the purchase price for, the Firm Offered Shares and any Optional
Offered Shares that the Underwriters have agreed to purchase. JMP,
individually and not as the Representative of the Underwriters, may
(but shall not be obligated to) make payment for any Offered Shares to
be purchased by any Underwriter whose funds shall not have been
received by the Representatives by the First Closing Date or the Second
Closing Date, as the case may be, for the account of such Underwriter,
but any such payment shall not relieve such Underwriter from any of its
obligations under this Agreement.
Each Selling Stockholder hereby agrees that (i) it will pay
all stock transfer taxes, stamp duties, and other similar taxes, if
any, payable upon the sale or delivery of the Offered Shares to be sold
by such Selling Stockholder to the several Underwriters, or otherwise
in connection with the performance of such Selling Stockholder's
obligations hereunder, and (ii) the Custodian is authorized to deduct
for such payment any such amounts from the proceeds to such Selling
Stockholder hereunder and to hold such amounts for the account of such
Selling Stockholder with the Custodian under the Custody Agreement.
(f) DELIVERY OF THE OFFERED SHARES. The Company and the
Selling Stockholders shall deliver, or cause to be delivered, a credit
representing the Firm Offered Shares to an account or accounts at The
Depository Trust Company as designated by the Representatives for the
accounts of the Representatives and the several Underwriters at the
First Closing Date, against the irrevocable release of a wire transfer
of immediately available funds for the amount of the purchase price
therefor. The Company and the Selling Stockholders shall also deliver,
or cause to be delivered, a credit representing the Optional Offered
Shares that the Representatives and the Underwriters have agreed to
purchase to an account or accounts at The Depository Trust Company as
designated by the Representatives for the accounts of the
Representatives and the several Underwriters, at the Second Closing
Date, against the irrevocable release of a wire transfer of immediately
available funds for the amount of the purchase price therefor.
Notwithstanding the foregoing, to the extent the Representatives so
elect at least three (3) full business days prior to the First Closing
Date or the Second Closing Date, as the case may be, the Company and the
Selling Stockholders shall deliver, or cause to be delivered, to the
Representatives for the accounts of the several Underwriters,
certificates for the Firm Offered Shares and the Optional Offered Shares
the Underwriters have agreed to purchase from them at the First Closing
Date or the Second Closing Date, as the case may be. In such case, the
15
certificates for the Offered Shares shall be in definitive form and
registered in such names and denominations as the Representatives shall
have requested at least two (2) full business days prior to the First
Closing Date (or the Second Closing Date, as the case may be) and shall
be made available for inspection on the business day preceding the First
Closing Date (or the Second Closing Date, as the case may be) at a
location in San Francisco as the Representatives may designate.
(g) DELIVERY OF PROSPECTUS TO THE UNDERWRITERS. Not later than
12:00 p.m. on the second business day following the date that the
Offered Shares are first released by the Underwriters for sale to the
public, the Company shall deliver or cause to be delivered, copies of
the Prospectus in such quantities and at such places as the
Representatives shall reasonably request.
SECTION 3. ADDITIONAL COVENANTS.
A. COVENANTS OF THE COMPANY. The Company further covenants and
agrees with each Underwriter as follows:
(a) REPRESENTATIVES' REVIEW OF PROPOSED AMENDMENTS AND
SUPPLEMENTS. During such period beginning on the date hereof and ending
on the later of the First Closing Date or such date, as in the opinion
of counsel for the Underwriters, the Prospectus is no longer required by
law to be delivered in connection with sales by an Underwriter or dealer
(the "PROSPECTUS DELIVERY PERIOD"), prior to amending or supplementing
the Registration Statement (including any registration statement filed
under Rule 462(b) under the Securities Act) or the Prospectus (including
any amendment or supplement through incorporation by reference of any
report filed under the Exchange Act), the Company shall furnish to the
Representatives for review a copy of each such proposed amendment or
supplement, and the Company shall not file any such proposed amendment
or supplement to which the Representatives reasonably object.
(b) SECURITIES ACT COMPLIANCE. After the date of this
Agreement and until the end of the Prospectus Delivery Period, the
Company shall promptly advise the Representatives in writing of (i) the
receipt of any comments of, or requests for additional or supplemental
information from, the Commission, (ii) the time and date of any filing
of any post-effective amendment to the Registration Statement or any
amendment or supplement to any preliminary prospectus or the Prospectus,
(iii) the time and date that any post-effective amendment to the
Registration Statement becomes effective, and (iv) the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or of any
order preventing or suspending the use of any preliminary prospectus or
the Prospectus, or of any proceedings to remove, suspend, or terminate
from listing or quotation the Common Stock from any securities exchange
upon which it is listed for trading or included or designated for
quotation, or of the threat or initiation of any proceedings for any of
such purposes. If the Commission shall enter any such stop order at any
time, the Company will use its reasonable best efforts to obtain the
lifting of such order at the earliest possible moment. Additionally, the
Company agrees that it shall comply with the provisions of Rules 424(b),
430A, and 434, as applicable, under the Securities Act and will use its
best efforts to confirm that any filings made by the Company under such
Rule 424(b) were received in a timely manner by the Commission.
(c) AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS AND OTHER
SECURITIES ACT MATTERS. If, during the Prospectus Delivery Period, any
event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Prospectus in order to make the
16
statements therein, in light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if in the reasonable
opinion of the Representatives or counsel for the Underwriters, it is
otherwise necessary to amend or supplement the Prospectus to comply with
the law, the Company agrees to promptly prepare (subject to Section
3(A)(a) (the "Representatives' Review of Proposed Amendments and
Supplements")), file with the Commission and furnish at its own expense
to the Underwriters and to dealers, amendments or supplements to the
Prospectus so that the statements in the Prospectus as so amended or
supplemented will not, in light of the circumstances when the Prospectus
is delivered to a purchaser, be misleading or so that the Prospectus, as
amended or supplemented, will comply with law.
(d) COPIES OF ANY AMENDMENTS AND SUPPLEMENTS TO THE
PROSPECTUS. The Company agrees to furnish the Representatives, without
charge, during the Prospectus Delivery Period, as many copies of the
Prospectus and any amendments and supplements thereto (including any
documents incorporated or deemed incorporated by reference therein) as
the Representatives may request.
(e) BLUE SKY COMPLIANCE. The Company shall cooperate with the
Representatives and counsel for the Underwriters to qualify or register
the Offered Shares for sale under (or obtain exemptions from the
application of) the state securities or blue sky laws, Canadian
provincial securities laws, or the securities laws of those
jurisdictions designated by the Representatives, and will make such
applications, file such documents, and furnish such information as may
be required for that purpose. The Company shall comply with such laws
and shall continue such qualifications, registrations, and exemptions in
effect so long as required to continue such qualifications for so long a
period as the Representatives may request for the distribution of the
Offered Shares. The Company shall not be required to qualify as a
foreign corporation or to take any action that would subject it to
general service of process in any such jurisdiction where it is not
presently qualified or where it is not presently subject to taxation as
a foreign corporation. The Company will advise the Representatives
promptly of the suspension of the qualification or registration of (or
any such exemption relating to) the Offered Shares for offering, sale,
or trading in any jurisdiction or any initiation or threat of any
proceeding for any such purpose. In the event of the issuance of any
order suspending such qualification, registration, or exemption, the
Company shall use its commercially reasonable efforts to obtain the
withdrawal thereof at the earliest possible moment.
(f) NOTICE OF SUBSEQUENT EVENTS AFFECTING THE MARKET PRICE OF
THE COMMON STOCK OR OFFERED SHARES. If at any time during the Prospectus
Delivery Period, any rumor, publication, or event relating to or
affecting the Company shall occur, as a result of which the market price
of the Offered Shares or Common Stock has been or is likely to be
adversely affected (regardless of whether such rumor, publication, or
event necessitates a supplement to or amendment of the Prospectus), the
Company will promptly advise the Representatives of such rumor,
publication or event.
(g) USE OF PROCEEDS. The Company shall apply the net proceeds
from the sale of the Offered Shares sold by it in the manner described
under the caption "Use of Proceeds" in the Prospectus.
(h) TRANSFER AGENT. The Company shall engage and maintain, at
its expense, a registrar and transfer agent for the Common Stock.
(i) EARNINGS STATEMENT. As soon as reasonably practicable, the
Company will make generally available to its securityholders and to the
Representatives an earnings statement (which
17
need not be audited) covering a period of at least twelve (12) months
beginning after the effective date of the Registration Statement that
satisfies the provisions of Section 11(a) of the Securities Act.
(j) PERIODIC REPORTING OBLIGATIONS. During the Prospectus
Delivery Period, the Company shall file, on a timely basis, with the
Commission and the AMEX all reports and documents required to be filed
under the Exchange Act and the Xxxxxxxx-Xxxxx Act.
(k) AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES.
During the period of ninety (90) days following the date of the
Prospectus (the "LOCK-UP PERIOD"), the Company will not, without the
prior written consent of JMP (which consent may be withheld in its sole
discretion), (a) consent to the disposition of any shares held by a
stockholder or option holder which is a director or executive officer of
the Company or is a Selling Stockholder before the expiration of the
Lock-up Period, or (b) sell, offer, contract, or grant, directly or
indirectly, any option to sell, pledge, transfer, or establish an open
"put equivalent position" within the meaning of Rule 16a-1(h) under the
Exchange Act, otherwise dispose of, transfer, or enter into any
transaction which is designed to, or could be expected to, result in the
disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise by the Company or any
affiliate of the Company or any person in privity with the Company or
any affiliate of the Company), or otherwise dispose of any Securities
(as defined in EXHIBIT B (the "Form of Lock-up Agreement") attached
hereto) or any securities that relates to or derives any significant
part of its value from the Securities; PROVIDED, HOWEVER, that the
Company may issue (i) shares of restricted stock or options to purchase
its Common Stock pursuant to any stock option plan, stock bonus, or
other stock plan or arrangement approved by the Board of Directors of
the Company and described in the Prospectus, or (ii) Common Stock upon
the exercise of such options described in clause (i), but only if such
shares, options, or shares issued upon exercise of such options, cannot
be sold, offered, disposed of or otherwise transferred during the
Lock-up Period without the prior written consent of JMP (which consent
may be withheld in its sole discretion).
(l) COMPLIANCE. During the Prospectus Delivery Period, the
Company will file all documents required to be filed with the Commission
pursuant to Section 13, 14, or 15 of the Exchange Act and pursuant to
the Xxxxxxxx-Xxxxx Act in the manner and within the time periods
required by such Acts. At all times during the Prospectus Delivery
Period, the Company and its subsidiaries shall remain in compliance with
all statutes, laws, rules, regulations, judgments, orders and decrees of
any court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company or
such subsidiary or any of its properties, as applicable, including,
without limitation, the provisions, rules and regulations of the
Securities Act, the Exchange Act, the Xxxxxxxx-Xxxxx Act, the NASD and
the AMEX.
(m) INVESTMENT COMPANY ACT. The Company shall at no time
during the two (2) years after the date hereof be an "investment
company" or an entity "controlled" by an "investment company" within the
meaning of the Investment Company Act or conduct its business in a
manner so that it will become subject to the Investment Company Act
unless the Board of Directors of the Company has determined that
becoming an "investment company" or an entity "controlled" by an
"investment company" within the meaning of the Investment Company Act or
conducting the Company's business in a manner so that the Company will
become subject to the Investment Company Act is in the best interests of
the Company and its stockholders.
(n) TAXABLE MORTGAGE POOL. At no time during the taxable years
ending December 31, 2004 and 2005 shall the Company or its assets be
treated as a taxable mortgage pool.
18
(o) INVESTMENT AND RISK-ADJUSTED CAPITAL GUIDELINES. The
Company shall operate in compliance with its investment and
risk-adjusted capital guidelines to the extent applicable, except as the
Board of Directors of the Company shall approve otherwise from time to
time.
B. COVENANTS OF THE SELLING STOCKHOLDERS. Each Selling
Stockholder further covenants and agrees with each Underwriter:
(a) AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES. Such
Selling Stockholder will not, without the prior written consent of JMP
(which consent may be withheld in its sole discretion), directly or
indirectly, sell, offer, contract, or grant any option to sell, pledge,
transfer, or establish an open "put equivalent position" within the
meaning of Rule 16a-1(h) under the Exchange Act, otherwise dispose of,
transfer, or enter into any transaction which is designed to, or could
be expected to, result in the disposition (whether by actual disposition
or effective economic disposition due to cash settlement or otherwise by
the Company or any affiliate of the Company or any person in privity
with the Company or any affiliate of the Company), or otherwise dispose
of any Securities (as defined in EXHIBIT B (the "Form of Lock-up
Agreement") attached hereto) or any securities that relates to or
derives any significant part of its value from Securities currently or
hereafter owned either of record or beneficially (as defined in Rule
13d-3 under the Exchange Act) by the undersigned, or publicly announce
the undersigned's intention to do any of the foregoing, during the
Lock-up Period; PROVIDED, HOWEVER, that with respect to Messrs. Xxxxxx
X., Xxxx, Xxxx and Xxx Xxxxxx, the term "Lock-up Period" shall mean the
period of one hundred twenty (120) days following the date of the
Prospectus. Furthermore, such Selling Stockholder also agrees and
consents to the entry of stop transfer instructions with the Company's
transfer agent against the transfer of the Securities held by such
Selling Stockholder except in compliance with this restriction.
(b) DELIVERY OF FORMS W-8 AND W-9. To deliver to the
Representatives or the custodian, as applicable, prior to the First
Closing Date a properly completed and executed United States Treasury
Department Form W-8 (if the Selling Stockholder is a non-United States
person) or Form W-9 (if the Selling Stockholder is a United States
Person).
(c) NOTIFICATION OF UNTRUE STATEMENTS, ETC. If, at any time
prior to the date on which the distribution of the Offered Shares as
contemplated herein and in the Prospectus has been completed, as
determined by the Representatives, such Selling Stockholder has
knowledge of the occurrence of any event as a result of which (i) the
Registration Statement, as then amended or supplemented, would contain
an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading, or (ii) the Prospectus, as then amended or
supplemented, would contain an untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, then such Selling
Stockholder will promptly notify the Company and the Representatives.
JMP, on behalf of the several Underwriters, may, in its sole
discretion, waive in writing the performance by the Company or any Selling
Stockholder of any one or more of the foregoing covenants.
SECTION 4. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS.
The obligations of the several Underwriters to purchase and pay for the
Offered Shares as provided herein on the First Closing Date and, with respect to
the Optional Offered Shares, the Second Closing Date, shall be subject to the
accuracy of the representations and warranties on the part of the
19
Company and the Selling Stockholders set forth in Section 1(A) (the
"Representations and Warranties of the Company") and Section 1(B) (the
"Representations and Warranties of the Selling Stockholders") hereof as of the
date hereof and as of the First Closing Date as though then made and, with
respect to the Optional Offered Shares, as of the Second Closing Date as though
then made, to the timely performance by the Company and the Selling Stockholders
of their respective covenants and other obligations hereunder, and to each of
the following additional conditions:
(a) ACCOUNTANTS' ORIGINAL COMFORT LETTER. On the date hereof,
the Representatives shall have received from KPMG LLP, independent
public or certified public accountants for the Company, a letter dated
the date hereof addressed to the Underwriters, in form and substance
satisfactory to the Representatives (the "ORIGINAL LETTER"). Such
Original Letter shall (i) represent, to the extent true, that they are
independent certified public accountants with respect to the Company
within the meaning of the Securities Act, (ii) set forth their opinion
with respect to their examination of the consolidated balance sheet of
the Company as of December 31, 2003 and related consolidated statements
of operations, shareholders' equity, and cash flows for the twelve (12)
months ended December 31, 2003, (iii) state that KPMG LLP has performed
the procedures set out in Statement on Auditing Standards ("SAS") No.
100 for a review of interim financial information and providing the
report of KPMG LLP as described in SAS No. 100 on the financial
statements for each of the quarters in the first-quarter period ended
March 31, 2004 (the "QUARTERLY FINANCIAL STATEMENTS"), (iv) state that
in the course of such review, nothing came to their attention that leads
them to believe that any material modifications need to be made to any
of the Quarterly Financial Statements in order for them to be in
compliance with GAAP consistently applied across the periods presented,
and (v) address other matters agreed upon by KPMG LLP and the
Underwriters.
(b) ACCOUNTANTS' BRING-DOWN COMFORT LETTER. Representatives
shall have received on the First Closing Date and on the Second Closing
Date, as the case may be, a letter from KPMG LLP addressed to the
Underwriters, dated the First Closing Date or the Second Closing Date,
as the case may be, confirming that they are independent certified
public accountants with respect to the Company within the meaning of the
Securities Act and based upon the procedures described in the Original
Letter, but carried out to a date not more than three (3) business days
prior to the First Closing Date or the Second Closing Date, as the case
may be, (i) confirming, to the extent true, that the statements and
conclusions set forth in the Original Letter are accurate as of the
First Closing Date or the Second Closing Date, as the case may be, and
(ii) setting forth any revisions and additions to the statements and
conclusions set forth in the Original Letter which are necessary to
reflect any changes in the facts described in the Original Letter since
the date of such letter, or to reflect the availability of more recent
financial statements, data, or information. The Representatives shall
have received an additional conformed copy of such accountants' letter
for each of the several Underwriters.
If the letter shall disclose any change in the
condition (financial or otherwise), earnings, operations, or business
of the Company and its subsidiaries, considered as one entity, from
that set forth in the Registration Statement or Prospectus, which, in
the sole judgment of the Representatives, is material and adverse and
that makes it, in the sole judgment of the Representatives,
impracticable or inadvisable to proceed with the public offering of the
Offered Shares as contemplated by the Prospectus, then this condition
in this Section 4(b) shall be deemed not satisfied, and the
Representatives may terminate this Agreement in accordance with the
last paragraph of this Section 4.
20
(c) COMPLIANCE WITH REGISTRATION REQUIREMENTS; NO STOP ORDER;
NO OBJECTION FROM THE NASD. For the period from and after effectiveness
of this Agreement and prior to the First Closing Date and, with respect
to the Optional Offered Shares, prior to the Second Closing Date:
(i) the Company shall have filed the Prospectus with
the Commission (including the information required by Rule
430A under the Securities Act) in the manner and within the
time period required by Rule 424(b) under the Securities Act;
or the Company shall have filed a post-effective amendment to
the Registration Statement containing the information required
by such Rule 430A, and such post-effective amendment shall
have become effective; or, if the Company elected to rely upon
Rule 434 under the Securities Act and obtained the
Representatives' consent thereto, the Company shall have filed
a Term Sheet with the Commission in the manner and within the
time period required by such Rule 424(b);
(ii) no stop order suspending the effectiveness of
the Registration Statement, any Rule 462(b) Registration
Statement, or any post-effective amendment to the Registration
Statement, shall be in effect and no proceedings for such
purpose shall have been instituted or are pending,
contemplated, or threatened by the Commission;
(iii) any request of the Commission for additional
information (to be included in the Registration Statement or
the Prospectus or any incorporated document or otherwise)
shall have been complied with to the reasonable satisfaction
of Underwriters' Counsel; and
(iv) the NASD shall have raised no objection to the
fairness and reasonableness of the underwriting terms and
arrangements.
(d) NO MATERIAL ADVERSE CHANGE. For the period from and after
the date of this Agreement and prior to the First Closing Date and, with
respect to the Optional Offered Shares, prior to the Second Closing
Date, in the judgment of the Representatives, there shall not have
occurred any material adverse change, or any development that could
reasonably be expected to result in a material adverse change, in the
condition, financial or otherwise, earnings, operations or business,
whether or not arising from transaction in the ordinary course of
business, of the Company and its subsidiaries, considered as one entity,
from that set forth in the Registration Statement or Prospectus, which,
in the sole judgment of the Representatives, is material and adverse and
that makes it, in the sole judgment of the Representatives,
impracticable or inadvisable to proceed with the public offering of the
Offered Shares as contemplated by the Prospectus.
(e) OPINION OF COUNSEL TO THE COMPANY. On each of the First
Closing Date and the Second Closing Date, the Representatives shall have
received the favorable opinion of Xxxxxxxx & Xxxxxxxx LLP, counsel for
the Company, dated as of such Closing Date, the form of which is
attached hereto as EXHIBIT A (the "Form of Legal Opinion of Counsel for
the Company"). The Representatives shall have received such additional
number of conformed copies of such counsel's legal opinion as the
Representatives may request for each of the several Underwriters.
(f) OPINION OF COUNSEL FOR THE UNDERWRITERS. On each of the
First Closing Date and the Second Closing Date, the Representatives
shall have received the favorable opinion of O'Melveny & Xxxxx LLP,
counsel for the Underwriters, dated as of such Closing Date, in form and
substance satisfactory to the Representatives, and the Representatives
shall have received such additional number of conformed copies of such
counsel's legal opinion as the
21
Representatives may request for each of the several Underwriters. The
Company shall have furnished to such counsel such documents as such may
have requested for the purpose of enabling them to pass upon such
matters.
(g) OFFICERS' CERTIFICATE. On each of the First Closing Date
and the Second Closing Date, the Representatives shall have received a
written certificate executed by the Chairman of the Board, Chief
Executive Officer or President of the Company and the Chief Financial
Officer or Chief Accounting Officer of the Company, dated as of such
Closing Date, to the effect set forth in subsection (c)(ii) ("Compliance
with Registration Requirements; No Stop Order; No Objection from NASD")
of this Section 5, and further to the effect that:
(i) Subsequent to the respective dates as of which
information is given in the Registration Statement and
Prospectus, there has not been (a) any material adverse change
in the condition (financial or otherwise), earnings,
operations, or business of the Company and its subsidiaries,
considered as one entity, (b) any transaction that is material
to the Company and its subsidiaries, considered as one entity,
except transactions entered into in the ordinary course of
business, (c) any obligation, direct or contingent, that is
material to the Company and its subsidiaries, considered as
one entity, incurred by the Company or its subsidiaries,
except obligations incurred in the ordinary course of
business, (d) any change in the capital stock or outstanding
indebtedness that is material to the Company and its
subsidiaries, considered as one entity, (e) any dividend or
distribution of any kind declared, paid, or made on the
capital stock of the Company or any of its subsidiaries, or
(f) any loss or damage (whether or not insured) to the
property of the Company or any of its subsidiaries which has
been sustained or will have been sustained which has a
material adverse effect on the condition (financial or
otherwise), earnings, operations, or business of the Company
and its subsidiaries, considered as one entity;
(ii) When the Registration Statement became effective
and at all times subsequent thereto up to the delivery of such
certificate, (a) the Registration Statement and the
Prospectus, and any amendments or supplements thereto and the
incorporated documents, when such incorporated documents
became effective or were filed with the Commission, contained
all material information required to be included therein by
the Securities Act or the Exchange Act, as the case may be,
and in all material respects conformed to the requirements of
the Securities Act or the Exchange Act, as the case may be;
(b) the Registration Statement and any amendments or
supplements thereto, did not and does not include any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading; (c) the Prospectus and any
amendments or supplements thereto, did not and does not
include any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and
(d) since the effective date of the Registration Statement,
there has occurred no event required to be set forth in an
amended or supplemented Prospectus which has not been so set
forth;
(iii) the representations, warranties, and covenants
of the Company in this Agreement are true and correct with the
same force and effect as though expressly made on and as of
such Closing Date; and
22
(iv) the Company has complied with all the agreements
hereunder and satisfied all the conditions on its part to be
performed or satisfied hereunder at or prior to such Closing
Date.
(h) SELLING STOCKHOLDERS' CERTIFICATE. On each of the First
Closing Date and the Second Closing Date, the Representatives shall have
received a written certificate executed by the Attorney-in-Fact, each
Selling Stockholder, dated as of such Closing Date, to the effect that:
(i) the representations, warranties, and covenants of
such Selling Stockholder set forth in Section 1(B) (the
"Representations and Warranties of the Selling Stockholders")
are true and correct with the same force and effect as though
expressly made by such Selling Stockholder on and as of such
Closing Date; and
(ii) such Selling Stockholder has complied with all
the agreements and satisfied all the conditions on its part to
be performed or satisfied at or prior to such Closing Date.
(i) SELLING STOCKHOLDERS' DOCUMENTS. At least three (3)
business days prior to the date hereof or promptly at such later date as
such instruments may be executed, but in any event not later than the
First Closing Date, the Company and the Selling Stockholders shall have
furnished for review by the Representatives copies of the Powers of
Attorney and Custody Agreements executed by each of the Selling
Stockholders and such further information, certificates, and documents
as the Representatives may reasonably request.
(j) LOCK-UP AGREEMENT FROM CERTAIN SECURITYHOLDERS OF THE
COMPANY. On the date hereof, the Company shall have furnished to the
Representatives an agreement in the form of EXHIBIT B (the "Form of
Lock-up Agreement") attached hereto from each executive officer and
director of the Company and each Selling Stockholder. Such agreement
shall be in full force and effect on each of the First Closing Date and
the Second Closing Date.
(k) ADDITIONAL DOCUMENTS. On or before each of the First
Closing Date and the Second Closing Date, the Representatives and
counsel for the Underwriters shall have received such information,
documents and opinions as they may require for the purposes of enabling
them to pass upon the issuance and sale of the Offered Shares as
contemplated herein, or in order to evidence the accuracy of any of the
representations and warranties, or the satisfaction of any of the
conditions or agreements, herein contained.
If any condition specified in this Section 4 is not satisfied when and
as required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company and the Selling Stockholders at any
time on or prior to the First Closing Date and, with respect to the Optional
Offered Shares, at any time prior to the Second Closing Date, which termination
shall be without liability on the part of any party to any other party, except
that Section 5 (the "Payment of Expenses"), Section 6 (the "Reimbursement of
Underwriters' Expenses"), Section 8 ("Indemnification"), Section 9
("Contribution"), and Section 12 (the "Representations and Indemnities to
Survive Delivery") shall at all times be effective and shall survive such
termination.
SECTION 5. PAYMENT OF EXPENSES.
The Company and the Selling Stockholders, jointly and severally, agree
to pay in such proportions as they may agree upon among themselves all costs,
fees, and expenses incurred in connection with the performance of their
obligations hereunder and in connection with the transactions
23
contemplated hereby, including without limitation (i) all expenses incident to
the issuance and delivery of the Offered Shares (including all printing and
engraving costs), (ii) all fees and expenses of the registrar and transfer agent
of the Common Stock, (iii) all necessary issue, transfer, and other stamp taxes
in connection with the issuance and sale of the Offered Shares to the
Underwriters, (iv) all fees and expenses of the Company's counsel, independent
public or certified public accountants, and other advisors, (v) all costs and
expenses incurred in connection with the preparation, printing, filing,
shipping, and distribution of the Registration Statement (including financial
statements, exhibits, schedules, consents, and certificates of experts), each
preliminary prospectus and the Prospectus, and all amendments and supplements
thereto, and this Agreement, (vi) all filing fees, attorneys' fees, and expenses
incurred by the Company or the Underwriters in connection with qualifying or
registering (or obtaining exemptions from the qualification or registration of)
all or any part of the Offered Shares for offer and sale under the state
securities or blue sky laws or the provincial securities laws of Canada, and, if
requested by the Representatives, preparing and printing a "Blue Sky Survey," an
"International Blue Sky Survey," or other memorandum, and any supplements
thereto, advising the Underwriters of such qualifications, registrations and
exemptions, (vii) the filing fees incident to, and the fees and expenses of
counsel for the Underwriters in connection with, the NASD's review and approval
of the Underwriters' participation in the offering and distribution of the
Offered Shares, (viii) the fees and expenses associated with listing the Offered
Shares on the AMEX, (ix) all costs and expenses incident to the travel and
accommodation of the Company's employees on the "roadshow," and (x) all other
fees, costs, and expenses referred to in Item 14 of Part II of the Registration
Statement. Except as provided in this Section 5, Section 6 (the "Reimbursement
of Underwriters' Expenses"), Section 8 ("Indemnification"), and Section 9
("Contribution") hereof, the Underwriters shall pay their own expenses,
including the fees and disbursements of their counsel.
The Selling Stockholders further agree with each Underwriter to pay
(directly or by reimbursement) all fees and expenses incident to the performance
of their obligations under this Agreement which are not otherwise specifically
provided for herein, including but not limited to (i) fees and expenses of
counsel and other advisors for such Selling Stockholders, (ii) fees and expenses
of the Custodian, and (iii) expenses and taxes incident to the sale and delivery
of the Offered Shares to be sold by such Selling Stockholders to the
Underwriters hereunder (which taxes, if any, may be deducted by the Custodian
under the provisions of Section 2 (the "Purchase, Sale, and Delivery of the
Offered Shares")).
This Section 5 shall not affect or modify any separate, valid agreement
relating to the allocation of payment of expenses between the Company, on the
one hand, and the Selling Stockholders, on the other hand.
SECTION 6. REIMBURSEMENT OF THE UNDERWRITERS' EXPENSES.
If this Agreement is terminated by the Representatives pursuant to
Section 4 (the "Conditions of the Obligations of the Underwriters'), Section 7
(the "Effectiveness of this Agreement"), Section 10 (the "Default of One or More
of the Several Underwriters") or Section 11 (the "Termination of this
Agreement") or Section 17 (the "Failure of One or More of the Selling
Stockholders to Sell and Deliver Offered Shares"), or if the sale to the
Underwriters of the Offered Shares on the First Closing Date is not consummated
because of any refusal, inability or failure on the part of the Company or the
Selling Stockholders to perform any agreement herein or to comply with any
provision hereof, the Company agrees to reimburse the Representatives and the
other Underwriters (or such Underwriters as have terminated this Agreement with
respect to themselves), severally, upon demand for all reasonable out-of-pocket
expenses that shall have been incurred by the Representatives and the
Underwriters in connection with the proposed purchase and the offering and sale
of the Offered Shares, including, without limitation, fees and disbursements of
counsel, printing expenses, travel and accommodation expenses, postage,
facsimile, and telephone charges. Notwithstanding anything herein, in the event
that the offering as
24
contemplated under this Agreement is terminated, the Company and the Selling
Stockholders shall not be required to reimburse any Underwriter in excess of the
maximum fair amount allowed by NASD Rule 2710(f)(2)(D) (I.E., out-of-pocket
accountable expenses actually incurred by the underwriter).
SECTION 7. EFFECTIVENESS OF THIS AGREEMENT.
This Agreement shall not become effective until the later of (i) the
execution of this Agreement by the parties hereto, and (ii) notification by the
Commission to the Company and the Representatives of the effectiveness of any
post-effective amendment to the Registration Statement under the Securities Act.
Prior to such effectiveness, this Agreement may be terminated by any
party by notice to each of the other parties hereto, and any such termination
shall be without liability on the part of (a) the Company or the Selling
Stockholders to any Underwriter, except that the Company and the Selling
Stockholders shall be obligated to reimburse the expenses of the Representatives
and the Underwriters pursuant to Section 5 (the "Payment of Expenses") and
Section 6 (the "Reimbursement of the Underwriters") hereof, (b) of any
Underwriter to the Company or the Selling Stockholders, or (c) of any party
hereto to any other party except that the provisions of Section 8
("Indemnification") and Section 9 ("Contribution") shall at all times be
effective and shall survive such termination.
SECTION 8. INDEMNIFICATION.
(a) INDEMNIFICATION OF THE UNDERWRITERS. (1) The Company
agrees to indemnify and hold harmless each Underwriter, its officers and
employees, and each person, if any, who controls any Underwriter within
the meaning of the Securities Act and the Exchange Act against any Loss
(as hereinafter defined) to which such Underwriter or such controlling
person may become subject, under the Securities Act, the Exchange Act or
other federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement
is effected with the written consent of the Company, which consent shall
not be unreasonably withheld), insofar as such Loss (or actions in
respect thereof as contemplated below) arises out of or is based (i)
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, or any amendment thereto,
including any information deemed to be a part thereof pursuant to Rule
430A or Rule 434 under the Securities Act, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading; or (ii) upon
any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus or the Prospectus (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; or (iii) in whole or in part
upon any inaccuracy in the representations and warranties of the Company
contained herein; or (iv) in whole or in part upon any failure of the
Company to perform its obligations hereunder or under law; or (v) any
untrue statement or alleged untrue statement of any material fact
contained in any audio or visual materials provided by the Company or
contained in written information furnished by or on behalf of the
Company including, without limitation, slides, videos, films or tape
recordings, used in connection with the marketing of the Offered Shares,
and including, without limitation, statements communicated to securities
analysts employed by the Underwriters; and to reimburse each Underwriter
and each such controlling person for any and all expenses (including the
fees and disbursements of counsel chosen by JMP) as such expenses are
incurred by such Underwriter or such controlling person in connection
with investigating, defending, settling, compromising, or paying any
such Loss; PROVIDED, HOWEVER, that the foregoing indemnity agreement
shall not apply to any Loss to the extent, but only to the extent, that
such loss, claim damage, liability or expense arises out of or is based
upon any untrue
25
statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information
furnished to the Company by the Representatives expressly for use in the
Registration Statement, any preliminary prospectus, or the Prospectus
(or any amendment or supplement thereto); PROVIDED, FURTHER, that with
respect to any preliminary prospectus, the foregoing indemnity agreement
shall not inure to the benefit of any Underwriter from whom the person
asserting any Loss purchased Offered Shares, or any person controlling
such Underwriter, if copies of the Prospectus were timely delivered to
the Underwriter pursuant to Section 2 (the "Purchase, Sale, and Delivery
of the Offered Shares") and a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the
Offered Shares to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such Loss.
"LOSS" shall be defined as any loss, claim, damage, liability, expense,
or action, as incurred, suffered by the specified person (collectively,
the "LOSSES"). The indemnity agreement set forth in this Section 8(a)(1)
shall be in addition to any liabilities that the Company may otherwise
have.
(2) Each of the Selling Stockholders, severally and
not jointly, agrees to indemnify and hold harmless each Underwriter, its
officers and employees, and each person, if any, who controls any
Underwriter within the meaning of the Securities Act and the Exchange
Act against any Loss (as hereinafter defined) to which such Underwriter
or such controlling person may become subject, under the Securities Act,
the Exchange Act or other federal or state statutory law or regulation,
or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of
the Company, which consent shall not be unreasonably withheld), insofar
as such Loss (or actions in respect thereof as contemplated below)
arises out of or is based (i) upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement, or any amendment thereto, including any information deemed to
be a part thereof pursuant to Rule 430A or Rule 434 under the Securities
Act, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements
therein not misleading; or (ii) upon any untrue statement or alleged
untrue statement of a material fact contained in any preliminary
prospectus or the Prospectus (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; in the case of subparagraphs (i) and (ii) of this
Section 8(a)(2) to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information
furnished to the Company or any Underwriter by such Selling Stockholder,
directly or through such Selling Stockholder's representatives,
specifically for use in the preparation thereof; or (iii) in whole or in
part upon any inaccuracy in the representations and warranties of such
Selling Stockholder contained herein; or (iv) in whole or in part upon
any failure of such Selling Stockholder to perform its obligations
hereunder or under law; and to reimburse each Underwriter and each such
controlling person for any and all expenses (including the fees and
disbursements of counsel chosen by JMP) as such expenses are incurred by
such Underwriter or such controlling person in connection with
investigating, defending, settling, compromising, or paying any such
Loss; PROVIDED, HOWEVER, that the foregoing indemnity agreement shall
not apply to any Loss to the extent, but only to the extent, that such
loss, claim damage, liability or expense arises out of or is based upon
any untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with written
information furnished to the Company and the Selling Stockholders by the
Representatives expressly for use in the Registration Statement, any
preliminary prospectus, or the Prospectus (or any amendment or
supplement thereto); PROVIDED, FURTHER, that with respect
26
to any preliminary prospectus, the foregoing indemnity agreement shall
not inure to the benefit of any Underwriter from whom the person
asserting any Loss purchased Offered Shares, or any person controlling
such Underwriter, if copies of the Prospectus were timely delivered to
the Underwriter pursuant to Section 2 (the "Purchase, Sale, and Delivery
of the Offered Shares") and a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the
Offered Shares to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such Loss;
PROVIDED, FURTHER, that the Company and the Selling Stockholders may
agree, as among themselves and without limiting the rights of the
Underwriters under this Agreement, as to the respective amounts of such
liability for which they each shall be responsible. The indemnity
agreement set forth in this Section 8(a)(2) shall be in addition to any
liabilities that the Selling Stockholders may otherwise have.
(b) INDEMNIFICATION OF THE COMPANY, ITS DIRECTORS AND OFFICERS
AND SELLING STOCKHOLDERS. Each Underwriter agrees, severally and not
jointly, to indemnify and hold harmless the Company, each of its
directors, each of its officers who signed the Registration Statement,
the Selling Stockholders and each person, if any, who controls the
Company or any Selling Stockholder within the meaning of the Securities
Act or the Exchange Act, against any Loss to which the Company, or any
such director, officer, Selling Stockholder or controlling person may
become subject, under the Securities Act, the Exchange Act, or other
federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement
is effected with the written consent of such Underwriter), insofar as
such Loss (or actions in respect thereof as contemplated below) arises
out of or is based upon (i) any untrue or alleged untrue statement of a
material fact contained in the Registration Statement (or any amendment
or supplement thereto), or arises out of or is based upon the omission
or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading or (ii) any untrue or alleged untrue statement of a material
fact contained in the any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto), or arises out of or is based upon
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, any preliminary
prospectus, the Prospectus (or any amendment or supplement thereto), in
reliance upon and in conformity with written information furnished to
the Company and the Selling Stockholders by the Representatives
expressly for use therein; and to reimburse the Company, or any such
director, officer, Selling Stockholder or controlling person for any
legal and other expense reasonably incurred by the Company, or any such
director, officer, Selling Stockholder or controlling person in
connection with investigating, defending, settling, compromising, or
paying any such Loss. The indemnity agreement set forth in this Section
8(b) shall be in addition to any liabilities that each Underwriter may
otherwise have.
(c) INFORMATION PROVIDED BY THE UNDERWRITERS. Each of the
Company and each of the Selling Stockholders, and each person, if any,
who controls the Company within the meaning of the Securities Act or the
Exchange Act, hereby acknowledges that the only information that the
Underwriters have furnished to the Company expressly for use in the
Registration Statement, any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) are the statements set forth in the
table in the first paragraph and the last four paragraphs under the
27
caption "Underwriting" in the Prospectus, and the Underwriters confirm
that such statements are correct.
(d) NOTIFICATIONS AND OTHER INDEMNIFICATION PROCEDURES.
Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against an indemnifying
party under this Section 8, notify the indemnifying party in writing of
the commencement thereof, but the omission so to notify the indemnifying
party shall not relieve it from any liability hereunder to the extent it
is not materially prejudiced as a proximate result of such failure and
in any event shall not relieve it from any liability which it may have
otherwise than on account of this indemnity agreement. In case any such
action is brought against any indemnified party and such indemnified
party seeks or intends to seek indemnity from an indemnifying party, the
indemnifying party will be entitled to participate in, and, to the
extent that it shall elect, jointly with all other indemnifying parties
similarly notified, by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified
party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; PROVIDED, HOWEVER, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded that a conflict may arise between the positions of the
indemnifying party and the indemnified party in conducting the defense
of any such action or that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional
to those available to the indemnifying party, the indemnified party or
parties shall have the right to select separate counsel to assume such
legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of
notice from the indemnifying party to such indemnified party of such
indemnifying party's election so to assume the defense of such action
and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 8 for
any legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof unless (i) the indemnified
party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however,
that the indemnifying party shall not be liable for the expenses of more
than one separate counsel (together with local counsel), approved by the
indemnifying party (JMP in the case of Section 8(b) and Section 9
("Contribution")), representing the indemnified parties who are parties
to such action), (ii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement
of the action, in each of which cases the fees and expenses of counsel
shall be at the expense of the indemnifying party, or (iii) the
indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party, in each of
which cases the fees and expenses of counsel shall be at the expense of
the indemnifying party.
(e) SETTLEMENTS. The indemnifying party under this Section 8
shall not be liable for any settlement of any proceeding effected
without its written consent, which consent shall not be unreasonably
withheld, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify
the indemnified party against any Loss by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as
contemplated by Section 8(d) hereof, the indemnifying party agrees that
it shall be liable for any settlement of any proceeding effected without
its written consent if (i) such settlement is entered into more than
thirty (30) days after receipt by such indemnifying party of the
aforesaid request, and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior
to the date of such
28
settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise, or
consent to the entry of judgment in any pending or threatened action,
suit, or proceeding in respect of which any indemnified party is or
could have been a party and indemnity was or could have been sought
hereunder by such indemnified party, unless such settlement, compromise,
or consent (i) includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
action, suit, or proceeding, 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.
SECTION 9. CONTRIBUTION.
If the indemnification provided for in Section 8 ("Indemnification") is
for any reason held to be unavailable to or otherwise insufficient to hold
harmless an indemnified party in respect of any Loss referred to therein, then
each indemnifying party shall contribute to the aggregate amount paid or payable
by such indemnified party, as incurred, as a result of any Loss referred to
therein (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Stockholders, on the one hand,
and the Underwriters, on the other hand, from the offering of the Offered Shares
pursuant to this Agreement or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company and the Selling Stockholders, on the one
hand, and the Underwriters, on the other hand, in connection with the
statements, omissions, or inaccuracies in the representations and warranties
herein which resulted in such Loss, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Stockholders, on the one hand, and the Underwriters, on the other hand, in
connection with the offering of the Offered Shares pursuant to this Agreement
shall be deemed to be in the same respective proportions as the total net
proceeds from the offering of the Offered Shares pursuant to this Agreement
(before deducting expenses) received by the Company and the Selling
Stockholders, and the total underwriting discount received by the Underwriters,
in each case as set forth on the front cover page of the Prospectus (or, if Rule
434 under the Securities Act is used, the corresponding location on the Term
Sheet) bear to the aggregate initial public offering price of the Offered Shares
as set forth on such cover. The relative fault of the Company and the Selling
Stockholders, on the one hand, and the Underwriters, 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 or any such inaccurate or alleged inaccurate
representation or warranty relates to information supplied by the Company and
the Selling Stockholders, on the one hand, or the Underwriters, on the other
hand, 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 an indemnified party as a result of the
Losses referred to above shall be deemed to include, subject to the limitations
set forth in Section 8(d) ("Notifications and Other Indemnification
Procedures"), any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim. The
provisions set forth in Section 8(d) with respect to notice of commencement of
any action shall apply if a claim for contribution is to be made under this
Section 9; provided, HOWEVER, that no additional notice shall be required with
respect to any action for which notice has been given under Section 8(d) for
purposes of indemnification.
The Company, the Selling Stockholders, 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 this Section 9.
29
The Underwriters' obligations to contribute pursuant to this Section 9
are several, and not joint, in proportion to their respective underwriting
commitments as set forth opposite their names in SCHEDULE A (the "List of
Underwriters") attached hereto. Notwithstanding the provisions of this Section
9, no Underwriter shall be required to contribute any amount in excess of the
underwriting commissions received by such Underwriter in connection with the
Offered Shares underwritten by it and distributed to the public. 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 officer and employee of an Underwriter and each person, if any, who
controls an Underwriter within the meaning of the Securities Act and the
Exchange Act shall have the same rights to contribution as such Underwriter,
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of the Securities Act and the Exchange Act shall have the same
rights to contribution as the Company, and each director of a Selling
Stockholder and each person, if any, who controls a Selling Stockholder within
the meaning of the Securities Act and the Exchange Act shall have the same
rights to contribution as the Selling Stockholder.
Any Loss for which an indemnified party is entitled to indemnification
or contribution under this Section 9 shall be paid by the indemnifying party to
the indemnified party as such Loss is incurred, but in all cases, no later than
forty-five (45) days of invoice to the indemnifying party.
SECTION 10. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS.
If, on the First Closing Date or the Second Closing Date, as the case
may be, any one or more of the several Underwriters shall fail or refuse to
purchase Offered Shares that it or they have agreed to purchase hereunder on
such date, and the aggregate number of Offered Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase does not
exceed ten percent (10%) of the aggregate number of the Offered Shares to be
purchased on such date, the other Underwriters shall be obligated, severally, in
the proportions that the number of Firm Offered Shares set forth opposite their
respective names on SCHEDULE A (the "List of Underwriters") attached hereto
bears to the aggregate number of Firm Offered Shares set forth opposite the
names of all such non-defaulting Underwriters, or in such other proportions as
may be specified by the Representatives with the consent of the non-defaulting
Underwriters, to purchase the Offered Shares which such defaulting Underwriter
or Underwriters agreed but failed or refused to purchase on such date. If, on
the First Closing Date or the Second Closing Date, as the case may be, any one
or more of the Underwriters shall fail or refuse to purchase Offered Shares and
the aggregate number of Offered Shares with respect to which such default occurs
exceeds ten percent (10%) of the aggregate number of Offered Shares to be
purchased on such date, and arrangements satisfactory to the Representatives and
the Company for the purchase of such Offered Shares are not made within
forty-eight (48) hours after such default, this Agreement shall terminate
without liability of any party to any other party except that the provisions of
Section 5 (the "Payment of Expenses"), Section 6 (the "Reimbursement of
Underwriters' Expenses"), Section 8 ("Indemnification"), and Section 9
("Contribution") shall at all times be effective and shall survive such
termination. In any such case, either the Representatives or the Company shall
have the right to postpone the First Closing Date or the Second Closing Date, as
the case may be, but in no event for longer than seven days in order that the
required changes, if any, to the Registration Statement and the Prospectus or
any other documents or arrangements may be effected.
As used in this Agreement, the term "Underwriter" shall be deemed to
include any person substituted for a defaulting Underwriter under this Section
10. Any action taken under this Section 10 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
30
SECTION 11. TERMINATION OF THIS AGREEMENT.
Prior to the First Closing Date, this Agreement may be terminated by the
Representatives by notice given to the Company and the Selling Stockholders if
at any time (i) trading or quotation in any of the Company's securities shall
have been suspended or limited by the Commission or by the AMEX, or trading in
securities generally on either the Nasdaq Stock Market or the New York Stock
Exchange shall have been suspended or limited, or minimum or maximum prices
shall have been generally established on any of such stock exchanges by the
Commission or the NASD; (ii) a general banking moratorium shall have been
declared by any of federal, New York, Delaware or California authorities; (iii)
there shall have occurred any outbreak or escalation of national or
international hostilities or any crisis or calamity, or any change in the United
States or international financial markets, or any substantial change or
development involving a prospective substantial change in United States' or
international political, financial, or economic conditions, as in the judgment
of the Representatives is material and adverse and makes it impracticable to
market the Common Shares in the manner and on the terms described in the
Prospectus or to enforce contracts for the sale of securities; (iv) in the
judgment of the Representatives there shall have occurred any Material Adverse
Change; or (v) the Company shall have sustained a loss by strike, fire, flood,
earthquake, accident, terrorist attack, act of war or other calamity of such
character as in the sole judgment of the Representatives may interfere
materially with the conduct of the business and operations of the Company
regardless of whether or not such loss shall have been insured. Any termination
pursuant to this Section 11 shall be without liability on the part of (a) the
Company or the Selling Stockholders to any Underwriter, except that the Company
and the Selling Stockholders shall be obligated to reimburse the expenses of the
Representatives and the Underwriters pursuant to Section 5 (the "Payment of
Expenses") and Section 6 (the "Reimbursement of Underwriters' Expenses") hereof,
(b) any Underwriter to the Company or the Selling Stockholders, or (c) of any
party hereto to any other party except that the provisions of Section 8
("Indemnification") and Section 9 ("Contribution") shall at all times be
effective and shall survive such termination.
SECTION 12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY.
The respective indemnities, agreements, representations, warranties and
other statements of the Company, of its officers, of the Selling Stockholders
and of the several Underwriters set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation made by or
on behalf of any Underwriter or the Company or any of its or their partners,
officers, or directors or any controlling person, or the Selling Stockholders,
as the case may be, and will survive delivery of and payment for the Offered
Shares sold hereunder and any termination of this Agreement.
SECTION 13. NOTICES.
All communications hereunder shall be in writing and shall be mailed,
hand delivered or telecopied and confirmed to the parties hereto as follows:
If to the Representatives:
JMP Securities LLC
Xxx Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xx. Xxxxxx X. Xxxxxx
31
with a copy to:
O'Melveny & Xxxxx LLP
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
If to the Company:
Delta Financial Corporation
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
with a copy to:
Xxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
If to a Selling Stockholder, to its address as listed on SCHEDULE B (the "List
of the Selling Stockholders") attached hereto, with a copy to:
Xxxx X. Xxxxxx, Esq.
Senior Vice President & General Counsel
Delta Funding Corporation
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
SECTION 14. SUCCESSORS.
This Agreement will inure to the benefit of and be binding upon the
parties hereto, including any substitute Underwriters pursuant to Section 10
(the "Default of One or More of the Several Underwriters"), and to the benefit
of the employees, officers and directors and controlling persons referred to in
Section 8 ("Indemnification") and Section 9 ("Contribution"), and in each case
their respective successors, and personal representatives, and no other person
will have any right or obligation hereunder. The term "successors" shall not
include any purchaser of the Offered Shares as such from any of the Underwriters
merely by reason of such purchase.
SECTION 15. PARTIAL UNENFORCEABILITY.
The invalidity or unenforceability of any Section, paragraph, or
provision of this Agreement shall not affect the validity or enforceability of
any other Section, paragraph or provision hereof. If any
32
Section, paragraph, or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
SECTION 16. GOVERNING LAW PROVISIONS.
(a) CHOICE OF LAW. 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 SUCH STATE.
(b) CONSENT TO JURISDICTION. Any legal suit, action, or
proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby ("RELATED PROCEEDINGS") may be
instituted in the federal courts of the United States of America located
in the City and County of San Francisco or the courts of the State of
California in each case located in the City and County of San Francisco
(collectively, the "SPECIFIED COURTS"), and each party irrevocably
submits to the exclusive jurisdiction (except for proceedings instituted
in regard to the enforcement of a judgment of any such court (a "RELATED
JUDGMENT"), as to which such jurisdiction is non-exclusive) of such
courts in any such suit, action, or proceeding. Service of any process,
summons, notice, or document by mail to such party's address set forth
above shall be effective service of process for any suit, action, or
other proceeding brought in any such court. The parties irrevocably and
unconditionally waive any objection to the laying of venue of any suit,
action, or other proceeding in the Specified Courts and irrevocably and
unconditionally waive and agree not to plead or claim in any such court
that any such suit, action, or other proceeding brought in any such
court has been brought in an inconvenient forum.
SECTION 17. FAILURE OF ONE OR MORE OF THE SELLING STOCKHOLDERS TO SELL AND
DELIVER OFFERED SHARES.
If one or more of the Selling Stockholders shall fail to sell and
deliver to the Underwriters the Offered Shares to be sold and delivered by such
Selling Stockholders at the First Closing Date pursuant to this Agreement, then
the Underwriters may at their option, by written notice from the Representatives
to the Company and the Selling Stockholders, either (i) terminate this Agreement
without any liability on the part of any Underwriter or, except as set forth in
Section 5 (the "Payment of Expenses"), Section 6 (the "Reimbursement of
Underwriters' Expenses"), Section 8 ("Indemnification"), and Section 9
("Contribution"), the Company or the Selling Stockholders, or (ii) purchase the
shares which the Company and other Selling Stockholders have agreed to sell and
deliver in accordance with the terms hereof. If one or more of the Selling
Stockholders shall fail to sell and deliver to the Underwriters the Offered
Shares to be sold and delivered by such Selling Stockholders pursuant to this
Agreement at the First Closing Date or the Second Closing Date, then the
Underwriters shall have the right, by written notice from the Representatives to
the Company and the Selling Stockholders, to postpone the First Closing Date or
the Second Closing Date, as the case may be, but in no event for longer than
seven days in order that the required changes, if any, to the Registration
Statement and the Prospectus or any other documents or arrangements may be
effected.
SECTION 18. GENERAL PROVISIONS.
This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings, and negotiations with respect to the subject matter
hereof. This Agreement may be executed in two or more counterparts, each one of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon
33
the same instrument. This Agreement may not be amended or modified unless in
writing by all of the parties hereto, and no condition herein (express or
implied) may be waived unless waived in writing by each party whom the condition
is meant to benefit. The Table of Contents and the Section headings herein are
for the convenience of the parties only and shall not affect the construction or
interpretation of this Agreement.
Each of the parties hereto further acknowledges that the provisions of
Sections 8 and 9 hereto fairly allocate the risks in light of the ability of the
parties to investigate the Company, its affairs, and its business in order to
assure that adequate disclosure has been made in the Registration Statement, any
preliminary prospectus, and the Prospectus (and any amendments and supplements
thereto), as required by the Securities Act and the Exchange Act.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company and the Custodian the enclosed
copies hereof, whereupon this instrument, along with all counterparts hereof,
shall become a binding agreement in accordance with its terms.
Very truly yours,
DELTA FINANCIAL CORPORATION
By: /s/ Xxxx X. Xxxxxx
-------------------------------------------------------
Name: Xxxx X. Xxxxxx
--------------------------------------------------
Title: Senior Vice President & GENERAL COUNSEL
--------------------------------------------------
SELLING STOCKHOLDERS
By: /s/ Xxxx X. Xxxxxx
-------------------------------------------------------
(Attorney-in-fact for the Selling Stockholders named
in SCHEDULE B (the "List of the Selling
Stockholders") attached hereto)
The foregoing Underwriting Agreement is hereby confirmed and accepted by
the Representatives in San Francisco, California as of the date first above
written.
JMP SECURITIES LLC
SUNTRUST CAPITAL MARKETS, INC.
XXXX CAPITAL PARTNERS, LLC
Acting as Representatives of the
several Underwriters named in
the SCHEDULE A (the "List of the
Underwriters") attached hereto.
By: JMP SECURITIES LLC
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Managing Director
SCHEDULE A
LIST OF THE UNDERWRITERS
Number of Firm
Common Shares To
Underwriters be Purchased
---------------------------------------------------- --------------------
JMP Securities LLC ................................. 2,406,250
SunTrust Capital Markets, Inc. ..................... 1,531,250
Xxxx Capital Partners, LLC ......................... 437,500
---------------------------------------------------- --------------------
Total...................................... 4,375,000
====================
SCHEDULE B
LIST OF THE SELLING STOCKHOLDERS
NUMBER OF MAXIMUM NUMBER OF
FIRM OFFERED SHARES OPTIONAL OFFERED
SELLING STOCKHOLDER TO BE SOLD SHARES TO BE SOLD
----------------------------------------------------------- ----------------------- ------------------------
XXXXXX X. XXXXXX 2001 FAMILY TRUST
c/o Delta Financial Corporation
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx, Esq.............................. 521,619 328,125
XXXX X. XXXXXX 2001 FAMILY TRUST
c/o Delta Financial Corporation
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx, Esq.............................. 521,618 328,125
XXXXXXX XXXXX
c/o Delta Financial Corporation
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxx Xxxx 11797................................. 100,000 --
XXXXXXX X. XXXXXXXX
c/o Delta Financial Corporation
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxx Xxxx 11797................................. 40,000 --
DLJ CBO, LIMITED
c/o Credit Suisse Asset Management ....................... 53,000 --
THE XXXXXXXX/XXXXXXX FAMILY TRUST
(XXXX X. XXXXXXXX & XXXXX X. XXXXXXX, TRUSTEES)
c/o Bear Xxxxxxx & Co. ................................... 1,060 --
XXXXXXXX XXXXXXX ......................................... 106 --
----------------------------------------------------------- ----------------------- ------------------------
Total............................................ 1,237,403 656,250
======================= ========================
SCHEDULE C
LIST OF THE ADDITIONAL SUBSIDIARIES
1. Renaissance NIM Trust 2004-A
2. Renaissance NIM Trust 2003-B
EXHIBIT A
FORM OF LEGAL OPINION OF COUNSEL TO THE COMPANY
Opinion of counsel for the Company to be delivered pursuant to Section 4(e)
("Conditions of the Obligations of the Underwriters") of the Underwriting
Agreement. References to the Prospectus in this EXHIBIT A include any
supplements thereto at the Closing Date. Capitalized terms herein shall, unless
the context indicates otherwise, have the same meanings as in the Agreement. Any
reference in one section hereof to another section or a schedule attached to the
Agreement shall be deemed to incorporate the matters addressed in such
referenced section or schedule.
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware and has full corporate
power and authority to own and lease its properties and conduct its business as
described in the Prospectus. The Company is duly qualified to transact business
and is in good standing as a foreign corporation in each jurisdiction in which
the conduct of its business requires such qualification, except for any such
jurisdiction where the failure to be so qualified would not have a material
adverse effect on the financial condition of the Company and its subsidiaries,
taken as a whole.
2. Each of the subsidiaries of the Company set forth on SCHEDULE A
hereto (the "Specified Subsidiaries")(1) is a corporation duly incorporated,
validly existing and in good standing under the laws of the State specified on
SCHEDULE A and has full corporate power and authority to own and lease its
properties and conduct its business as presently conducted. Each such Specified
Subsidiary is duly qualified to transact business as a foreign corporation and
is in good standing in each jurisdiction in which the conduct of its business
requires such qualification, except for any such jurisdiction where the failure
to be so qualified would not have a material adverse effect on the financial
condition of the Company and its subsidiaries, taken as a whole.
3. All of the issued and outstanding capital stock of each of the
Specified Subsidiaries has been duly authorized and validly issued, is fully
paid and non-assessable, and, to our knowledge, is owned by the Company,
directly or indirectly, free and clear of any security interest, mortgage,
pledge, lien or encumbrance.
4. The Underwriting Agreement has been duly authorized, executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company.
5. The Offered Shares to be sold by the Company have been duly
authorized and, upon delivery to the Underwriters against payment therefor in
accordance with the terms of the Underwriting Agreement, will be validly issued,
fully paid and nonassessable. The issuance of the Offered Shares to be sold by
the Company is not subject to any preemptive rights or rights of first refusal
arising under (i) the Company's certificate of incorporation or by-laws, (ii)
the Delaware General Corporation Law or (iii) any contract, undertaking,
indenture or other agreement of the Company or any of its subsidiaries filed as
an exhibit to the Registration Statement (the "Material Agreements"). The
Offered Shares to be sold by Messrs. Blass and Michaels have been duly
authorized, and when issued and paid for on the First Closing Date in accordance
with the terms of the applicable option agreements, will be fully paid and
nonassessable. The Offered Shares to be sold by the remaining Selling
Stockholders have been duly authorized, and are fully paid and non-assessable.
---------------------------------
(1) SCHEDULE A shall include the following: (i) Delta Funding Corporation; (ii)
Fidelity Mortgage Inc.; (iii) DFC Financial Corporation; (iv) DFC Acceptance
Corporation; and (v) Renaissance Mortgage Acceptance Corp.
Exhibit A-1
6. The execution and delivery of the Underwriting Agreement and the
performance by the Company of its terms do not violate or result in a violation
of any Applicable Law, the Company's certificate of incorporation or bylaws or
any judgment, order or decree of any court or arbiter known to us to which the
Company or any of its subsidiaries is a party or to which their properties are
subject, and, to our knowledge, will not constitute a material breach of the
terms, conditions or provisions of or constitute a default under any of the
Material Agreements. "Applicable Laws" means those laws and regulations which,
in our experience, are normally applicable to transactions of the type
contemplated by the Underwriting Agreement and that are not applicable because
of the nature of the assets or business of the Company or the Specified Selling
Stockholders. Such term does not include the anti-fraud provisions of federal
and state securities laws, as to which we express no opinion in such paragraph.
With respect to such opinions, we have assumed that no discretionary action
under the Underwriting Agreement will be taken by or on behalf of the Company or
any Specified Selling Stockholder violate any federal or state statute or
regulation applicable to such parties.
7. We are without knowledge of rights to have securities of the Company
registered under the Registration Statement or included in the offering
contemplated by the Underwriting Agreement which have not been waived by the
holders of such rights or which have not expired by reason of lapse of time
following notification of the Company's intention to file the Registration
Statement.
8. The Common Stock conforms in all material respects to the description
thereof contained under the heading "Description of Capital Stock" in the
Registration Statement. The form of certificate used to evidence the Common
Stock is in due and proper form and complies with all applicable requirements of
the charter and by-laws of the Company and the General Corporation Law of the
State of Delaware.
9. The Registration Statement has become effective under the Act, and we
are not aware that any stop order suspending the effectiveness thereof has been
issued or any proceedings for that purpose have been instituted or are pending
or threatened under the Act.
10. The Company has satisfied the conditions for the use of Form S-2
with respect to the Registration Statement in connection with the offering
contemplated by the Agreement.
11. The Registration Statement, as of the effective date thereof, and
the Prospectus, as of its date, complied as to form in all material respects
with the requirements of the Securities Act (except as to the financial
statements, supporting schedules, footnotes and other financial and statistical
information included therein, as to which we express no opinion). The reports
incorporated by reference in the Registration Statement, as of their respective
filing dates, complied as to form in all material respects with the requirements
of the Exchange Act (except as to the financial statements, supporting
schedules, footnotes and other financial and statistical information included
therein, as to which we express no opinion).
12. We are without knowledge that there is any pending or threatened
action, suit or proceeding before or by any court or governmental agency,
authority or body or any arbitrator to which the Company or any of its
subsidiaries is a party, of a character required to be disclosed in the
Registration Statement, which is not adequately disclosed in the Prospectus or
the documents incorporated by reference therein. There is no contract or other
document known to us of a character required to be described in the Prospectus
or the documents incorporated by reference therein or to be filed as an exhibit
to the Registration Statement that is not described or filed as required.
13. No authorization, approval or consent of any court or governmental
authority or agency is required in connection with the Company's execution and
delivery of the Underwriting Agreement and its
Exhibit A-2
performance of the transactions contemplated by the Underwriting Agreement,
except such as have been obtained under the Securities Act and such as may be
required under state securities or blue sky laws in connection with the purchase
and distribution of the Offered Shares by the several Underwriters.
14. The Offered Shares have been approved for listing on the American
Stock Exchange.
15. The statements in the Registration Statement under the heading
"Description of Capital Stock" and "Item 15 - Indemnification of Directors and
Officers," to the extent that they constitute summaries of the terms of stock,
documents, matters of law or regulation or legal conclusions, fairly summarize
the matters described therein in all material respects.
16. The Company is not, and after receipt of payment for the Offered
Shares will not be, an "investment company" within the meaning of the Investment
Company Act.
17. The Underwriting Agreement has been duly authorized, executed and
delivered by or on behalf of each of the Selling Stockholders specified on
SCHEDULE B hereto (the "Specified Selling Stockholders")(2) and constitutes the
legal, valid and binding obligation of each Specified Selling Stockholder.
18. The execution and delivery by each Specified Selling Stockholder of,
and the performance by each Specified Selling Stockholder of its obligations
under, the Underwriting Agreement, the Custody Agreement and Power of Attorney
of each Specified Selling Stockholder will not violate or result in a violation
of (a) the trust formation or organizational documents (if an entity) of each
Specified Selling Stockholder, (b) to our knowledge, any agreement or other
instrument binding upon each Specified Selling Stockholder or to which its
properties are subject, (c) any Applicable Law or (d) any judgment known to us
of any court or arbiter, to which each Specified Selling Stockholder is a party
or to which its properties are subject. No authorization, approval or consent of
any court or governmental authority or agency is required for the execution and
delivery by each Specified Selling Stockholder of its obligations under the
Underwriting Agreement or the Custody Agreement or Power of Attorney of each
Specified Selling Stockholder or the performance of its obligations thereunder,
except each as may be required by the state securities or blue sky laws in
connection with the purchase and distribution of the Offered Shares by the
several Underwriters.
19. Each Specified Selling Stockholder (a) is (i) the record owner and,
(ii) to our knowledge, the beneficial owner of the Shares to be sold by each
Specified Selling Stockholder and (b) has the legal right and power to enter
into the Underwriting Agreement and the Custody Agreement and Power of Attorney
of each Specified Selling Stockholder and to sell, transfer and deliver the
Offered Shares to be sold by each Specified Selling Stockholder.
20. The Custody Agreement and the Power of Attorney of each Specified
Selling Stockholder have been duly authorized, executed and delivered by each
Specified Selling Stockholder and constitute the legal, valid and binding
obligations of each Specified Selling Stockholder.
21. Upon payment by the Underwriters for the Offered Shares to be sold
by the Specified Selling Stockholders in accordance with the terms of the
Underwriting Agreement, delivery of such Offered Shares pursuant to the
direction of JMP as contemplated by the Underwriting Agreement to Cede & Co.,
the registration of such Offered Shares in the name of Cede & Co. and the
crediting of such
---------------------------------
(2) SCHEDULE B shall include all of the Selling Stockholders, other than any
Selling Stockholder organized under the laws of the Cayman Islands. For such
Selling Stockholder, another law firm acceptable to JMP shall provide the
opinions on behalf of the Selling Stockholder.
Exhibit A-3
Offered Shares to the Underwriters' accounts with DTC, (A)
under Section 8-501 of the Uniform Commercial Code as in effect in the State of
New York (the "New York UCC"), the respective Underwriters will acquire a
security entitlement in respect of such Offered Shares, and (B) no action based
on an "adverse claim" (as defined in New York UCC Section 8-102) to such
security entitlement may be asserted successfully against the Underwriters if,
at such time, the Underwriters do not have notice of such adverse claim within
the meaning of New York UCC Section 8-105. For purposes of this paragraph, we
have assumed that the relevant "securities intermediary's jurisdiction" for
purposes of New York UCC Section 8-110 is the State of New York.
In addition, we have participated in conferences with your
representatives and with representatives of the Company and its accountants
concerning the Registration Statement and the Prospectus and any supplements or
amendments thereto, including the documents incorporated by reference therein,
and have considered the matters required to be stated therein and the statements
contained therein, although we have not independently verified the accuracy,
completeness or fairness of such statements. Based upon and subject to the
foregoing, nothing has come to our attention that leads us to believe that the
Registration Statement, or any amendments thereto, at the time the Registration
Statement or such amendment became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that the
Prospectus and any amendment or supplement thereto, at the time it was filed
with the Commission under the Act or as of the date hereof, 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 light of the
circumstances under which they were made, not misleading (it being understood
that we have not been requested to and do not make any comment in this paragraph
with respect to the financial statements, supporting schedules, footnotes, and
other financial and statistical information contained in the Registration
Statement or Prospectus).
Such opinion shall contain such qualifications and assumptions as shall
be reasonably acceptable to counsel for the Underwriters. Such opinion may rely
as to factual matters upon the certificates of the Company, the Selling
Stockholders and public officials, and the representations of the parties in the
transaction documents.
Exhibit A-4
EXHIBIT B
FORM OF LOCK-UP AGREEMENT
July _____, 2004
JMP Securities LLC
SunTrust Capital Markets, Inc.
Xxxx Capital Partners, LLC
As Representatives of the Several Underwriters
c/o JMP Securities LLC
Xxx Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Re: Delta Financial Corporation (the "COMPANY")
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of
Common Stock of the Company ("COMMON STOCK") or securities convertible into,
exchangeable, or exercisable for Common Stock ("SECURITIES"). The Company
proposes to carry out a public offering of Common Stock (the "OFFERING") for
which you will act as the representatives of the underwriters. The undersigned
recognizes that the Offering will be of benefit to the undersigned and will
benefit the Company by, among other things, raising additional capital for its
operations. The undersigned acknowledges that you and the other underwriters are
relying on the representations and agreements of the undersigned contained in
this letter in carrying out the Offering and in entering into underwriting
arrangements with the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not, without the prior written consent of JMP Securities LLC
(which consent may be withheld in its sole discretion), directly or indirectly,
sell, offer, contract, or grant any option to sell (including without limitation
any short sale), pledge, transfer, establish an open "put equivalent position"
within the meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder (collectively,
the "EXCHANGE ACT") or otherwise dispose of any shares (collectively, a
"DISPOSITION") of Securities currently or hereafter owned either of record or
beneficially (as defined in Rule 13d-3 under the Exchange Act) by the
undersigned, or publicly announce the undersigned's intention to do any of the
foregoing, for a period commencing on the date hereof and continuing through the
close of trading on the date ninety (90) days, or with respect to Messrs. Xxxxxx
X., Xxxx, Xxxx and Xxx Xxxxxx, the date one hundred twenty (120) days, after the
date of the Prospectus (the "LOCK-UP PERIOD"). The undersigned also agrees and
consents to the entry of stop transfer instructions with the Company's transfer
agent and registrar against the transfer of shares of Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock held by the
undersigned except in compliance with the foregoing restrictions.
The foregoing restriction has been expressly agreed to preclude the holder of
the Securities from engaging in any hedging or other transaction which is
designed to or reasonably expected to lead to or result in a Disposition of
Securities during the Lock-up Period, even if such Securities would be disposed
of by someone other than such holder. Such prohibited hedging or other
transactions would include, without limitation, any short sale (whether or not
against the box) or any purchase, sale, or grant of any right (including,
without limitation, any put or call option) with respect to any Securities or
with respect to any security (other than a broad-based market basket or index)
that included, relates to, or derives any significant part of its value from
Securities. The undersigned also agrees and consents to the entry of stop
transfer
Exhibit B-1
instructions with the Company's transfer agent and registrar against the
transfer of shares of Common Stock or Securities held by the undersigned except
in compliance with the foregoing restrictions.
With respect to the Offering only, the undersigned waives any registration
rights relating to registration under the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder, of any Common Stock owned
either of record or beneficially by the undersigned (other than the shares of
Common Stock included in the Offering), including any rights to receive notice
of the Offering.
This agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives, and assigns of the
undersigned. Nothing in this Lock-up Agreement shall constitute an obligation to
purchase shares of Common Stock or Securities of the Company.
---------------------------------------------
Printed Name of Holder
By:
------------------------------------------
Signature
---------------------------------------------
Printed Name of Person Signing
(AND INDICATE CAPACITY OF PERSON SIGNING IF
SIGNING AS CUSTODIAN, TRUSTEE, OR ON BEHALF
OF AN ENTITY)
Exhibit B-2