Exhibit 1
October 29, 1997
Friedman, Billings, Xxxxxx Group, Inc.
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Dear Sirs:
The undersigned investor (the "Investor"), subject and pursuant to
the terms and conditions set forth below, agrees to purchase from Friedman,
Billings, Xxxxxx Group, Inc. (together with its successors, "FBR") and/or
certain selling stockholders of FBR (the "Selling Stockholders"), and FBR,
subject and pursuant to the terms and conditions set forth below, agrees on its
behalf or on behalf of the Selling Stockholders to sell to such Investor, such
number of shares (the "Offered Securities") of Class A Common Stock, par value
$0.01 per share (the "Class A Common Stock"), of FBR as shall constitute 4.9% of
the then total aggregate number of currently outstanding shares of Common Stock
of FBR after giving effect to the issuance of any such primary shares (including
any primary shares issued pursuant to the underwriters' over-allotment option).
The purchase and sale of such shares shall occur substantially simultaneously
with the closing of the initial public offering (including the underwriters'
over-allotment option) (the "IPO") of shares of the Class A Common Stock as
contemplated in the draft Registration Statement (and associated form of
prospectus) on Form S-1 attached as Annex 1 hereto (the "Draft Registration
Statement"). As used herein, the term "Common Stock" shall mean the Class A
Common Stock, the Class B Common Stock"), par value $0.01 per share, of FBR (the
"Class B Common Stock"), and any other classes of Common Stock as may be
established prior to the consummation of the IPO.
Substantially simultaneously with the execution of this Agreement,
Investor and FBR are entering into a nonbinding memorandum of understanding
relating to certain anticipated mutually beneficial business relationships which
Investor and FBR hope to establish (a copy of which is attached hereto as Annex
2).
1. Representations and Warranties
(a) Investor has received a copy of the Draft Registration
Statement which for purposes of this Agreement shall constitute a private
offering
memorandum relating to the Offered Securities which the Investor agrees to
purchase pursuant to Section 2 below and understands that no person has been
authorized to give any information or to make any representations that were not
contained in the Draft Registration Statement, and Investor has not relied on
any such other information or representations in making a decision to purchase
any of the Offered Securities. Investor understands that an investment in FBR
involves a high degree of risk, including the risks set forth under the caption
"RISK FACTORS" in the Draft Registration Statement.
(b) Investor has been advised that (i) there will be restrictions
on the transfer of the Offered Securities and (ii) there has been no prior
trading market for the Offered Securities.
(c) Investor has been advised that any and all certificates
representing the Offered Securities shall bear the following legend, or one
substantially similar thereto:
The shares represented by this certificate were issued in a
private placement preceding the initial public offering of the
Corporation and have not been registered under the Securities
Act of 1933, as amended, or under any state securities laws and
may not be transferred, sold or otherwise disposed of except
pursuant to an effective registration statement or pursuant to
an exemption from registration, under the Securities Act and
under any applicable state securities laws.
(d) Investor agrees and understands that FBR shall remain free to
revise the Draft Registration Statement and the proposed terms of the IPO
(including, without limitation, the number of shares to be sold in the IPO, the
proposed terms of the Restated Articles of Association of FBR and relative
voting and other rights of the holders of the Class A Common Stock and Class B
Common Stock and/or such other classes of capital stock of FBR as FBR may
determine to establish) in FBR's sole discretion prior to the consummation of
the IPO and/or to abandon the proposed IPO; provided, however, that Investor's
obligations hereunder shall be conditioned on the aggregate number of shares of
Common Stock sold on either a primary or secondary basis (or a combination
thereof) in the IPO (excluding the Offered Securities) being not less than
5,000,000 shares of Class A Common Stock. Investor agrees and understands that
by executing this Agreement it is agreeing to
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purchase the Offered Securities on the terms that, except as set forth in
Section 2, are offered to the public in the IPO, and that the sale of shares in
the IPO will be based upon such disclosures as will be set forth in the final
prospectus relating to the IPO.
(e) Investor represents that it is a sophisticated institutional
or corporate investor and is an "accredited investor" as defined in Rule 501
under the Securities Act of 1933 and that Investor has sufficient knowledge and
experience in financial and business matters to make an informed investment
decision based upon the information included in the Draft Registration Statement
and this Agreement. Investor further represents that Investor can bear the
economic risk of loss of the entire investment in the Offered Securities being
purchased by such Investor; that Investor intends to purchase such Offered
Securities for the account of the Investor and its affiliates and not, in whole
or in part, for the account of any other person.
(f) Investor represents that it is acquiring the Offered
Securities solely for investment purposes and that it shall not exercise or
attempt to exercise any controlling influence over the business or affairs of
FBR or any of its subsidiaries.
(g) The execution, delivery and performance by Investor of this
Agreement have been duly authorized by all necessary action and this Agreement
has been duly executed and delivered and, when executed and delivered by FBR,
will constitute the legal, valid, binding and enforceable obligation of
Investor, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(h) The Investor is a corporation duly incorporated, validly
existing and in good standing under the laws of Pennsylvania, with full power
and authority (corporate and other) to perform its obligations under this
Agreement. Investor does not require any consents or approvals of any
governmental, regulatory or self-regulatory bodies (other than expiration of the
waiting period pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of
1972, as amended) to execute this Agreement and/or to perform its obligations
hereunder.
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(i) FBR represents and warrants to Investor that FBR and/or the
Selling Stockholders, immediately prior to the consummation of the sale of the
Offered Securities to the Investor, will have good and marketable title to such
securities, free and clear of any liens, claims, charges, security interests or
encumbrances of any kind and that the execution, delivery and performance by FBR
of this Agreement have been duly authorized by all necessary action, and this
Agreement has been duly executed and delivered by FBR and, when executed and
delivered by the Investor, will constitute the legal, valid and binding
obligation of FBR, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally and subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law).
2. Subscription and Method of Payment. Investor hereby agrees to
purchase the Offered Securities at a purchase price per share equal to (a) 96%,
times (b) the price per share of such securities offered to the public in the
IPO. FBR shall be responsible for the payment to Lazard Freres, LLC of the
advisory fees due to them with respect to the Offered Securities. Such purchase
shall occur substantially simultaneously with the completion of the sale of
shares to the public in the IPO.
The closing (the "Closing") of the purchase of the Offered
Securities will be held at a time and place to be designated by FBR. Investor
agrees to deliver payment for the Offered Securities at the Closing by wire
transfer in Federal funds to such account or accounts as may be designated by
FBR at least 24 hours prior to the Closing.
3. Miscellaneous.
(a) The Investor agrees not to transfer or assign this Agreement,
or any of the Investor's interest herein; provided that the Investor may assign
its interest herein to its wholly-owned, direct or indirect, subsidiaries.
(b) The Investor agrees that, until the earlier of (i) such date,
if applicable, on which FBR expressly determines not to proceed forward with the
IPO and (ii) March 30, 1998, the Investor may not terminate or revoke this
Agreement or any agreement, offer or commitment of the Investor made hereunder,
and this Agreement shall be binding upon the Investor's successors and assigns.
This Agreement shall automatically terminate without liability of either party
if FBR determines not to proceed with the IPO or
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the IPO is not consummated by March 30, 1998 or there exists a final order,
injunction or notice from a court or administrative agency of competent
jurisdiction which prohibits consummation of the transactions contemplated
herein.
(c) This Agreement constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof and may be amended only
by written execution by both parties.
(d) THIS AGREEMENT SHALL BE ENFORCED, GOVERNED AND CONSTRUED IN ALL
RESPECTS IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF VIRGINIA.
(e) Time is of the essence with respect to all provisions of this
Agreement including, without limitation, the Investor's obligation to make
payment as of the specified time on the Closing Date.
(f) Execution. By executing this Agreement below, the Investor
agrees to be bound by all of the terms, provisions, warranties and conditions
contained herein. Upon acceptance by FBR, this Agreement shall be binding on
both parties hereto.
(g) Registration Rights. FBR shall, if requested by the Investor (a
"Request"), within 120 days file a shelf registration statement on a form of
general use under the Securities Act of 1933, as amended (the "Securities Act"),
and shall use best efforts to have such registration statement declared
effective in order to facilitate a sale of Class A Common Stock purchased
pursuant hereto; provided, however, that the Investor may not make a Request
prior to 180 days from and after the consummation of the IPO and may not make
more than one Request, except that the Investor may make up to two Requests to
participate in registration statement filed by FBR for the sale of Class A
Common Stock by either FBR or a third party. FBR and Investor shall each pay
one-half of the reasonable fees and expenses incurred in connection with any
offering pursuant to such a requested registration statement (excluding any fees
payable to or discounts received by any underwriters or placement agents) and
shall provide one another customary indemnification with respect to any
liability arising from the portions of such requested registration statement
provided by the respective indemnifying party.
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(h) In the event that FBR proposes to sell any Common Stock (other
than a brokerage transaction in the ordinary course of business) to any U.S.
bank or bank holding company (a U.S. Bank), other than Common Stock which such
U.S. Bank will not beneficially own or Common Stock that FBR proposes to sell to
a U.S. Bank as a purchaser in any underwritten public offering subsequent to the
IPO (so long as such sale to such U.S. Bank does not exceed 1% of the total
outstanding Common Stock of FBR following the closing of such underwritten
offering), FBR shall provide notice to Investor of its intention and provide
Investor the opportunity to sell any or all of its Class A Common Stock
purchased pursuant hereto to such U.S. Bank.
(i) Sections 2 and 3 of this Agreement shall survive the Closing of
the purchase of the Class A Common Stock pursuant hereto. Section 1 of this
Agreement shall not survive the Closing.
Very truly yours,
PNC BANK CORP.
By: /s/ Xxxxxx X. Xxxxx, Xx.
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Title:________________________
Address:______________________
______________________
Telephone:____________________
Facsimile:____________________
Accepted and agreed to this
29th day of October, 1997.
FRIEDMAN, BILLINGS, XXXXXX GROUP, INC.
(a Virginia Corporation)
By:/s/ Xxxxxxx Xxxxxxxx
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Title:_________________
