EXHIBIT 1.1
ACCREDITED HOME LENDERS HOLDING CO.
Shares of Common Stock
UNDERWRITING AGREEMENT
______________, 2002
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
U.S. BANCORP XXXXX XXXXXXX INC.
WEDBUSH XXXXXX SECURITIES, INC.
as Representatives of the several Underwriters
c/o Friedman, Billings, Xxxxxx & Co., Inc.
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
Accredited Home Lenders Holding Co., a Delaware corporation
(the "Company"), and certain stockholders of the Company listed on Schedule I
hereto (the "Selling Stockholders"), each confirms its agreement with each of
the Underwriters listed on Schedule II hereto (collectively, the
"Underwriters"), for whom Friedman, Billings, Xxxxxx & Co., Inc., U.S. Bancorp
Xxxxx Xxxxxxx Inc. and Wedbush Xxxxxx Securities, Inc. are acting as
representatives (in such capacity, the "Representatives"), with respect to (i)
the sale by the Company and the Selling Stockholders of an aggregate of
10,159,044 shares (the "Initial Shares") of Common Stock, par value $0.001 per
share, of the Company ("Common Stock") in the respective numbers of shares set
forth opposite the names of the Company and each such Selling Stockholder in
Schedule I hereto, and the purchase by the Underwriters, acting severally and
not jointly, of the respective number of shares of Common Stock set forth
opposite the names of the Underwriters in Schedule II hereto, and (ii) the grant
of the option described in Section 1(b) hereof to purchase all or any part of
1,523,856 additional shares of Common Stock to cover over-allotments (the
"Option Shares"), if any, from the Company and certain Selling Stockholders, in
the respective numbers of shares of Common Stock set forth opposite the names of
the Company and such Selling Stockholders, reflected in Schedule I hereto, to
the Underwriters, acting severally and not jointly, in the respective numbers of
shares of Common Stock set forth opposite the names of the Underwriters in
Schedule II hereto. The 10,159,044 shares of Common Stock to be purchased by the
Underwriters and all or any part of the 1,523,856 shares of Common Stock subject
to the option described in Section l(b) hereof are hereinafter called,
collectively, the "Shares."
The Company understands that the Underwriters propose to make
a public offering of the Shares as soon as the Underwriters deem advisable after
this Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange
Commission (the Commission"), a registration statement on Form S-1 (No.
333-91644) and a related preliminary
prospectus for the registration of the Shares under the Securities Act of 1933,
as amended (the "Securities Act"), and the rules and regulations thereunder (the
"Securities Act Regulations"). The Company has prepared and filed such
amendments thereto, if any, and such amended preliminary prospectuses, if any,
as may have been required to the date hereof, and will file such additional
amendments thereto and such amended prospectuses as may hereafter be required.
The registration statement has been declared effective under the Securities Act
by the Commission. The registration statement as amended at the time it became
effective (including all information deemed (whether by incorporation by
reference or otherwise) to be a part of the registration statement at the time
it became effective pursuant to Rule 430A(b) of the Securities Act Regulations)
is hereinafter called the "Registration Statement," except that, if the Company
files a post-effective amendment to such registration statement which becomes
effective prior to the Closing Time (as defined below), "Registration Statement"
shall refer to such registration statement as so amended. Any registration
statement filed pursuant to Rule 462(b) of the Securities Act Regulations is
hereinafter called the "Rule 462(b) Registration Statement," and after such
filing the term "Registration Statement" shall include the 462(b) Registration
Statement. Each prospectus included in the Registration Statement, or amendments
thereof or supplements thereto, before it became effective under the Securities
Act and any prospectus filed with the Commission by the Company with the consent
of the Underwriters pursuant to Rule 424(a) of the Securities Act Regulations is
hereinafter called the "Preliminary Prospectus." The term "`Prospectus" means
the final prospectus, as first filed with the Commission pursuant to paragraph
(1) or (4) of Rule 424(b) of the Securities Act Regulations, and any amendments
thereof or supplements thereto. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus.
Each Selling Stockholder has executed and delivered a Custody
Agreement and a Power of Attorney in the form attached hereto as Exhibit A
(collectively, the "Custody Agreement and Power of Attorney") pursuant to which
each Selling Stockholder party thereto has placed the Initial Shares and Option
Shares to be sold by it pursuant to this Agreement in custody and appointed the
persons designated therein as a committee (the "Committee") with the authority
to execute and deliver this Agreement on behalf of such Selling Stockholder and
to take certain other actions with respect thereto and hereto.
The Company and each of the Selling Stockholders and the
Underwriters agree as follows:
1. Sale and Purchase:
(a) Initial Shares. Upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per share of $________, the Company agrees to sell to the Underwriters the
number of Initial Shares set forth in Schedule I opposite its name and each
Selling Stockholder agrees to sell to the Underwriters the number of Initial
Shares set forth in Schedule I opposite such Selling Stockholder's name, and
each Underwriter agrees, severally and not jointly, to purchase from the Company
and the Selling Stockholders the number of Initial Shares set forth in Schedule
II opposite such Underwriter's name, plus any additional number of Initial
Shares which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 8 hereof, subject in each case, to
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such adjustments among the Underwriters as the Representatives in their sole
discretion shall make to eliminate any sales or purchases of fractional shares.
(b) Option Shares. In addition, upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per share set forth in paragraph (a), the Company and certain Selling
Stockholders hereby grant an option to the Underwriters, acting severally and
not jointly, to purchase from the Company and those Selling Stockholders listed
in Schedule I hereto as selling Option Shares, all or any part of the Option
Shares, plus any additional number of Option Shares which such Underwriter may
become obligated to purchase pursuant to the provisions of Section 8 hereof. The
option hereby granted will expire 30 days after the date hereof and may be
exercised in whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Shares upon notice by the Representatives to the
Company and the Committee setting forth the number of Option Shares as to which
the several Underwriters are then exercising the option and the time and date of
payment and delivery for such Option Shares. Any such time and date of delivery
(a "Date of Delivery") shall be determined by the Representatives, but shall not
be later than three full business days (or earlier, without the consent of the
Company, than two full business days) after the exercise of such option, nor in
any event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the Option Shares, the Company and each
Selling Stockholder listed in Schedule I hereto as selling Option Shares will
sell that proportion of the total number of Option Shares then being purchased
which the number of Initial Shares set forth in Schedule I opposite the name of
the Company or such Selling Stockholder bears to the total number of Initial
Shares being sold by the Company and such Selling Stockholder, and each of the
Underwriters, acting severally and not jointly, will purchase that proportion of
the total number of Option Shares then being purchased which the number of
Initial Shares set forth in Schedule II opposite the name of such Underwriter
bears to the total number of Initial Shares, subject in each case to such
adjustments among the Underwriters as the Representatives in their sole
discretion shall make to eliminate any sales or purchases of fractional shares.
2. Payment and Delivery:
(a) Initial Shares. The Shares to be purchased by each Underwriter
hereunder, in definitive form, and in such authorized denominations and
registered in such names as the Representatives may request upon at least
forty-eight hours' prior notice to the Company and the Selling Stockholders
shall be delivered by or on behalf of the Company and the Selling Stockholders
to the Representatives, including, at the option of the Representatives, through
the facilities of The Depository Trust Company ("DTC") for the account of such
Underwriter, against payment by or on behalf of such Underwriter of the purchase
price therefor by wire transfer of Federal (same-day) funds to the account
specified to the Representatives by the Company and each of the Selling
Stockholders, upon at least forty-eight hours' prior notice. The Company will
cause the certificates representing the Initial Shares to be made available for
checking and packaging at least twenty-four hours prior to the Closing Time (as
defined below) with respect thereto at the office of the Representatives, 1001
00/xx/ Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000, or at the office of DTC or its
designated custodian, as the case may be (the "Designated Office"). The time and
date of such delivery and payment shall be 9:30 a.m., New
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York City time, on the third (fourth, if pricing occurs after 4:30 p.m., New
York City time) business day after the date hereof (unless another time and date
shall be agreed to by the Representatives and the Company). The time at which
such payment and delivery are actually made is hereinafter sometimes called the
"Closing Time" and the date of delivery of both Initial Shares and Option Shares
is hereinafter sometimes called the "Date of Delivery."
(b) Option Shares. Any Option Shares to be purchased by each
Underwriter hereunder, in definitive form, and in such authorized denominations
and registered in such names as the Representatives may request upon at least
forty-eight hours' prior notice to the Company and the Selling Stockholders
listed in Schedule I hereto as selling Option Shares shall be delivered by or on
behalf of the Company and such Selling Stockholders to the Representatives,
including, at the option of the Representatives, through the facilities of DTC
for the account of such Underwriter, against payment by or on behalf of such
Underwriter of the purchase price therefor by wire transfer of Federal
(same-day) funds to the account specified to the Representatives by the Company
and each of such Selling Stockholders, upon at least forty-eight hours' prior
notice. The Company will cause the certificates representing the Option Shares
to be made available for checking and packaging at least twenty-four hours prior
to the Date of Delivery with respect thereto at the Designated Office. The time
and date of such delivery and payment shall be 9:30 a.m., New York City time, on
the date specified by the Representatives in the notice given by the
Representatives to the Company of the Underwriters' election to purchase such
Option Shares or on such other time and date as the Company and the
Representatives may agree upon in writing.
(c) Directed Shares. It is understood that approximately shares of the
Initial Shares ("Directed Shares") initially will be reserved by the
Underwriters for offer and sale to employees and persons having business
relationships with the Company ("Directed Share Participants") upon the terms
and conditions set forth in the Prospectus and in accordance with the rules and
regulations of the National Association of Securities Dealers, Inc. (the
"Directed Share Program"). Under no circumstances will the Representatives or
any Underwriter be liable to the Company or to any Directed Share Participant
for any action taken or omitted to be taken in good faith in connection with
such Directed Share Program. To the extent that any Directed Shares are not
affirmatively reconfirmed for purchase by any Directed Share Participant on or
immediately after the date of this Agreement, such Directed Shares may be
offered to the public as part of the public offering contemplated herein.
3. Representations and Warranties:
3.1 The Company represents and warrants to the Underwriters that:
(a) the Company has an authorized capitalization as set forth in the
Prospectus; the outstanding shares of capital stock of the Company and each
subsidiary of the Company (each, a "Subsidiary") have been duly and validly
authorized and issued and are fully paid and non-assessable and were issued in
compliance with all applicable state and federal laws concerning the issuance of
securities; all of the outstanding shares of capital stock of the Subsidiaries
are directly or indirectly owned of record and beneficially by the Company;
except as disclosed in the Prospectus, there are no outstanding (i) securities
or obligations of the Company or any of
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the Subsidiaries convertible into or exchangeable for any capital stock of the
Company or any such Subsidiary, (ii) warrants, rights or options to subscribe
for or purchase from the Company or any such Subsidiary any such capital stock
or any such convertible or exchangeable securities or obligations, or (iii)
obligations of the Company or any such Subsidiary to issue any shares of capital
stock, any such convertible or exchangeable securities or obligation, or any
such warrants, rights or options;
(b) each of the Company and the Subsidiaries (all of which are named in
Exhibit 21 to the Registration Statement) has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
respective jurisdiction of incorporation with full corporate power and authority
to own its respective properties and to conduct its respective businesses as
described in the Registration Statement and Prospectus and, in the case of the
Company, to execute and deliver this Agreement and to consummate the
transactions contemplated herein;
(c) the Company and all of the Subsidiaries are duly qualified or licensed
and are in good standing in each jurisdiction in which they conduct their
respective businesses or in which they own or lease real property or otherwise
maintain an office and in which the failure, individually or in the aggregate,
to be so qualified or licensed could have a material adverse effect on the
assets, business, operations, earnings, prospects, properties or condition
(financial or otherwise), present or prospective, of the Company and the
Subsidiaries taken as a whole, (any such effect or change, where the context so
requires, is hereinafter called a "Material Adverse Effect" or "Material Adverse
Change"); except as disclosed in the Prospectus, no Subsidiary is prohibited or
restricted, directly or indirectly, from paying dividends to the Company, or
from making any other distribution with respect to such Subsidiary's capital
stock or from repaying to the Company or any other Subsidiary any amounts which
may from time to time become due under any loans or advances to such Subsidiary
from the Company or such other Subsidiary, or from transferring any such
Subsidiary's property or assets to the Company or to any other Subsidiary; other
than as disclosed in the Prospectus, the Company does not own, directly or
indirectly, any capital stock or other equity securities of any other
corporation or any ownership interest in any partnership, joint venture or other
association;
(d) the Company and the Subsidiaries are in compliance in all material
respects with all applicable laws, rules, regulations, orders, decrees and
judgments, including those relating to transactions with affiliates and
regulatory matters;
(e) to the best knowledge of the Company and the Subsidiaries, there is and
has been no failure on the part of any of the Company's directors or officers,
in their capacities as such, to comply with any provision of the Sarbanes Oxley
Act of 2002 (the "Sarbanes Oxley Act");
(f) neither the Company nor any Subsidiary is in breach of or in default
under (nor has any event occurred which with notice, lapse of time, or both
would constitute a breach of, or default under), its respective organizational
documents, or in the performance or observance of any obligation, agreement,
covenant or condition contained in any license, indenture, mortgage, deed of
trust, loan or credit agreement or other agreement or instrument to which the
Company or any Subsidiary is a party or by which any of them or their respective
properties is bound, except for such breaches or defaults which could not have a
Material Adverse Effect;
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(g) the execution, delivery and performance of this Agreement, and
consummation of the transactions contemplated herein will not (A) conflict with,
or result in any breach of, or constitute a default under (nor constitute any
event which with notice, lapse of time, or both would constitute a breach of, or
default under), (i) any provision of the organizational documents of the Company
or any Subsidiary, or (ii) any provision of any license, indenture, mortgage,
deed of trust, loan or credit agreement or other agreement or instrument to
which the Company or any Subsidiary is a party or by which any of them or their
respective properties may be bound or affected, or under any federal, state,
local or foreign law, regulation or rule or any decree, judgment or order
applicable to the Company or any Subsidiary, except in the case of this clause
(ii) for such breaches or defaults which could not have a Material Adverse
Effect; or (B) result in the creation or imposition of any lien, charge, claim
or encumbrance upon any property or asset of the Company or any Subsidiary;
(h) this Agreement has been duly authorized, executed and delivered by
the Company and is a legal, valid and binding agreement of the Company
enforceable in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, and by general equitable principles, and
except to the extent that the indemnification and contribution provisions of
Section 9 hereof may be limited by federal or state securities laws and public
policy considerations in respect thereof;
(i) no approval, authorization, consent or order of or filing with any
federal, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the Company's execution,
delivery and performance of this Agreement, its consummation of the
Reorganization (as defined in Section 3.1(vv) below) and the other transactions
contemplated herein, and its sale and delivery of the Shares, other than (i)
such as have been obtained, or will have been obtained at the Closing Time or
the relevant Date of Delivery, as the case may be, under the Securities Act and
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (ii) such
approvals as have been obtained in connection with the approval of the quotation
of the Shares on the Nasdaq National Market and (iii) any necessary
qualification under the securities or blue sky laws of the various jurisdictions
in which the Shares are being offered by the Underwriters;
(j) each of the Company and the Subsidiaries has all necessary
licenses, authorizations, consents and approvals and has made all necessary
filings required under any federal, state or local law, regulation or rule, and
has obtained all necessary authorizations, consents and approvals from other
persons, required in order to conduct their respective businesses as described
in the Prospectus, except to the extent that any failure to have any such
licenses, authorizations, consents or approvals, to make any such filings or to
obtain any such authorizations, consents or approvals could not, individually or
in the aggregate, have a Material Adverse Effect; neither the Company nor any of
the Subsidiaries is required by any applicable law to obtain accreditation or
certification from any governmental agency or authority in order to provide the
products and services which it currently provides or which it proposes to
provide as set forth in the Prospectus; neither the Company nor any of the
Subsidiaries is in violation of, in default under, or has received any notice
regarding a possible violation, default or revocation of any such license,
authorization, consent or approval or any federal, state, local or foreign law,
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regulation or rule or any decree, order or judgment applicable to the Company or
any of the Subsidiaries the effect of which could result in a Material Adverse
Change; and no such license, authorization, consent or approval contains a
materially burdensome restriction that is not adequately disclosed in the
Registration Statement and the Prospectus;
(k) each of the Registration Statement and any Rule 462(b) Registration
Statement has become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the Securities Act and no
proceedings for that purpose have been instituted or are pending or, to the
knowledge of the Company or any Selling Stockholder, are threatened by the
Commission, and the Company has complied to the Commission's satisfaction with
any request on the part of the Commission for additional information;
(l) the Preliminary Prospectus and the Registration Statement comply,
and the Prospectus and any further amendments or supplements thereto will, when
they have become effective or are filed with the Commission, as the case may be,
comply, in all material respects with the requirements of the Securities Act and
the Securities Act Regulations; the Registration Statement did not, and any
amendment thereto will not, in each case as of the applicable effective date,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; and
the Preliminary Prospectus does not, and the Prospectus or any amendment or
supplement thereto will not, as of the applicable filing date and at the Closing
Time and on each Date of Delivery (if any), contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Company
makes no warranty or representation with respect to any statement contained in
the Registration Statement or the Prospectus in reliance upon and in conformity
with the information concerning the Underwriters and furnished in writing by or
on behalf of the Underwriters through the Representatives to the Company
expressly for use in the Registration Statement or the Prospectus (that
information being limited to that described in the penultimate sentence of the
first paragraph of Section 9(c) hereof);
(m) the Preliminary Prospectus was and the Prospectus delivered to the
Underwriters for use in connection with this offering will be identical to the
versions of the Preliminary Prospectus and Prospectus created to be transmitted
to the Commission for filing via the Electronic Data Gathering Analysis and
Retrieval System ("XXXXX"), except to the extent permitted by Regulation S-T;
(n) there are no actions, suits, proceedings, inquiries or
investigations pending or, to the knowledge of the Company, threatened against
the Company or any Subsidiary or any of their respective officers and directors
or to which the properties, assets or rights of any such entity are subject, at
law or in equity, before or by any federal, state, local or foreign governmental
or regulatory commission, board, body, authority, arbitral panel or agency which
could result in a judgment, decree, award or order having a Material Adverse
Effect;
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(o) the financial statements, including the notes thereto, included in
the Registration Statement and the Prospectus present fairly the consolidated
financial position of the entities to which such financial statements relate
(the "Covered Entities") as of the dates indicated and the consolidated results
of operations and changes in financial position and cash flows of the Covered
Entities for the periods specified; such financial statements have been prepared
in conformity with generally accepted accounting principles as applied in the
United States and on a consistent basis during the periods involved and in
accordance with Regulation S-X promulgated by the Commission; the financial
statement schedules included in the Registration Statement and the amounts in
the Prospectus under the captions "Summary - Summary Consolidated Financial
Data" and "Selected Consolidated Financial Data" fairly present the information
shown therein and have been compiled on a basis consistent with the financial
statements included in the Registration Statement and the Prospectus; no other
financial statements or supporting schedules are required to be included in the
Registration Statement; the unaudited pro forma financial information (including
the related notes) included in the Prospectus and any Preliminary Prospectus
complies as to form in all material respects with the applicable accounting
requirements of the Securities Act and the Securities Act Regulations, and
management of the Company believes that the assumptions underlying the pro forma
adjustments are reasonable; such pro forma adjustments have been properly
applied to the historical amounts in the compilation of the information and such
information fairly presents with respect to the Company and the Subsidiaries,
the financial position, results of operations and other information purported to
be shown therein at the respective dates and for the respective periods
specified; no other pro forma financial information is required to be included
in the Registration Statement;
(p) Deloitte & Touche LLP, whose reports on the consolidated financial
statements of the Company and the Subsidiaries are filed with the Commission as
part of the Registration Statement and Prospectus, are, and were during the
periods covered by their reports, independent public accountants as required by
the Securities Act and the Securities Act Regulations;
(q) subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, and except as may be otherwise
stated in the Registration Statement or Prospectus, there has not been (i) any
Material Adverse Change or any development that could reasonably be expected to
result in a Material Adverse Change, whether or not arising in the ordinary
course of business, (ii) any transaction that is material to the Company and the
Subsidiaries taken as a whole, contemplated or entered into by the Company or
any of the Subsidiaries, (iii) any obligation, contingent or otherwise, directly
or indirectly incurred by the Company or any Subsidiary that is material to the
Company and Subsidiaries taken as a whole or (iv) any dividend or distribution
of any kind declared, paid or made by the Company on any class of its capital
stock;
(r) the Shares conform in all material respects to the description
thereof contained in the Registration Statement and the Prospectus;
(s) there are no persons with registration or other similar rights to
have any equity or debt securities, including securities which are convertible
into or exchangeable for equity
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securities, registered pursuant to the Registration Statement or otherwise
registered by the Company under the Securities Act, (i) except for certain of
the Selling Stockholders, to the extent of the equity securities to be offered
and sold by such Selling Stockholders as contemplated by this Agreement, and
(ii) except for those registration or similar rights which have been waived with
respect to the offering contemplated by this Agreement, all of which
registration or similar rights described in clauses (i) and (ii) are fairly
summarized in the Prospectus;
(t) the Shares have been duly authorized and, when issued and duly
delivered against payment therefor as contemplated by this Agreement, will be
validly issued, fully paid and non-assessable, free and clear of any pledge,
lien, encumbrance, security interest or other claim, and the issuance and sale
of the Shares by the Company is not subject to preemptive or other similar
rights arising by operation of law, under the organizational documents of the
Company or under any agreement to which the Company or any Subsidiary is a party
or otherwise;
(u) the Shares have been approved for listing on the Nasdaq National
Market, subject to official notice of issuance;
(v) the Company has not taken, and will not take, directly or
indirectly, any action which is designed to or which has constituted or which
might reasonably be expected to cause or result in stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Shares;
(w) neither the Company nor any of its affiliates (i) is required to
register as a "broker" or "dealer" in accordance with the provisions of the
Exchange Act, or the rules and regulations thereunder (the "Exchange Act
Regulations"), or (ii) directly, or indirectly through one or more
intermediaries, controls or has any other association with (within the meaning
of Article I of the By-laws of the National Association of Securities Dealers,
Inc. (the "NASD")) any member firm of the NASD;
(x) the Company has not relied upon the Representatives or legal
counsel for the Representatives for any legal, tax or accounting advice in
connection with the offering and sale of the Shares;
(y) any certificate signed by any officer of the Company or any
Subsidiary delivered to the Representatives or to counsel for the Underwriters
pursuant to or in connection with this Agreement shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby;
(z) the form of certificate used to evidence the Common Stock complies
in all material respects with all applicable statutory requirements, with any
applicable requirements of the organizational documents of the Company and the
requirements of the Nasdaq National Market;
(aa) the Company and the Subsidiaries have good and marketable title in
fee simple to all real property, if any, and good title to all personal property
owned by them, in each case free
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and clear of all liens, security interests, pledges, charges, encumbrances,
mortgages and defects, except such as are disclosed in the Prospectus or such as
do not materially and adversely affect the value of such property and do not
interfere with the use made or proposed to be made of such property by the
Company and the Subsidiaries; and any real property and buildings held under
lease by the Company or any Subsidiary are held under valid, existing and
enforceable leases, with such exceptions as are disclosed in the Prospectus or
are not material and do not interfere with the use made or proposed to be made
of such property and buildings by the Company or such Subsidiary;
(bb) the descriptions in the Registration Statement and the Prospectus
of the legal or governmental proceedings, contracts, leases and other legal
documents therein described present fairly the information required to be shown,
and there are no legal or governmental proceedings, contracts, leases, or other
documents of a character required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration Statement which
are not described or filed as required; all agreements between the Company or
any of the Subsidiaries and third parties expressly referenced in the Prospectus
are legal, valid and binding obligations of the Company or one or more of the
Subsidiaries, enforceable in accordance with their respective terms, except to
the extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and by general equitable principles;
(cc) the Company and each Subsidiary owns or possesses adequate
licenses or other rights to use all patents, trademarks, service marks, trade
names, copyrights, software and design licenses, trade secrets, manufacturing
processes, other intangible property rights and know-how (collectively
"Intangibles") necessary to entitle the Company and each Subsidiary to conduct
its business as described in the Prospectus, and neither the Company nor any
Subsidiary has received notice of infringement of or conflict with (and neither
the Company nor any Selling Stockholder knows of any such infringement of or
conflict with) asserted rights of others with respect to any Intangibles which
could have a Material Adverse Effect;
(dd) the Company and each of the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles as applied in the United States and to maintain asset
accountability; (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 the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences;
(ee) each of the Company and the Subsidiaries maintains insurance
(issued by insurers of recognized financial responsibility) of the types and in
the amounts generally deemed adequate for their respective businesses and
consistent with insurance coverage maintained by similar companies in similar
businesses, including, but not limited to, insurance covering real and personal
property owned or leased by the Company and the Subsidiaries against theft,
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damage, destruction, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect;
(ff) neither the Company nor any of the Subsidiaries is in violation,
or has received notice of any violation with respect to, any applicable
environmental, safety or similar law applicable to the business of the Company
or any of the Subsidiaries; the Company and the Subsidiaries have received all
permits, licenses or other approvals required of them under applicable federal
and state occupational safety and health and environmental laws and regulations
to conduct their respective businesses, and the Company and the Subsidiaries are
in compliance with all terms and conditions of any such permit, license or
approval, except any such violation of law or regulation, failure to receive
required permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals which could not,
individually or in the aggregate, result in a Material Adverse Change;
(gg) neither the Company nor any Subsidiary is in violation of or has
received notice of any violation with respect to any federal or state law
relating to discrimination in the hiring, promotion or pay of employees, nor any
applicable federal or state wages and hours law, nor any state law precluding
the denial of credit due to the neighborhood in which a property is situated,
the violation of any of which could have a Material Adverse Effect;
(hh) the Company and each of the Subsidiaries are in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company or any of the Subsidiaries would have any
liability; the Company and each of the Subsidiaries have not incurred and do not
expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Section 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder ("Code"); and each "pension plan" for
which the Company and each of its Subsidiaries would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by failure to
act, which would cause the loss of such qualification;
(ii) neither the Company nor any of the Subsidiaries nor any officer or
director purporting to act on behalf of the Company or any of the Subsidiaries
has at any time (i) made any contributions to any candidate for political
office, or failed to disclose fully any such contributions, in violation of law,
(ii) made any payment to any state, federal or foreign governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or allowed by applicable law, (iii) made any
payment outside the ordinary course of business to any investment officer or
loan broker or person charged with similar duties of any entity to which the
Company or any of the Subsidiaries sells or from which the Company or any of the
Subsidiaries buys loans or servicing arrangements for the purpose of influencing
such agent, officer, broker or person to buy loans or servicing arrangements
from or sell loans to the Company or any of the Subsidiaries, or (iv) engaged in
11
any transactions, maintained any bank account or used any corporate funds except
for transactions, bank accounts and funds which have been and are reflected in
the normally maintained books and records of the Company and the Subsidiaries;
(jj) except as otherwise disclosed in the Prospectus, there are no
material outstanding loans or advances or material guarantees of indebtedness by
the Company or any of the Subsidiaries to or for the benefit of any of the
officers or directors of the Company or any of the Subsidiaries or any of the
members of the families of any of them;
(kk) neither the Company nor any of the Subsidiaries nor, to the
knowledge of the Company or any Selling Stockholder, any employee or agent of
the Company or any of the Subsidiaries, has made any payment of funds of the
Company or of any Subsidiary or received or retained any funds in violation of
any law, rule or regulation or of a character required to be disclosed in the
Prospectus that was not disclosed in the Prospectus;
(ll) all securities issued by the Company, any of the Subsidiaries or
any trusts established by the Company or any Subsidiary, have been issued and
sold in compliance with (i) all applicable federal and state securities laws,
(ii) the laws of the applicable jurisdiction of incorporation of the issuing
entity and, (iii) to the extent applicable to the issuing entity, the
requirements of the Nasdaq National Market;
(mm) neither the Company nor any Subsidiary knows of any violation of
any municipal, state or federal law, rule or regulation (including those
pertaining to environmental matters) concerning the real properties owned by any
such entity, including those real properties acquired upon foreclosure
(collectively, the "Properties"), or any part thereof which could have a
Material Adverse Effect;
(nn) except as otherwise disclosed in the Prospectus, (i) none of the
Company, any of the Subsidiaries nor, to the best knowledge of the Company, any
other owners of the Properties at any time or any other party has at any time,
handled, stored, treated, transported, manufactured, spilled, leaked, or
discharged, dumped, transferred or otherwise disposed of or dealt with,
Hazardous Materials (as hereinafter defined) on, to or from the Properties,
other than by any such action taken in compliance with all applicable
Environmental Statutes (as hereinafter defined) or by the Company, any of the
Subsidiaries or any other party in connection with the ordinary use of
residential, retail or commercial properties owned by the Company or any
Subsidiary; (ii) the Company does not know of any intention to use the
Properties or any subsequently acquired properties for the purpose of handling,
storing, treating, transporting, manufacturing, spilling, leaking, discharging,
dumping, transferring or otherwise disposing of or dealing with Hazardous
Materials other than by any such action taken in compliance with all applicable
Environmental Statues or by the Company, any of the Subsidiaries or any other
party in connection with the ordinary use of residential, retail or commercial
properties owned by the Company or any Subsidiary; (iii) neither the Company nor
any of the Subsidiaries knows of any seepage, leak, discharge, release,
emission, spill, or dumping of Hazardous Materials into waters on or adjacent to
the Properties or any other real property owned or occupied by any such party,
or onto lands from which Hazardous Materials might seep, flow or drain into such
waters; (iv) neither the Company nor any of the Subsidiaries has received any
notice of, or has any
12
knowledge of any occurrence or circumstance which, with notice or passage of
time or both, would give rise to a claim under or pursuant to any federal, state
or local environmental statute or regulation or under common law, pertaining to
Hazardous Materials on or originating from any of the Properties or any assets
described in the Prospectus (or, the most recent Preliminary Prospectus) or any
other real property owned or occupied by any such party or arising out of the
conduct of any such party, including without limitation a claim under or
pursuant to any Environmental Statute (hereinafter defined); (v) neither the
Properties nor any other real estate owned by the Company or any of the
Subsidiaries is included or, to the best of the Company's knowledge, proposed
for inclusion on the National Priorities List issued pursuant to CERCLA (as
hereinafter defined) by the United States Environmental Protection Agency (the
"EPA") or, to the best of the Company's knowledge, proposed for inclusion on any
similar list or inventory issued pursuant to any other Environmental Statute or
issued by any other Governmental Authority (as hereinafter defined);
As used herein, "Hazardous Material" shall include, without
limitation any flammable explosives, radioactive materials, hazardous materials,
hazardous wastes, toxic substances, or related materials, asbestos or any
hazardous material as defined by any federal, state or local environmental law,
ordinance, rule or regulation including without limitation the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C. Sections 9601-9675 ("CERCLA"), the Hazardous Materials Transportation
Act, as amended, 49 U.S.C. Sections 1801-1819, the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. Sections 6901-6992K, the Emergency Planning
and Community Right-to-Know Act of 1986, 42 U.S.C. Sections 11001-11050, the
Toxic Substances Control Act, 15 U.S.C. Sections 2601-2671, the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Sections 136-136y, the
Clean Air Act, 42 U.S.C. Sections 7401-7642, the Clean Water Act (Federal Water
Pollution Control Act), 33 U.S.C. Sections 1251-1387, the Safe Drinking Water
Act, 42 U.S.C. Sections 300f-300j-26, and the Occupational Safety and Health
Act, 29 U.S.C. Sections 651-678, as any of the above statutes may be amended
from time to time, and in the regulations promulgated pursuant to each of the
foregoing (individually, an "Environmental Statute") or by any federal, state or
local governmental authority having or claiming jurisdiction over the properties
and assets described in the Prospectus (a "Governmental Authority");
(oo) in connection with this offering, the Company has not offered and
will not offer its Common Stock or any other securities convertible into or
exchangeable or exercisable for Common Stock in a manner in violation of the
Securities Act. The Company has not distributed and will not distribute any
offering material other than the Prospectus in connection with the offer and
sale of the Shares;
(pp) the Company has complied and will comply with all the provisions
of Florida Statutes, Section 517.075 (Chapter 92-198, Laws of Florida); and
neither the Company nor any of the Subsidiaries or affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba;
(qq) the Company has not incurred any liability for any finder's fees
or similar payments in connection with the transactions herein contemplated;
13
(rr) no relationship, direct or indirect, exists between or among the
Company or any of the Subsidiaries on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any of the Subsidiaries
on the other hand, which is required by the Securities Act and the Securities
Act Regulations to be described in the Registration Statement and the Prospectus
and which is not so described;
(ss) neither the Company nor any of the Subsidiaries is and, after
giving effect to the offering and sale of the Shares, will be an "investment
company" or an entity "controlled" by an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended (the "Investment
Company Act");
(tt) there are no existing or, to the knowledge of the Company or any
Selling Stockholder, threatened labor disputes with the employees of the Company
or any of the Subsidiaries which are likely to have individually or in the
aggregate a Material Adverse Effect;
(uu) there are no "Year 2000" issues related to the Company, or any of
the Subsidiaries, that (i) are of a character required to be described or
referred to in the Registration Statement or Prospectus by the Securities Act or
by the Exchange Act or the Securities Act Regulations or Exchange Act
Regulations, which have not been accurately described in the Registration
Statement or Prospectus or (ii) might reasonably be expected to result in any
Material Adverse Change or that might materially affect the Company's or any
Subsidiary's properties, assets or rights;
(vv) no consent, approval, authorization or order of, or qualification
with, any governmental body or agency, other than those obtained, is required in
connection with the offering of the Directed Shares in any jurisdiction where
the Directed Shares are being offered. The Company has not offered, or caused
the Representatives to offer, Shares to any person pursuant to the Directed
Share Program with the specific intent to unlawfully influence (i) a customer or
supplier of the Company to alter the customer's or supplier's level or type of
business with the Company or (ii) a trade journalist or publication to write or
publish favorable information about the Company or its products; and
(ww) the execution and delivery of the Agreement and Plan of Merger
effective as of September __, 2002 (the "Reorganization Agreement") among AHL
Merger Sub, a California corporation, the California Corporation and the
Company, pursuant to which the California Corporation became a wholly-owned
subsidiary of the Company and the Company became a Delaware holding company (the
"Reorganization"), were duly authorized by all necessary corporate action on the
part of each of the California Corporation and the Company; and each of the
California Corporation and the Company had all corporate power and authority to
execute and deliver the Reorganization Agreement and the exhibits, certificates
and other documents related thereto to which they are a party, to file such
Reorganization Agreement and other documents with the Secretary of State of the
State of Delaware and the Secretary of State of the State of California and to
consummate the Reorganization contemplated by the Reorganization Agreement, and
the Reorganization Agreement at the time of execution and immediately prior to
the effectiveness of the Reorganization constituted a valid and binding
obligation of each of the California Corporation and the Company, subject to the
effect of (i) applicable bankruptcy,
14
insolvency, reorganization, moratorium or other similar federal or state laws
affecting the rights of creditors and (ii) general principles of equity.
3.2 Each Selling Stockholder, severally and not jointly, represents and
warrants to the Underwriters that:
(a) such Selling Stockholder has full power and authority to enter into
this Agreement and the Custody Agreement and Power of Attorney to which it is a
party. All authorizations and consents necessary for the execution and delivery
by such Selling Stockholder of the Custody Agreement and Power of Attorney, and
for the execution of this Agreement on behalf of such Selling Stockholder, have
been given. Each of the Custody Agreement and Power of Attorney and this
Agreement has been duly authorized, executed and delivered by or on behalf of
such Selling Stockholder and constitutes a valid and binding agreement of such
Selling Stockholder and is enforceable against such Selling Stockholder in
accordance with the terms thereof and hereof, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, and by general equitable principles, and except to
the extent that the indemnification and contribution provisions of Section 9
hereof may be limited by federal or state securities laws and public policy
considerations in respect thereof;
(b) such Selling Stockholder now has, and at the Closing Time or the
applicable Date of Delivery will have, (i) good and marketable title to the
Shares to be sold by such Selling Stockholder hereunder, free and clear of all
liens, encumbrances and claims whatsoever (other than pursuant to the Custody
Agreement and Power of Attorney), and (ii) full legal right and power, and all
authorizations and approvals required by law, to sell, transfer and deliver such
Shares to the Underwriters hereunder and to make the representations, warranties
and agreements made by such Selling Stockholder herein. Upon the delivery of and
payment for such Shares hereunder, such Selling Stockholder will deliver good
and marketable title thereto, free and clear of any pledge, lien, encumbrance,
security interest or other claim;
(c) at the Closing Time or the applicable Date of Delivery, all stock
transfer or other taxes (other than income taxes) which are required to be paid
in connection with the sale and transfer of the Shares to be sold by such
Selling Stockholder to the Underwriters hereunder will have been fully paid or
provided for by such Selling Stockholder and all laws imposing such taxes will
have been fully complied with;
(d) the performance of this Agreement and the consummation of the
transactions contemplated herein will not conflict with, or result in any breach
of, or constitute a default under (nor constitute any event which with notice,
lapse of time, or both would constitute a breach of, or default under), (i) any
provision of the certificate or articles of incorporation, other charter or
similar constitutive documents, or the bylaws of the Selling Stockholder, or
(ii) any provision of any license, indenture, mortgage, deed of trust, loan or
credit agreement or other agreement or instrument to which the Selling
Stockholder is a party or by which it or its properties may be bound or
affected, or under any federal, state, local or foreign law, regulation or rule
or any decree, judgment or order applicable to the Selling Stockholder; or
result in the creation or imposition of any lien, charge, claim or encumbrance
upon any property or asset of the Selling Stockholder;
15
(e) no approval, authorization, consent or order of or filing with any
federal, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the Selling Stockholder's
execution, delivery and performance of this Agreement, its consummation of the
transactions contemplated herein, and its sale and delivery of the Shares, other
than (i) such as have been obtained, or will have been obtained at the Closing
Time or the relevant Date of Delivery, as the case may be, under the Securities
Act and the Exchange Act, (ii) such approvals as have been obtained in
connection with the approval of the quotation of the Shares on the Nasdaq
National Market and (iii) any necessary qualification under the securities or
blue sky laws of the various jurisdictions in which the Shares are being offered
by the Underwriters;
(f) such Selling Stockholder (i) has carefully reviewed the
representations and warranties of the Company contained in this Agreement and
has no reason to believe that such representations and warranties are untrue or
incorrect; (ii) 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 Effect and (iii) is not prompted to sell Shares by any
information concerning the Company which is not set forth in the Registration
Statement or the Prospectus;
(g) all material information with respect to such Selling Stockholder
contained in the Registration Statement and the Prospectus (as amended or
supplemented, if the Company shall have filed with the Commission any amendment
or supplement thereto) complied and will comply in all material respects with
all applicable provisions of the Securities Act and the Securities Act
Regulations, contains and will contain all statements of material fact required
to be stated therein in accordance with the Securities Act and the Securities
Act Regulations, and does not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading;
(h) other than as permitted by the Securities Act and the Securities
Act Regulations, such Selling Stockholder has not distributed and will not
distribute any preliminary prospectus, the Prospectus or any other offering
material in connection with the offering and sale of the Shares. Such Selling
Stockholder has not taken, directly or indirectly, any action intended, or which
might reasonably be expected, to cause or result in, under the Securities Act,
the Securities Act Regulations or otherwise, or which has constituted,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares;
(i) certificates in negotiable form for the Shares to be sold hereunder
by such Selling Stockholder have been placed in custody, for the purpose of
making delivery of such Shares under this Agreement and under the Custody
Agreement and Power of Attorney which appoints U.S. Stock Transfer Corporation,
as custodian (the "Custodian"), for such Selling Stockholder; such Selling
Stockholder agrees that the Shares represented by the certificates held in
custody for him or it under the Custody Agreement and Power of Attorney are for
the benefit of and coupled with and subject to the interest hereunder of the
Custodian, the Committee, the Underwriters, each other Selling Stockholder and
the Company; that the arrangements made by such Selling Stockholder for such
custody and the appointment of the Custodian and the Committee by such Selling
Stockholder are irrevocable; and that the obligations of such Selling
Stockholder
16
hereunder shall not be terminated by operation of law, whether by the death,
disability, incapacity or liquidation of any Selling Stockholder or the
occurrence of any other event; if any Selling Stockholder should die, become
disabled or incapacitated or be liquidated or if any other such event should
occur before the delivery of the Shares hereunder, certificates for the Shares
shall be delivered by the Custodian in accordance with the terms and conditions
of this Agreement and actions taken by the Committee and the Custodian pursuant
to the Custody Agreement and Power of Attorney shall be as valid as if such
death, liquidation, incapacity or other event had not occurred, regardless of
whether or not the Custodian or the Committee, or either of them, shall have
received notice thereof;
(j) such Selling Stockholder has not relied upon the Representatives
or legal counsel for the Representatives for any legal, tax or accounting advice
in connection with the offering and sale of the Shares;
(k) 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 such rights as are described in the
Prospectus under "Shares Eligible for Future Sale;"
(l) such Selling Stockholder does not have, or has waived prior to the
date hereof, any preemptive right, co-sale right or right of first refusal or
other similar right to purchase any of the Shares that are to be sold by the
Company or any of the other Selling Stockholders to the Underwriters pursuant to
this Agreement; and such Selling Stockholder does not own any warrants, options,
convertible debt 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 Registration
Statement and the Prospectus; and
(m) such Selling Stockholder is not a member of or an affiliate of or
associated with any member of the NASD.
4. Certain Covenants:
4.1 The Company hereby agrees with each Underwriter:
(a) to comply with all applicable securities and other applicable
laws, rules and regulations, including, without limitation, the Sarbanes Oxley
Act, and to use its best efforts to cause the Company's directors and officers,
in their capacities as such, to comply with such laws, rules and regulations,
including, without limitation, the provisions of the Sarbanes Oxley Act;
(b) to furnish such information as may be required and otherwise to
cooperate in qualifying the Shares for offering and sale under the securities or
blue sky laws of such jurisdictions (both domestic and foreign) as the
Representatives may designate and to maintain such qualifications in effect as
long as requested by the Representatives for the distribution of the Shares,
provided that the Company shall not be required to qualify as a foreign
corporation
17
or to consent to the service of process under the laws of any such state (except
service of process with respect to the offering and sale of the Shares);
(c) if, at the time this Agreement is executed and delivered, it is
necessary for a post-effective amendment to the Registration Statement to be
declared effective before the offering of the Shares may commence, the Company
will endeavor to cause such post-effective amendment to become effective as soon
as possible and will advise the Representatives promptly and, if requested by
the Representatives, will confirm such advice in writing, when such
post-effective amendment has become effective;
(d) to prepare the Prospectus in a form approved by the Underwriters
and file such Prospectus with the Commission pursuant to Rule 424(b) under the
Securities Act not later than 10:00 a.m. (New York City time), on the day
following the execution and delivery of this Agreement or on such other day as
the parties may mutually agree and to furnish promptly (and with respect to the
initial delivery of such Prospectus, not later than 10:00 a.m. (New York City
time) on the day following the execution and delivery of this Agreement or on
such other day as the parties may mutually agree to the Underwriters copies of
the Prospectus (or of the Prospectus as amended or supplemented if the Company
shall have made any amendments or supplements thereto after the effective date
of the Registration Statement) in such quantities and at such locations as the
Underwriters may reasonably request for the purposes contemplated by the
Securities Act Regulations, which Prospectus and any amendments or supplements
thereto furnished to the Underwriters will be identical to the version created
to be transmitted to the Commission for filing via XXXXX, except to the extent
permitted by Regulation S-T;
(e) to advise the Representatives promptly and (if requested by the
Representatives) to confirm such advice in writing, when the Registration
Statement has become effective and when any post-effective amendment thereto
becomes effective under the Securities Act Regulations;
(f) to advise the Representatives immediately, confirming such advice
in writing, of (i) the receipt of any comments from, or any request by, the
Commission for amendments or supplements to the Registration Statement or
Prospectus or for additional information with respect thereto, or (ii) the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, or of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes and, if
the Commission or any other government agency or authority should issue any such
order, to make every reasonable effort to obtain the lifting or removal of such
order as soon as possible; to advise the Representatives promptly of any
proposal to amend or supplement the Registration Statement or Prospectus and to
file no such amendment or supplement to which the Representatives shall
reasonably object in writing;
(g) to furnish to the Underwriters for a period of five years from the
date of this Agreement (i) as soon as available, copies of all annual, quarterly
and current reports or other communications supplied to holders of shares of
Common Stock, (ii) as soon as practicable after the filing thereof, copies of
all reports filed by the Company with the Commission, the NASD or
18
any securities exchange and (iii) such other information as the Underwriters may
reasonably request regarding the Company and the Subsidiaries;
(h) to advise the Underwriters promptly of the happening of any event
known to the Company within the time during which a Prospectus relating to the
Shares is required to be delivered under the Securities Act Regulations which,
in the judgment of the Company or in the reasonable opinion of the
Representatives or counsel for the Underwriters, would require the making of any
change in the Prospectus then being used so that the Prospectus would not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or if
it is necessary at any time to amend or supplement the Prospectus to comply with
any law and, during such time, to promptly prepare and furnish to the
Underwriters copies of the proposed amendment or supplement before filing any
such amendment or supplement with the Commission and thereafter promptly furnish
at the Company's own expense to the Underwriters and to dealers, copies in such
quantities and at such locations as the Representatives may from time to time
reasonably request of an appropriate amendment to the Registration Statement or
supplement to the Prospectus so that the Prospectus as so amended or
supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with the law;
(i) to file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Company or the Representatives, be required by
the Securities Act or requested by the Commission;
(j) prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 under the Securities Act, to furnish a copy thereof to the
Representatives and counsel for the Underwriters and obtain the consent of the
Representatives to the filing;
(k) to furnish promptly to each Representative a signed copy of the
Registration Statement, as initially filed with the Commission, and of all
amendments or supplements thereto (including all exhibits filed therewith or
incorporated by reference therein) and such number of conformed copies of the
foregoing as the Representatives may reasonably request;
(l) to furnish to each Representative, not less than two business days
before filing with the Commission subsequent to the effective date of the
Prospectus and during the period referred to in paragraph (f) above, a copy of
any document proposed to be filed with the Commission pursuant to Section 13,
14, or 15(d) of the Exchange Act and during such period to file all such
documents in the manner and within the time periods required by the Exchange Act
and the Exchange Act Regulations;
(m) to apply the net proceeds of the sale of the Shares in accordance
with its statements under the caption "Use of Proceeds" in the Prospectus;
19
(n) to make generally available to its security holders and to deliver
to the Representatives as soon as practicable, but in any event not later than
the end of the fiscal quarter first occurring after the first anniversary of the
effective date of the Registration Statement an earnings statement complying
with the provisions of Section 11(a) of the Securities Act (in form, at the
option of the Company, complying with the provisions of Rule 158 of the
Securities Act Regulations,) covering a period of 12 months beginning after the
effective date of the Registration Statement;
(o) to use its best efforts to maintain the quotation of the Shares on
the Nasdaq National Market and to file with the Nasdaq National Market all
documents and notices required by the Nasdaq National Market of companies that
have securities that are traded and quotations for which are reported by the
Nasdaq National Market;
(p) to engage and maintain, at its expense, a registrar and transfer
agent for the Shares;
(q) to refrain during a period of 360 days from the date of the
Prospectus, without the prior written consent of the Representatives, from,
directly or indirectly, (i) offering, pledging, selling, contracting to sell,
selling any option or contract to purchase, purchasing any option or contract to
sell, granting any option for the sale of, or otherwise disposing of or
transferring, (or entering into any transaction or device which is designed to,
or could be expected to, result in the disposition by any person at any time in
the future of), any share of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, or filing any registration
statement under the Securities Act with respect to any of the foregoing, or (ii)
entering into any swap or any other agreement or any transaction that transfers,
in whole or in part, directly or indirectly, the economic consequence of
ownership of the Common Stock, whether any such swap or transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to (A) the Shares to be sold hereunder, or (B) any shares of Common Stock issued
by the Company upon the exercise of an option outstanding on the date hereof and
referred to in the Prospectus;
(r) not to, and to use its best efforts to cause its officers,
directors and affiliates not to, (i) take, directly or indirectly prior to
termination of the underwriting syndicate contemplated by this Agreement, any
action designed to stabilize or manipulate the price of any security of the
Company, or which may cause or result in, or which might in the future
reasonably be expected to cause or result in, the stabilization or manipulation
of the price of any security of the Company, to facilitate the sale or resale of
any of the Shares, (ii) sell, bid for, purchase or pay anyone any compensation
for soliciting purchases of the Shares or (iii) pay or agree to pay to any
person any compensation for soliciting any order to purchase any other
securities of the Company;
(s) to cause each stockholder (other than stockholders who obtained all
of their shares of stock of the Company through the exercise of options granted
under the California Corporation's 1995 Stock Option Plan, 1995 Executive Stock
Option Plan or 1998 Stock Option Plan (collectively, the "Option Stockholders")
and other than the Selling Stockholders), officer
20
and director (other than Xxxxx X. Xxxxxxx, Xxx X. XxXxxxx and Xxxxxx X. Xxxxx)
of the Company to furnish to the Representatives, prior to the first Date of
Delivery, a letter or letters, substantially in the form of Exhibit B hereto,
pursuant to which each such person shall agree not to, directly or indirectly,
(1) offer for sale, sell, pledge or otherwise dispose of (or enter into any
transaction or device which is designed to, or could be expected to, result in
the disposition by any person at any time in the future of) any shares of Common
Stock or securities convertible into or exchangeable for Common Stock or (2)
enter into any swap or other derivatives transaction that transfers to another,
in whole or in part, any of the economic benefits or risks of ownership of such
shares of Common Stock, whether any such transaction described in clause (1) or
(2) above is to be settled by delivery of Common Stock or other securities, in
cash or otherwise, in each case for a period of 180 days from the date of the
Prospectus, without the prior written consent of the Representatives on behalf
of the Underwriters;
(t) to cause each Selling Stockholder to furnish to the
Representatives, prior to the first Date of Delivery, a letter or letters,
substantially in the form of Exhibit C hereto, pursuant to which each such
person shall agree not to, directly or indirectly, (1) offer for sale, sell,
pledge or otherwise dispose of (or enter into any transaction or device which is
designed to, or could be expected to, result in the disposition by any person at
any time in the future of) any shares of Common Stock or securities convertible
into or exchangeable for Common Stock or (2) enter into any swap or other
derivatives transaction that transfers to another, in whole or in part, any of
the economic benefits or risks of ownership of such shares of Common Stock,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Common Stock or other securities, in cash or otherwise,
in each case for a period of up to 180 days from the date of the Prospectus,
without the prior written consent of the Representatives on behalf of the
Underwriters;
(u) to cause each of Xxxxx X. Xxxxxxx, Xxx X. XxXxxxx and Xxxxxx X.
Xxxxx to furnish to the Representatives, prior to the first Date of Delivery, a
letter or letters, substantially in the form of Exhibit D hereto, pursuant to
which each such person shall agree not to, directly or indirectly, (1) offer for
sale, sell, pledge or otherwise dispose of (or enter into any transaction or
device which is designed to, or could be expected to, result in the disposition
by any person at any time in the future of) any shares of Common Stock or
securities convertible into or exchangeable for Common Stock or (2) enter into
any swap or other derivatives transaction that transfers to another, in whole or
in part, any of the economic benefits or risks of ownership of such shares of
Common Stock, whether any such transaction described in clause (1) or (2) above
is to be settled by delivery of Common Stock or other securities, in cash or
otherwise, in each case for a period of 365 days from the date of the
Prospectus, without the prior written consent of the Representatives on behalf
of the Underwriters;
(v) to deliver to each holder of options to purchase the Company's
securities and each Option Stockholder (together, the "Optionees") written
confirmation that each such Optionee is bound by the terms and conditions of
certain option agreements previously executed by each such Optionee in which
each such Optionee agreed that, in connection with the Company's initial public
offering, such Optionee would not offer, sell, contract to sell, pledge,
hypothecate, grant any option to purchase or make any short sale of, or
otherwise dispose of any shares of stock or any rights to acquire stock of the
Company;
21
(w) that the Company shall take no action that would result in any
alteration, modification, amendment or waiver of any the restrictions described
in Section 4.1(u) above;
(x) that the provisions of the letter agreement dated May 8, 2002
between the Company and Friedman, Billings, Xxxxxx & Co., Inc. shall survive the
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein;
(y) that the Company shall (i) obtain or maintain, as appropriate,
Directors and Officers liability insurance in the minimum amount of $xx million
which shall apply to the offering contemplated herein and (ii) cause the
Representatives to be added to such policy as an additional insured such that up
to $xxx,xxx of its expenses pursuant to Section 9(a) shall be paid directly by
such insurer and (iii) shall cause the Representatives to be added as an
additional insured to such policy in respect of the offering contemplated
herein;
(z) if at any time during the 90-day period after the Registration
Statement becomes effective, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which, in the reasonable
opinion of the Representatives, the market price of the Common Stock has been or
is likely to be materially affected (regardless of whether such rumor,
publication or event necessitates a supplement to or amendment of the
Prospectus) and after written notice from the Representatives advising the
Company to the effect set forth above, to forthwith prepare, consult with the
Representatives concerning the substance of, and disseminate a press release or
other public statement, reasonably satisfactory to the Representatives,
responding to or commenting on such rumor, publication or event;
(aa) that the Company will comply with all of the provisions of any
undertakings in the Registration Statement;
(bb) that the Company (i) will comply with all applicable securities
and other applicable laws, rules and regulations, including without limitation,
the rules and regulations of the NASD, in each jurisdiction in which the
Directed Shares are offered in connection with the Directed Share Program and
(ii) will pay all reasonable fees and disbursements of counsel incurred by the
Underwriters in connection with the Directed Share Program and any stamp duties,
similar taxes or duties or other taxes, if any, incurred by the Underwriters in
connection with the Directed Share Program.
4.2 Each Selling Stockholder hereby agrees, severally and not jointly,
with each Underwriter:
(a) to deliver to the Representatives prior to the Closing Time a
properly completed and executed United States Treasury Department Form W-8 (if
the Selling Stockholder is a non-United States person, within the meaning of the
Code or Form W-9 (if the Selling Stockholder is a United States person, within
the meaning of the Code);
(b) to furnish to the Representatives, prior to the first Date of
Delivery, a letter or letters, substantially in the form of Exhibit B hereto,
pursuant to which each such person shall agree not to, directly or indirectly,
(1) offer for sale, sell, pledge or otherwise dispose of (or enter
22
into any transaction or device which is designed to, or could be expected to,
result in the disposition by any person at any time in the future of) any shares
of Common Stock or securities convertible into or exchangeable for Common Stock
or (2) enter into any swap or other derivatives transaction that transfers to
another, in whole or in part, any of the economic benefits or risks of ownership
of such shares of Common Stock, whether any such transaction described in clause
(1) or (2) above is to be settled by delivery of Common Stock or other
securities, in cash or otherwise, in each case for a period of up to 180 days
from the date of the Prospectus, without the prior written consent of the
Representatives on behalf of the Underwriters;
(c) if, at any time prior to the date on which the distribution of the
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 the Prospectus or the Registration
Statement, in each case as then amended or supplemented, would include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, such Selling Stockholder will promptly notify the
Company and the Representatives; and
(d) such Selling Stockholder agrees to deliver to the Company or the
Underwriters such documentation as the Company or the Underwriters or any of
their respective counsel may reasonably request in order to effectuate any of
the provisions of this Agreement.
5. Payment of Expenses:
(a) The Company agrees to pay all costs and expenses incident to the
performance of its obligations under this Agreement, whether or not the
transactions contemplated hereunder are consummated or this Agreement is
terminated, including expenses, fees and taxes in connection with (i) the
preparation and filing of the Registration Statement, each Preliminary
Prospectus, the Prospectus, and any amendments or supplements thereto, and the
printing and furnishing of copies of each thereof to the Underwriters and to
dealers (including costs of mailing and shipment), (ii) the preparation,
issuance and delivery of the certificates for the Shares to the Underwriters,
including any stock or other transfer taxes or duties payable upon the sale of
the Shares to the Underwriters, (iii) the printing of this Agreement and any
dealer agreements and furnishing of copies of each to the Underwriters and to
dealers (including costs of mailing and shipment), (iv) the qualification of the
Shares for offering and sale under state laws that the Company and the
Representatives have mutually agreed are appropriate and the determination of
their eligibility for investment under state law as aforesaid (including the
legal fees and filing fees and other disbursements of counsel for the
Underwriters and the printing and furnishing of copies of any blue sky surveys
or legal investment surveys to the Underwriters and to dealers, (v) filing for
review of the public offering of the Shares by the NASD (including the legal
fees and filing fees and other disbursements of counsel for the Underwriters
relating thereto), (vi) the fees and expenses of any transfer agent or registrar
for the Shares and miscellaneous expenses referred to in the Registration
Statement, (vii) the fees and expenses incurred in connection with the inclusion
of the Shares in the Nasdaq National Market, (viii) making road show
presentations with respect to the offering of the Shares, (ix) preparing and
distributing bound volumes of transaction documents for the Representatives and
its legal
23
counsel and (x) the performance of the Company's other obligations hereunder.
Upon the request of the Representatives, the Company will provide funds in
advance for filing fees.
(b) The Company agrees to reimburse the Representatives for their
out-of-pocket expenses in connection with the performance of their activities
under this Agreement, including, but not limited to, costs such as printing,
facsimile, courier service, direct computer expenses, accommodations, travel,
and all fees and expenses of the Underwriters' outside legal counsel and any
other advisors, accountants, appraisers, etc. (including, but not limited to,
the fees and expenses of counsel with respect to state securities or blue sky
laws and in connection with obtaining the filing for review of the public
offering of the Shares by the NASD, all of which shall be reimbursed by the
Company).
(c) The Company agrees with each Underwriter to pay (directly or by
reimbursement) all fees and expenses incident to the performance of the
obligations of the Selling Stockholders under this Agreement which are otherwise
specifically provided for herein, including, but not limited to, (i) fees and
expenses of one counsel for such Selling Stockholders, (ii) fees and expenses of
the Custodian and (iii) expenses and taxes incident to the sale and delivery of
the Shares to be sold by such Selling Stockholder to the Underwriters hereunder
(which taxes, if any, may be deducted by the Custodian).
(d) If this Agreement shall be terminated by the Underwriters, or any
of them, because of any failure or refusal on the part of the Company or the
Selling Stockholders to comply with the terms or to fulfill any of the
conditions of this Agreement, or if for any reason the Company or the Selling
Stockholders shall be unable to perform its or their obligations under this
Agreement, the Company also will reimburse the Underwriters or such Underwriters
as have so terminated this Agreement with respect to themselves, severally, for
all out-of-pocket expenses (such as printing, facsimile, courier service, direct
computer expenses, accommodations, travel and the fees and disbursements of
Underwriters' counsel) and any other advisors, accountants, appraisers, etc.
reasonably incurred by such Underwriters in connection with this Agreement or
the transactions contemplated herein.
6. Conditions of the Underwriters' Obligations:
(a) The obligations of the Underwriters hereunder to purchase Shares at
the Closing Time or on each Date of Delivery, as applicable, are subject to the
accuracy of the representations and warranties on the part of the Company and
the Selling Stockholders hereunder and under the Custody Agreement and Power of
Attorney on the date hereof and at the Closing Time and on each Date of
Delivery, as applicable, the performance by the Company and the Selling
Stockholders of their respective obligations hereunder and under the Custody
Agreement and Power of Attorney and to the satisfaction of the following further
conditions at the Closing Time or on each Date of Delivery, as applicable:
(b) The Company shall furnish to the Underwriters at the Closing Time
and on each Date of Delivery an opinion of Xxxx Xxxx Xxxx & Freidenrich LLP,
counsel for the Company and the Subsidiaries, addressed to the Underwriters and
dated the Closing Time and each Date
24
of Delivery, substantially in the form attached hereto as Exhibit ___. Such
opinion shall be reasonably satisfactory to Xxxxxxx, Phleger & Xxxxxxxx LLP,
counsel for the Underwriters.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company, independent
public accountants of the Company, representatives of the Representatives, at
which the contents of the Registration Statement and Prospectus were discussed
and, although such counsel is not passing upon and does not assume
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or Prospectus (except as and to the
extent stated in subparagraphs (xiv), (xvii), and (xix) above), they have no
reason to believe that the Registration Statement, the Preliminary Prospectus or
the Prospectus, as of their respective effective or issue date, and as of the
date of such counsel's opinion, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being understood
that, in each case, such counsel need express no view with respect to the
financial statements and other financial and statistical data included in the
Registration Statement, Preliminary Prospectus or Prospectus).
(c) The Company shall furnish to the Underwriters at the Closing Time
and on each Date of Delivery one or more opinions of Xxxxxxxxxxx & Xxxxxxxx LLP,
counsel for the Company and the Subsidiaries, addressed to the Underwriters and
dated the Closing Time and each Date of Delivery, substantially in the form
attached hereto as Exhibits E-1, E-2 and E-3. Each such opinion shall be
reasonably satisfactory to Xxxxxxx, Phleger & Xxxxxxxx LLP, counsel for the
Underwriters.
(d) Each Selling Stockholder shall furnish to the Underwriters at the
Closing Time and on each Date of Delivery, if applicable, an opinion of counsel
for such Selling Stockholder, addressed to the Underwriters and dated the
Closing Time and each Date of Delivery, substantially in the form attached
hereto as Exhibit ____. Such opinion shall be reasonably satisfactory to
Xxxxxxx, Phleger & Xxxxxxxx LLP, counsel for the Underwriters.
(e) The Representatives shall have received from Deloitte & Touche LLP,
letters dated, respectively, as of the date of this Agreement, the Closing Time
and each Date of Delivery, as the case may be, addressed to the Representatives,
in form and substance satisfactory to the Representatives, relating to the
financial statements, including any pro forma financial statements, of the
Company and the Subsidiaries, and such other matters customarily covered by
comfort letters issued in connection with registered public offerings.
In the event that the letters referred to above set forth any
changes in indebtedness, decreases in total assets or retained earnings or
increases in borrowings, it shall be a further condition to the obligations of
the Underwriters that (i) such letters shall be accompanied by a written
explanation of the Company as to the significance thereof, unless the
Representatives deems such explanation unnecessary, and (ii) such changes,
decreases or increases do not, in the sole judgment of the Representatives, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Shares as contemplated by the Registration Statement.
25
(f) The Representatives shall have received at the Closing Time and on
each Date of Delivery the favorable opinion of Xxxxxxx, Phleger & Xxxxxxxx LLP,
dated the Closing Time or such Date of Delivery, addressed to the
Representatives and in form and substance satisfactory to the Representatives.
(g) No amendment or supplement to the Registration Statement or
Prospectus shall have been filed to which the Underwriters shall have objected
in writing.
(h) Prior to the Closing Time and each Date of Delivery (i) no stop
order suspending the effectiveness of the Registration Statement or any order
preventing or suspending the use of any Preliminary Prospectus or Prospectus has
been issued, and no proceedings for such purpose shall have been initiated or
threatened, by the Commission, and no suspension of the qualification of the
Shares for offering or sale in any jurisdiction, or the initiation or
threatening of any proceedings for any of such purposes, has occurred; (ii) all
requests for additional information on the part of the Commission shall have
been complied with to the reasonable satisfaction of the Representatives; and
(iii) the Registration Statement and the Prospectus shall not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(i) All filings with the Commission required by Rule 424 under the
Securities Act to have been filed by the Closing Time shall have been made
within the applicable time period prescribed for such filing by such Rule.
(j) Between the time of execution of this Agreement and the Closing
Time or the relevant Date of Delivery there shall not have been any Material
Adverse Change, and (ii) no transaction which is material and unfavorable to the
Company shall have been entered into by the Company or any of the Subsidiaries,
in each case, which in the Representatives' sole judgment, makes it
impracticable or inadvisable to proceed with the public offering of the Shares
as contemplated by the Registration Statement.
(k) The Shares shall have been approved for inclusion in the Nasdaq
National Market.
(l) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
(m) The Representatives shall have received agreements from the
Company's officers, directors and stockholders (including the Selling
Stockholders) as described in Sections 4.1(r), 4.1(s) and 4.1(t), and such
letter agreements shall be in full force and effect.
(n) The Company shall have delivered to the Optionees the confirmation
notice described in Section 4.1(u).
(o) The Company will, at the Closing Time and on each Date of Delivery,
deliver to the Underwriters a certificate of its Chairman of the Board, Chief
Executive Officer, President, Chief Operating Officer or Vice President and
Chief Accounting Officer or Chief Financial Officer, to the effect that:
26
(i) the representations and warranties of the Company in
this Agreement are true and correct, as if made on and as of the
date hereof, and the Company has complied with all the agreements
and satisfied all the conditions on its part to be performed or
satisfied at or prior to the date hereof;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto has
been issued and no proceedings for that purpose have been
instituted or are pending or threatened under the Securities Act;
(iii) when the Registration Statement became effective and at
all times subsequent thereto up to the date hereof, the
Registration Statement and the Prospectus, and any amendments or
supplements thereto contained all material information required to
be included therein by the Securities Act or the Exchange Act and
the applicable rules and regulations of the Commission thereunder,
as the case may be, and in all material respects conformed to the
requirements of the Securities Act or the Exchange Act and the
applicable rules and regulations of the Commission thereunder, as
the case may be; the Registration Statement and the Prospectus,
and any amendments or supplements thereto, did not and do 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 the light of the circumstances under
which they were made, not misleading; and, since the effective
date of the Registration Statement, there has occurred no event
required to be set forth in an amendment or supplemented
Prospectus which has not been so set forth; and
(iv) 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, (b) any
transaction that is material to the Company and the Subsidiaries
considered as one enterprise, except transactions entered into in
the ordinary course of business, (c) any obligation, direct or
contingent, that is material to the Company and the Subsidiaries
considered as one enterprise, incurred by the Company or the
Subsidiaries, except obligations incurred in the ordinary course
of business, (d) any change in the capital stock or outstanding
indebtedness of the Company or any Subsidiary that is material to
the Company and the Subsidiaries considered as one enterprise, (e)
any dividend or distribution of any kind declared, paid or made on
the capital stock of the Company or any Subsidiary, or (f) any
loss or damage (whether or not insured) to the property of the
Company or any subsidiary which has been sustained or will have
been sustained which has a Material Adverse Effect.
(p) Each Selling Stockholder will, at the Closing Time and on each
Date of Delivery with respect to such Selling Stockholder, as applicable,
deliver to the Underwriters a certificate, to the effect that:
27
(i) the representations and warranties of such Selling
Stockholder set forth in this Agreement and in the Custody
Agreement and Power of Attorney are true and correct as of such
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 hereunder and under the Custody Agreement
and Power of Attorney at or prior to the date hereof.
(q) The Company and the Selling Stockholders, as applicable, shall have
furnished to the Underwriters such other documents and certificates as to the
accuracy and completeness of any statement in the Registration Statement and the
Prospectus, the representations, warranties and statements of the Company
contained herein and in the Custody Agreement and Power of Attorney, and the
performance by the Company and the Selling Stockholders of their respective
covenants contained herein and therein, and the fulfillment of any conditions
contained herein or therein, as of the Closing Time or any Date of Delivery, as
the Underwriters may reasonably request.
7. Termination:
The obligations of the several Underwriters hereunder shall be subject
to termination in the absolute discretion of the Representatives, at any time
prior to the Closing Time or any Date of Delivery, (i) if any of the conditions
specified in Section 6 shall not have been fulfilled when and as required by
this Agreement to be fulfilled, or (ii) if there has been since the respective
dates as of which information is given in the Registration Statement, any
Material Adverse Change, or any development involving a prospective Material
Adverse Change, or material change in management of the Company or any
Subsidiary, whether or not arising in the ordinary course of business, or (iii)
if there has occurred any outbreak or escalation of hostilities or other
national or international calamity or crisis or change in economic, political or
other conditions the effect of which on the financial markets of the United
States is such as to make it, in the judgment of the Representatives,
impracticable to market the Shares or enforce contracts for the sale of the
Shares, or (iv) if trading in any securities of the Company has been suspended
by the Commission or by the Nasdaq National Market or if trading generally on
the New York Stock Exchange or in the Nasdaq over-the-counter market has been
suspended (including an automatic halt in trading pursuant to market-decline
triggers, other than those in which solely program trading is temporarily
halted), or limitations on prices for trading (other than limitations on hours
or numbers of days of trading) have been fixed, or maximum ranges for prices for
securities have been required, by such exchange or the NASD or the
over-the-counter market or by order of the Commission or any other governmental
authority, or (v) if there has been any downgrade in the rating of any of the
Company's debt securities or preferred stock by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g) under
the Securities Act), or (vi) any federal or state statute, regulation, rule or
order of any court or other governmental authority has been enacted, published,
decreed or otherwise promulgated which, in the reasonable opinion of the
Representatives, materially adversely affects or will materially adversely
affect the business or operations of the Company, or (vii) any action has been
taken by any federal, state or local government or agency in respect of its
monetary or fiscal affairs which,
28
in the reasonable opinion of the Representatives, has a material adverse effect
on the securities markets in the United States.
If the Representatives elect to terminate this Agreement as provided in
this Section 7, the Company and the Underwriters shall be notified promptly by
telephone, promptly confirmed by facsimile.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply in all material respects with any of the terms of this
Agreement, the Company shall not be under any obligation or liability under this
Agreement (except to the extent provided in Sections 5 and 9 hereof) and the
Underwriters shall be under no obligation or liability to the Company under this
Agreement (except to the extent provided in Section 9 hereof) or to one another
hereunder.
8. Increase in Underwriters' Commitments:
If any Underwriter shall default at the Closing Time or on a Date of
Delivery in its obligation to take up and pay for the Shares to be purchased by
it under this Agreement on such date, the Representatives shall have the right,
within 36 hours after such default, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Shares which such Underwriter shall have agreed but failed
to take up and pay for (the "Defaulted Shares"). Absent the completion of such
arrangements within such 36-hour period, (i) if the total number of Defaulted
Shares does not exceed 10% of the total number of Shares to be purchased on such
date, each non-defaulting Underwriter shall take up and pay for (in addition to
the number of Shares which it is otherwise obligated to purchase on such date
pursuant to this Agreement) the portion of the total number of Shares agreed to
be purchased by the defaulting Underwriter on such date in the proportion that
its underwriting obligations hereunder bears to the underwriting obligations of
all non-defaulting Underwriters; and (ii) if the total number of Defaulted
Shares exceeds 10% of such total, the Representatives may terminate this
Agreement by notice to the Company, without liability of any party to any other
party except that the provisions of Sections 5 and 9 hereof shall at all times
be effective and shall survive such termination.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that it will
not sell any Shares hereunder on such date unless all of the Shares to be
purchased on such date are purchased on such date by the Underwriters (or by
substituted Underwriters selected by the Representatives with the approval of
the Company or selected by the Company with the approval of the
Representatives).
If a new Underwriter or Underwriters are substituted for a defaulting
Underwriter in accordance with the foregoing provision, the Company or the
non-defaulting Underwriters shall have the right to postpone the Closing Time or
the relevant Date of Delivery for a period not exceeding five business days in
order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
29
The term "Underwriter" as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 8 with the same effect as
if such substituted Underwriter had originally been named in this Agreement.
9. Indemnity and Contribution by the Company, the Selling Stockholders
and the Underwriters:
(a) The Company agrees to indemnify, defend and hold harmless each
Underwriter and any person who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any loss, expense, liability, damage or claim (including the reasonable
cost of investigation) which, jointly or severally, any such Underwriter or
controlling person may incur under the Securities Act, the Exchange Act or
otherwise, insofar as such loss, expense, liability, damage or claim arises out
of or is based upon (i) any breach of any representation, warranty or covenant
of the Company contained herein, (ii) any failure on the part of the Company to
comply with any applicable law, rule or regulation relating to the offering of
securities being made pursuant to the Prospectus, (iii) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof by the Company), the Prospectus (the term Prospectus for the
purpose of this Section 9 being deemed to include any Preliminary Prospectus,
the Prospectus and the Prospectus as amended or supplemented by the Company),
(iv) any application or other document, or any amendment or supplement thereto,
executed by the Company or based upon written information furnished by or on
behalf of the Company filed in any jurisdiction (domestic or foreign) in order
to qualify the Shares under the securities or blue sky laws thereof or filed
with the Commission or any securities association or securities exchange (each
an "Application"), (v) any omission or alleged omission to state a material fact
required to be stated in any such Registration Statement, Prospectus or any
Application or necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading, or (vi) any untrue
statement or alleged untrue statement of any material fact contained in any
audio or visual materials used in connection with the marketing of the Shares,
including, without limitation, slides, videos, films and tape recordings; except
insofar as any such loss, expense, liability, damage or claim arises out of or
is based upon any untrue statement or alleged untrue statement or omission or
alleged omission of a material fact contained in and in conformity with
information furnished in writing by the Underwriters through the Representatives
to the Company expressly for use in such Registration Statement, Prospectus or
Application. The indemnity agreement set forth in this Section 9(a) shall be in
addition to any liability which the Company may otherwise have.
(b) Each Selling Stockholder, severally and not jointly, agrees to
indemnify, defend and hold harmless each Underwriter and any person who controls
any Underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any loss, expense, liability,
damage or claim (including the reasonable cost of investigation) which, jointly
or severally, any such Underwriter or controlling person may incur under the
Securities Act, the Exchange Act or otherwise, insofar as such loss, expense,
liability, damage or claim arises out of or is based upon (i) any breach of any
representation, warranty or covenant of such Selling Stockholder contained
herein or in the Custody Agreement and Power of Attorney, (ii) any failure on
the part of such Selling Stockholder to comply with any applicable
30
law, rule or regulation relating to the offering of securities being made
pursuant to the Prospectus, (iii) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or in the
Registration Statement as amended by any post-effective amendment thereof by the
Company), Prospectus (the term Prospectus for the purpose of this Section 9
being deemed to include any Preliminary Prospectus, the Prospectus and the
Prospectus as amended or supplemented by the Company), or any Application or
(iv) any omission or alleged omission to state a material fact required to be
stated in either such Registration Statement, Prospectus or any Application, or
necessary to make the statements made therein, in the light of the circumstances
under which they were made, not misleading; but only insofar as any such loss,
expense, liability, damage or claim arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission of a
material fact contained in and in conformity with information furnished in
writing by such Selling Stockholder to the Company expressly for use in such
Registration Statement, Prospectus or Application. The indemnity agreement set
forth in this Section 9(b) shall be in addition to any liabilities that the
Selling Stockholders may otherwise have.
If any action is brought against an Underwriter or controlling person
in respect of which indemnity may be sought against the Company or any Selling
Stockholder pursuant to subsection (a) or (b) above, such Underwriter shall
promptly notify the Company or such Selling Stockholder, as applicable, in
writing of the institution of such action, and the Company or such Selling
Stockholder, as applicable, shall assume the defense of such action, including
the employment of counsel and payment of expenses; provided, however, that any
failure or delay to so notify the Company or such Selling Stockholder, as
applicable, will not relieve the Company or such Selling Stockholder, as
applicable, of any obligation hereunder, except to the extent that its ability
to defend is actually impaired by such failure or delay. Such Underwriter or
controlling person shall have the right to employ its or their own counsel in
any such case, but the fees and expenses of such counsel shall be at the expense
of such Underwriter or such controlling person unless the employment of such
counsel shall have been authorized in writing by the Company or such Selling
Stockholder, as applicable, in connection with the defense of such action, or
the Company or such Selling Stockholder, as applicable, shall not have employed
counsel to have charge of the defense of such action within a reasonable time or
such indemnified party or parties shall have reasonably concluded (based on the
advice of counsel) that there may be defenses available to it or them which are
different from or additional to those available to the Company or such Selling
Stockholder, as applicable, (in which case neither the Company nor such Selling
Stockholder shall have the right to direct the defense of such action on behalf
of the indemnified party or parties), in any of which events such fees and
expenses shall be borne by the Company or the Selling Stockholder, as
applicable, and paid as incurred (it being understood, however, that neither the
Company nor any Selling Stockholder shall be liable for the expenses of more
than one separate firm of attorneys for the Underwriters or controlling persons
in any one action or series of related actions in the same jurisdiction (other
than local counsel in any such jurisdiction) representing the indemnified
parties who are parties to such action). Anything in this paragraph to the
contrary notwithstanding, neither the Company nor any Selling Stockholder shall
be liable for any settlement of any such claim or action effected without its
consent, which consent shall not be unreasonably withheld, conditioned or
delayed.
31
(c) Each Underwriter agrees, severally and not jointly, to indemnify,
defend and hold harmless the Company and each Selling Stockholder, the Company's
directors, the Company's officers that signed the Registration Statement, and
any person who controls the Company or any Selling Stockholder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any loss, expense, liability, damage or claim (including the
reasonable cost of investigation) which, jointly or severally, the Company, the
Selling Stockholder or any such person may incur under the Securities Act, the
Exchange Act or otherwise, but only insofar as such loss, expense, liability,
damage or claim arises out of or is based upon (i)any untrue statement or
alleged untrue statement of a material fact contained in and in conformity with
information furnished in writing by such Underwriter through the Representatives
to the Company expressly for use in the Registration Statement (or in the
Registration Statement as amended by any post-effective amendment thereof by the
Company), the Prospectus, or any Application, or (ii)any omission or alleged
omission to state a material fact in connection with such information required
to be stated either in such Registration Statement, Prospectus or any
Application or necessary to make such information, in the light of the
circumstances under which made, not misleading. The statements set forth in the
paragraphs identified by "Stabilization, Syndicate Short Positions and Penalty
Bids" under the caption "Underwriting" in the Preliminary Prospectus and the
Prospectus (to the extent such statements relate to the Underwriters) constitute
the only information furnished by or on behalf of any Underwriter through the
Representatives to the Company for purposes of this Section 9. The indemnity
agreement set forth in this Section 9(c)shall be in addition to any liabilities
that such Underwriter may otherwise have.
If any action is brought against the Company, any Selling Stockholder
or any such person in respect of which indemnity may be sought against any
Underwriter pursuant to the foregoing paragraph, the Company, the Selling
Stockholder or such person shall promptly notify the Representatives in writing
of the institution of such action and the Representatives, on behalf of the
Underwriters, shall assume the defense of such action, including the employment
of counsel and payment of expenses. The Company, the Selling Stockholder or such
person shall have the right to employ its own counsel in any such case, but the
fees and expenses of such counsel shall be at the expense of the Company, the
Selling Stockholder or such person unless the employment of such counsel shall
have been authorized in writing by the Representatives in connection with the
defense of such action or the Representatives shall not have employed counsel to
have charge of the defense of such action within a reasonable time or such
indemnified party or parties shall have reasonably concluded (based on the
advice of counsel) that there may be defenses available to it or them which are
different from or additional to those available to the Underwriters (in which
case the Representatives shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by such Underwriter and paid as incurred
(it being understood, however, that the Underwriters shall not be liable for the
expenses of more than one separate firm of attorneys in any one action or series
of related actions in the same jurisdiction (other than local counsel in any
such jurisdiction) representing the indemnified parties who are parties to such
action). Anything in this paragraph to the contrary notwithstanding, no
Underwriter shall be liable for any settlement of any such claim or action
effected without the written consent of the Representatives, which consent shall
not be unreasonably withheld, conditioned or delayed.
32
(d) If the indemnification provided for in this Section 9 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a), (b) and (c) of this Section 9 in respect of any losses,
expenses, liabilities, damages or claims referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, expenses, liabilities, damages or claims (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, the Selling Stockholders and the Underwriters from the offering of the
Shares or (ii) if (but only 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, of the Selling Stockholders and of the
Underwriters in connection with the statements or omissions which resulted in
such losses, expenses, liabilities, damages or claims, as well as any other
relevant equitable considerations. The relative benefits received by the
Company, the Selling Stockholders and the Underwriters shall be deemed to be in
the same proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
or the Selling Stockholders, as applicable, bear to the underwriting discounts
and commissions received by the Underwriters. The relative fault of the Company,
of the Selling Stockholders and of the Underwriters shall be determined by
reference to, among other things, whether the untrue statement or alleged untrue
statement of a material fact or omission or alleged omission relates to
information supplied by the Company, by the Selling Stockholders or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, claims, damages and
liabilities referred to above shall be deemed to include any legal or other fees
or expenses reasonably incurred by such party in connection with investigating
or defending any claim or action.
(e) 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 subsection
(d)(i) and, if applicable (ii), above. Notwithstanding the provisions of this
Section 9, no Underwriter shall be required to contribute any amount in excess
of the underwriting discounts and commissions applicable to the Shares purchased
by such Underwriter and no Selling Stockholder shall be required to contribute
any amount in excess of the gross sale price of the Shares sold by such Selling
Stockholder pursuant to this Agreement. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 9 are several in proportion to their respective
underwriting commitments and not joint.
(f) The Company agrees to indemnify and hold harmless each Underwriter
and its affiliates and each person, if any, who controls each Underwriter and
its affiliates within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) (i) caused by any untrue statement or alleged untrue
statement of a
33
material fact contained in any material prepared by or with the consent of the
Company for distribution to participants in connection with the Directed Share
Program, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; (ii) as a result of the failure of any participant to
pay for and accept delivery of Directed Shares that the participant has agreed
to purchase; or (iii) related to, arising out of, or in connection with the
Directed Share Program.
10. Survival:
The indemnity and contribution agreements contained in Section 9 and
the covenants, warranties and representations of the Company and the Selling
Stockholders contained in Sections 3, 4 and 5 of this Agreement shall remain in
full force and effect regardless of any investigation made by or on behalf of
any Underwriter, or any person who controls any Underwriter within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act, or by or
on behalf of the Company, its directors and officers, the Selling Stockholders
or any person who controls the Company or any Selling Stockholder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
and shall survive any termination of this Agreement or the sale and delivery of
the Shares. The Company, each Selling Stockholder and each Underwriter agree
promptly to notify the others of the commencement of any litigation or
proceeding against it and, in the case of the Company, against any of the
Company's officers and directors, in connection with the sale and delivery of
the Shares, or in connection with the Registration Statement or Prospectus.
11. Notices:
Except as otherwise herein provided, all statements, requests, notices
and agreements shall be in writing or by telegram and, if to the Underwriters,
shall be sufficient in all respects if delivered to Friedman, Billings, Xxxxxx &
Co., Inc., 0000 00xx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention:
Syndicate Department; if to the Company, shall be sufficient in all respects if
delivered to the Company at the offices of the Company at 00000 Xxxxxx xx
Xxxxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000; or if to a Selling Stockholder,
c/o INSERT NAME AND ADDRESS OF ATTORNEY-IN-FACT].
12. Governing Law; Headings:
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE COMMONWEALTH OF VIRGINIA, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES. The section headings in this Agreement have been inserted as a
matter of convenience of reference and are not a part of this Agreement.
13. Parties at Interest:
The Agreement herein set forth has been and is made solely for the
benefit of the Underwriters, the Company, the Selling Stockholders and the
controlling persons, directors and officers referred to in Sections 9 and 10
hereof, and their respective successors, assigns,
34
executors and administrators. No other person, partnership, association or
corporation (including a purchaser, as such purchaser, from any of the
Underwriters) shall acquire or have any right under or by virtue of this
Agreement.
14. Counterparts and Facsimile Signatures:
This Agreement may be signed by the parties in counterparts which
together shall constitute one and the same agreement among the parties. A
facsimile signature shall constitute an original signature for all purposes.
35
If the foregoing correctly sets forth the understanding among the
Company, the Selling Stockholders and the Underwriters, please so indicate in
the space provided below for the purpose, whereupon this Agreement shall
constitute a binding agreement among the Company, the Selling Stockholders and
the Underwriters.
Very truly yours,
ACCREDITED HOME LENDERS HOLDING CO.
By:_____________________________
By:
Title:
SELLING STOCKHOLDERS LISTED ON
SCHEDULE I ATTACHED HERETO
By: [Insert Name of Attorney-in-Fact]
_______________________________
Attorney-in-Fact
Accepted and agreed to as
of the date first above written:
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
By:_______________________________
Title:
For itself and as Representatives of the other
Underwriters named on Schedule I hereto.
36
Schedule I
Number of Initial Number of Option
Name of Party Selling Shares Shares to be Sold Shares to be Sold
---------------------------- ----------------- -----------------
Accredited Home Lenders Holding Co. 5,000,000 1,291,356
Residential Funding Corporation 2,095,625 --
Xxxxxxx X. Xxxxxxx XxXxxxx 901,197 --
Ocean Park Ventures 250,000 --
Xxxxxxx Financial Services Corporation 132,222 --
Xxxxxx Commercial Paper Inc. 150,000 --
Xxxxx Xxx Xxxxx 50,000 --
Xxxxxxx X. Xxxxxx 30,000 --
Enterprise Partners III, L.P. 644,000 96,600
Enterprise Partners III Associates, L.P. 56,000 8,400
Crosspoint Venture Partners 824,295 123,644
Crosspoint 1993 Entrepreneurs Fund 25,705 3,856
TOTAL 10,159,044 1,523,856
========== =========
Schedule II
Number of Initial
Underwriter Shares to be Purchased
----------- ----------------------
Friedman, Billings, Xxxxxx & Co., Inc. [____________]
U.S. Bancorp Xxxxx Xxxxxxx Inc. [____________]
Wedbush Xxxxxx Securities, Inc. [____________]
Total ............................................ 10,159,044
==========
