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Exhibit 1.1
LONG BEACH FINANCIAL CORPORATION
21,750,000 SHARES(1)
COMMON STOCK
FORM OF UNDERWRITING AGREEMENT
April __, 1997
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
as Representatives of the Several Underwriters
c/o Friedman, Billings, Xxxxxx & Co., Inc.
Potomac Tower
0000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Long Beach Financial Corporation, a Delaware corporation (the
"Company") and Long Beach Mortgage Company, a Delaware corporation that is to be
renamed Ameriquest Mortgage Company immediately following the consummation of
the Reorganization (as hereinafter defined) (the "Selling Securityholder"),
hereby confirm their agreement with the several underwriters named in Schedule I
hereto (the "Underwriters"), for whom you have been duly authorized to act as
representative (in such capacity, the "Representative"), as set forth below. If
you are the only Underwriters all references herein to the Representative shall
be deemed to be to the Underwriters. This Agreement contemplates the
consummation, as of the Firm Closing Date (as hereinafter defined), of the
"Reorganization" pursuant to which the Selling Securityholder will contribute to
the Company $40 million in cash and the assets and personnel relating to the
Company's broker-sourced mortgage lending and loan sales operations, as more
fully set forth in the Prospectus (as hereinafter defined). All references
herein to the Company and the Selling Securityholder and representations and
warranties relating thereto are made as of the date hereof, except for those
representations and warranties herein which state that they are made as of the
Firm Closing Date and the consummation of the Reorganization.
1. Securities. Subject to the terms and conditions herein contained,
the Selling Securityholder proposes to sell to the several Underwriters on the
Firm Closing Date an aggregate of 21,750,000 shares of the Company's Common
Stock, $0.001 par value per share (the "Common Stock") (such Common Stock shall
be referred to herein as the "Firm Securities"). The Selling Securityholder also
proposes to grant to the several Underwriters an option to purchase up to an
aggregate of 3,250,000 additional shares of Common Stock, all of which will be
sold by the Selling Securityholder (the "Option Securities" and collectively
with the Firm Securities, the "Securities") if requested by the Representative
as provided in Section 3 of this Agreement. The Common Stock is more fully
described in the Registration Statement and the Prospectus hereinafter
mentioned.
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1 Plus an option to purchase from the Selling Securityholder up to 3,250,000
additional shares to cover over-allotments, if any.
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2. Representations and Warranties of the Company and the Selling
Securityholder
(a) The Company represents and warrants to, and agrees with, each of
the several Underwriters that:
(i) A registration statement on Form S-1 (File No. 333-22013) with
respect to the Securities, including a prospectus subject to
completion, has been filed by the Company with the Securities and
Exchange Commission (the "Commission") under the Securities Act of
1933, as amended (the "Act"), and one or more amendments to such
registration statement have been so filed, if applicable. Copies of
such registration statement and of each amendment thereto, if any,
including the related preliminary prospectus (meeting the requirements
of Rule 430A under the Act) heretofore filed by the Company with the
Commission have been delivered to you. After the execution of this
Agreement, the Company will file with the Commission either: (A) if
such registration statement, as it may have been amended, has been
declared by the Commission to be effective under the Act, either (1) if
the Company relies on Rule 434 under the Act, a Term Sheet (as
hereinafter defined) relating to the Securities, that shall identify
the Preliminary Prospectus (as hereinafter defined) that it supplements
containing such information as is required or permitted by Rules 434,
430A and 424(b) under the Act, or (2) if the Company does not rely on
Rule 434 under the Act, a prospectus in the form most recently included
in an amendment to such registration statement (or, if no such
amendment shall have been filed, in such registration statement), with
such changes or insertions as are required by Rule 430A under the Act
or permitted by Rule 424(b) under the Act, and in the case of either
clause (A)(1) or (A)(2) of this sentence, as have been provided to and
approved by the Representative prior to the execution of this
Agreement; or (B) if such registration statement, as it may have been
amended, has not been declared by the Commission to be effective under
the Act, an amendment to such registration statement, including a form
of prospectus, a copy of which amendment has been furnished to and
approved by the Representative prior to the execution of this
Agreement. The Company may also file a related abbreviated registration
statement with the Commission pursuant to Rule 462(b) under the Act for
the purpose of registering certain additional Securities, which
registration statement shall be effective upon filing with the
Commission. If the Company has elected to rely on Rule 462(b) under the
Act and the Rule 462(b) Registration Statement (as hereinafter defined)
has not been declared effective: (A) the Company has filed a Rule
462(b) Registration Statement in compliance with the Act and the rules
and regulations of the Commission promulgated thereunder and that the
Rule 462(b) Registration Statement is effective upon filing pursuant to
Rule 462(b) under the Act and the Company has received confirmation of
its receipt; and (B) the Company has given irrevocable instructions for
transmission of the applicable filing fee in connection with the filing
of the Rule 462(b) Registration Statement, in compliance with Rule 111
promulgated under the Act or the Commission has received payment of
such filing fee. As used in this Agreement, the term "Original
Registration Statement" means the registration statement initially
filed relating to the Securities, as amended at the time when it was or
is declared effective, including all financial schedules and exhibits
thereto and including any information omitted therefrom pursuant to
Rule 430A under the Act and included in the Prospectus (as hereinafter
defined); the term "Rule 462(b) Registration Statement" means any
abbreviated registration statement filed with the Commission pursuant
to Rule 462(b) under the Act (including the Registration Statement and
any Preliminary Prospectus or Prospectus incorporated therein at the
time such Registration Statement becomes effective); the term
"Registration Statement" includes both the Original Registration
Statement and any Rule 462(b) Registration Statement; the term
"Preliminary Prospectus" means each prospectus subject to completion
filed with such registration statement or any amendment thereto
(including the prospectus subject to completion, if any, included in
the Registration Statement or any amendment thereto at the time it was
or is declared effective); the term "Prospectus" means: (A) if the
Company relies on Rule 434 under the Act, the Term Sheet relating to
the Securities that is first filed pursuant to Rule 424(b)(7) under the
Act, together with the Preliminary Prospectus identified therein that
such Term Sheet supplements; (B) if the Company does not rely on Rule
434 under the Act, the prospectus first filed with the Commission
pursuant to Rule 424(b) under the Act; or (C) if the Company does not
rely on Rule 434 under the Act
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and if no prospectus is required to be filed pursuant to Rule 424(b)
under the Act, the prospectus included in the Registration Statement;
and the term "Term Sheet" means any term sheet that satisfies the
requirements of Rule 434 under the Act. Any reference herein to the
"date" of a Prospectus that includes a Term Sheet shall mean the date
of such Term Sheet.
(ii) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus or instituted
proceedings for such purpose. When any Preliminary Prospectus was filed
with the Commission it: (A) contained all statements required to be
stated therein in accordance with, and complied in all material
respects with the requirements of, the Act and the rules and
regulations of the Commission promulgated thereunder; and (B) did not
include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
When the Registration Statement or any amendment thereto was or is
declared effective, it: (A) contained or will contain all statements
required to be stated therein in accordance with, and complied or will
comply in all material respects with the requirements of, the Act and
the rules and regulations of the Commission promulgated thereunder; and
(B) did not or will not include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements
therein not misleading. When the Prospectus or any Term Sheet that is a
part thereof or any amendment or supplement to the Prospectus is filed
with the Commission pursuant to Rule 424(b) (or, if the Prospectus or
any part thereof or such amendment or supplement is not required to be
so filed, when the Registration Statement or the amendment thereto
containing such amendment or supplement to the Prospectus was or is
declared effective) and on the Firm Closing Date and any Option Closing
Date (both as hereinafter defined), the Prospectus or any Term Sheet,
if applicable, as amended or supplemented at any such time: (A)
contained or will contain all statements required to be stated therein
in accordance with, and complied or will comply in all material
respects with the requirements of, the Act and the rules and
regulations of the Commission promulgated thereunder; and (B) did not
or will not include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. The foregoing provisions of this paragraph (ii) do not
apply to statements in, or omissions from, any Preliminary Prospectus,
the Registration Statement or any amendment thereto or the Prospectus
or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by or on
behalf of the Underwriters specifically for use therein.
(iii) Each of the Company and its subsidiary, Ameriquest Mortgage
Corporation, a Delaware corporation that is to be renamed Long Beach
Mortgage Company immediately following the consummation of the
Reorganization (the "Subsidiary"), has been duly incorporated and is
validly existing and in good standing under the laws of its
jurisdiction of organization and is duly qualified to transact business
as a foreign entity and is in good standing under the laws of all other
jurisdictions where the ownership or leasing of its properties or the
conduct of its businesses requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on
the business, properties, business prospects, financial condition or
results of operations of the Company and the Subsidiary, taken as a
whole (a "Material Adverse Effect").
(iv) Each of the Company and the Subsidiary will have, as of the
Firm Closing Date, the corporate power and authority to own or lease
its properties and conduct its businesses as described in the
Registration Statement and the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus); and the Company
has the legal right, corporate power and authority to enter into this
Agreement and to perform the transactions contemplated hereby.
(v) All issued and outstanding shares of the Subsidiary have
been duly authorized and validly issued, are fully paid and
nonassessable, and have not been issued in violation of or subject to
any preemptive right, co-sale right, registration right, right of first
refusal or other similar right and are owned by the Company free and
clear of any pledge, security interests, liens, encumbrances, claims or
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equitable interests. The Company does not own or control, directly or
indirectly, any corporation, association or other entity other than the
Subsidiary.
(vi) The Company has, or as of the Firm Closing Date will have,
an authorized, issued and outstanding capitalization as set forth in
the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus) under the caption "Capitalization." All
of the issued and outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all Federal and
state securities laws, and have not been issued in violation of or
subject to any preemptive rights or other rights to subscribe for or
purchase securities. At the Firm Closing Date or the Option Closing
Date, no holders of outstanding shares of capital stock of the Company
will be entitled as such to any preemptive or other rights to subscribe
for any of the Securities, and no holder of securities of the Company
has any right which has not been fully exercised or waived to require
the Company to register the offer or sale of any securities owned by
such holder under the Act in the public offering contemplated by this
Agreement.
(vii) The capital stock of the Company conforms to the
description thereof and statements relating thereto contained in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), and such statements correctly state the
substance of the instruments defining the capitalization of the
Company.
(viii) Except as disclosed in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus), there are no outstanding: (A) securities or obligations of
the Company or the Subsidiary convertible into or exchangeable for any
capital stock or ownership interests of the Company or the Subsidiary;
(B) warrants, rights or options to subscribe for or purchase from the
Company or the Subsidiary any such capital stock or ownership interest
or any such convertible or exchangeable securities or obligations; or
(C) obligations of the Company or the Subsidiary to issue any shares of
capital stock or any ownership interests, any such convertible or
exchangeable securities or obligations, or any such warrants, rights or
options. The description of the Company's stock option and deferred
compensation plans, and the options or other rights granted or to be
granted thereunder, set forth in the Prospectus accurately and fairly
presents the information required to be shown with respect to such
plans, arrangements, options and rights.
(ix) The audited consolidated financial statements of the
Company and the Subsidiary, together with the related schedules and
notes, and the unaudited consolidated financial information, included
in the Registration Statement and the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus), present
fairly the financial position of the Company and the Subsidiary, the
results of operations and changes in financial condition as of the
dates and periods therein specified. Such financial statements and
schedules have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods
involved (except as otherwise noted therein). The consolidated and
summary financial and statistical data included in the Registration
Statement present fairly the information included therein and have been
compiled on a basis consistent with the audited financial statements
presented therein. No other financial statements or schedules are
required to be included in the Registration Statement.
(x) Deloitte & Touche LLP, who have audited certain financial
statements of the Company and the Subsidiary and delivered their report
with respect to the audited consolidated financial statements, together
with the related schedules and notes, included in the Registration
Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), are independent
public accountants within the meaning of the Act and the applicable
rules and regulations thereunder.
(xi) The execution and delivery of this Agreement have been duly
authorized by the Company, and this Agreement has been duly executed
and delivered by the Company, and is the valid
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and binding agreement of the Company, enforceable against the Company
in accordance with its terms, except as the enforcement hereof may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors'
rights generally, or by general equitable principles.
(xii) No legal or governmental action, suit, claim or other
proceedings are pending to which the Company or the Subsidiary is a
party or to which the property of the Company or the Subsidiary is
subject that would have a Material Adverse Effect, and to the best
knowledge of the Company no such actions, suits or proceedings have
been threatened against the Company or the Subsidiary or with respect
to any of their respective properties or is required to be described in
the Registration Statement or the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), and is not
so described; and no contract or other document is required to be
described in the Registration Statement or the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus), or to be filed as an exhibit to the Registration Statement
that is not described therein or filed as required and any such
description of such contracts or agreements conforms in all material
respects to the terms of such contracts or agreements.
(xiii) Neither the Company nor the Subsidiary is in violation of
its certificate of incorporation or bylaws.
(xiv) The following agreements to which the Company or the
Subsidiary is a party, and any other agreements to which the Company or
the Subsidiary is a party which are described in the Registration
Statement and Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus), will be, as of the Firm
Closing Date, valid agreements enforceable by the Company and the
Subsidiary (as applicable), except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting creditors' rights
generally or by general equitable principles and except where the lack
of enforceability would not have a Material Adverse Effect: (A) that
certain 4/97 Senior Secured Credit Agreement dated April __, 1997
between the Subsidiary and Texas Commerce Bank, National Association,
as agent and lender, and any other documents governing the Subsidiary's
line of credit from Texas Commerce Bank (the Credit Agreement and all
such other documents, collectively the "Warehouse Documents"); (B) the
two Administrative Services Agreements, the Contribution Agreement and
the Loan Sub-Servicing Agreement, each dated as of April __, 1997
between the Company and the Selling Securityholder, and any other
documents governing the Reorganization and the relationship between the
Company and the Selling Securityholder following the Reorganization
(all such agreements and other documents, collectively, the
"Reorganization Documents"); and (C) all purchase agreements and any
other documents governing whole loan sales by the Company or the
Subsidiary (all such agreements and other documents, collectively, the
"Loan Sale Documents").
(xv) Neither the Company nor the Subsidiary (and to the
Company's and the Subsidiary's best knowledge the party or parties
contracting with the Company and the Subsidiary) is in default to an
extent which could result in a Material Adverse Effect under any of the
following agreements, and no event has occurred which, with notice or
lapse of time or both, would constitute a default under any of the
following agreements: (A) the Warehouse Documents; (B) the
Reorganization Documents; (C) the Loan Sale Documents; or (D) any other
contract, indenture, mortgage, loan agreement, joint venture or other
agreement or instrument to which the Company or the Subsidiary is a
party or by which it or any of its respective properties are bound.
(xvi) Neither the Company nor the Subsidiary is in violation, to
an extent which could result in a Material Adverse Effect, of any law,
order, rule, regulation, writ, injunction, judgment or decree of any
court or governmental agency or body to which the Company or the
Subsidiary is subject, or of the Department of Justice settlement (the
"DOJ Settlement") described under the caption
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"Risk Factors" in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), assuming such
settlement applies to the Company and the Subsidiary.
(xvii) The compliance by the Company with the provisions of this
Agreement and the consummation of the Reorganization and the other
transactions herein contemplated do not and will not: (A) require the
consent, approval, authorization, registration or qualification of or
with any governmental authority, except (1) such as have been obtained,
such as may be required under state securities or blue sky laws and, if
the Registration Statement is not effective under the Act as of the
time of execution hereof, such as may be required (and shall be
obtained as provided in this Agreement) under the Act, and (2) for any
consent, approval, authorization, registration or qualification the
lack of which would not have a Material Adverse Effect; or (B) conflict
with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under, the Reorganization
Documents, the Warehouse Documents, the Loan Sale Documents, the DOJ
Settlement or any material indenture, mortgage, deed of trust, lease or
other agreement or instrument to which the Company or the Subsidiary is
a party or by which the Company or the Subsidiary or any of their
respective properties are bound, or the charter documents or by-laws of
the Company or the Subsidiary, or any statute or any judgment, decree,
order, rule or regulation of any court or other governmental authority
or any arbitrator applicable to the Company or the Subsidiary, except
for any conflict, breach or violation which would not result in a
Material Adverse Effect.
(xviii) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), neither the Company nor the Subsidiary has sustained any
loss or interference with their respective businesses or properties
having a Material Adverse Effect from fire, flood, hurricane, accident
or other calamity, whether or not covered by insurance, or from any
labor dispute or any legal or governmental proceeding and there has not
been any development involving the business, properties, business
prospects, financial condition or results of operations of the Company
or the Subsidiary, whether or not arising from transactions in the
ordinary course of business, in the condition (financial or otherwise)
having a Material Adverse Effect, except as described in the
Registration Statement and the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus).
(xix) Neither the Company nor the Subsidiary has directly or
indirectly: (A) taken any action designed to cause or to result in, or
that has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Securities; or (B) since the filing of the Registration Statement: (1)
sold, bid for, purchased, or paid anyone any compensation for
soliciting purchases of, the Securities, or (2) paid or agreed to pay
to any person any compensation for soliciting another to purchase any
other securities of the Company.
(xx) To the best knowledge of the Company and except as set
forth in the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus), loans sold by the Company, the
Subsidiary or the Selling Securityholder have performed in a manner
that would not impair, to an extent which would result in a Material
Adverse Effect, the Company's or the Subsidiary's ability to consummate
future whole loan sales.
(xxi) Neither the Company nor the Subsidiary, or, to the best
knowledge of the Company or the Subsidiary, any of their respective
employees, have at any time during the last five (5) years: (A) failed
to disclose fully any contribution in violation of law; or (B) made any
payment to any federal or state governmental officer or official, or
other person charged with similar public or quasi-public duties, other
than payments required or permitted by the laws of the United States or
any jurisdiction thereof.
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(xxii) (A) The Company and the Subsidiary possess all
certificates, authorizations, licenses, franchises and permits issued
by the appropriate Federal, state or foreign regulatory authorities
necessary to own, lease and operate their respective properties and to
conduct their respective businesses described in the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus), except for those the lack of which would not have a
Material Adverse Effect; and (B) neither the Company or the Subsidiary
has received any notice of proceedings relating to, the revocation or
modification of any such certificate, authorization, license, franchise
or permit, except as described in the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus). Except as
described in the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus), none of the Company's or the
Subsidiary's certificates, authorizations, licenses, franchises or
permits contain any restrictions or conditions that would result in any
Material Adverse Effect.
(xxiii) The Company is familiar with the Investment Company Act
of 1940, as amended, and has in the past conducted its affairs, and
will in the future conduct its affairs, in such a manner to ensure that
the Company was not and will not be an "investment company" or a
company "controlled" by an "investment company" within the meaning of
the Investment Company Act of 1940, as amended, and the rules and
regulations thereunder.
(xxiv) The Company and the Subsidiary have timely filed all
foreign, Federal, state and local tax returns that are required to be
filed and have paid all taxes and assessments required to be paid by
them and any other assessment, fine or penalty levied against them, to
the extent that any of the foregoing is due and payable, except for any
such assessment, fine or penalty that is currently being contested in
good faith or as described in or contemplated by the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus).
(xxv) Except for the shares of the Subsidiary owned by the
Company, neither the Company nor the Subsidiary owns any shares of
stock or any other equity securities of any corporation or has any
equity interest in any firm, partnership, association or other entity.
(xxvi) As of the Firm Closing Date, each of the Company and the
Subsidiary will maintain a system of internal accounting controls
sufficient to provide reasonable assurance that: (A) transactions are
executed in accordance with management's general or specific
authorizations; (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability;
(C) access to assets is permitted only in accordance with management's
general or specific authorization; and (D) the recorded accountability
for assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
(xxvii) Neither the Company nor the Subsidiary has distributed or
will distribute, prior to the later of: (A) the Firm Closing Date, or
any date on which the Option Securities are to be purchased, as the
case may be; and (B) the completion of the distribution of the
Securities, any offering material in connection with the offering and
sale of the Securities other than any Preliminary Prospectus, the
Prospectus, the Registration Statement or Term Sheet or any amendment
or supplement thereto, or other materials, if any, permitted by the
Act.
(xxviii) Except as set forth in the Registration Statement and
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus): (A) each of the Company and the Subsidiary
has, or immediately following the consummation of the Reorganization
will have, good and marketable title to all properties and assets
described in the Registration Statement and Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus), as owned by it, free and clear of any pledge, lien,
security interest, encumbrance, claim or equitable interest (including
without limitation, any pledge, lien, security interest, encumbrance,
claim or equitable interest of the Selling Securityholder or creditors
of the Selling Securityholder), other than such as would not result in
a
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Material Adverse Effect; and (B) each of the Company and the Subsidiary
has, or immediately following the consummation of the Reorganization
will have, a valid and enforceable lease or sublease for their
headquarters at 0000 Xxxx & Xxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxx described
in the Registration Statement and Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), as leased by
it, except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles. Except as set forth in the Registration Statement
and Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus), the Company and the Subsidiary owns or
leases, or immediately following the consummation of the Reorganization
will own or lease, all properties as are necessary to its operations as
now conducted or as proposed to be conducted following the consummation
of the Reorganization, except for those the lack of which would not
have a Material Adverse Effect.
(xxix) No labor dispute with the employees of the Company or the
Subsidiary exists or, to the Company's knowledge, is threatened or
imminent that might be expected to result in any Material Adverse
Effect. No collective bargaining agreement exists with any of the
Company's or the Subsidiary's employees and no such agreement is
imminent.
(xxx) The Company and the Subsidiary own or possess adequate
rights to use all material patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names
currently employed by them in connection with the business to be
operated by them, which are material to the Company's and the
Subsidiary's ability to conduct their business as described in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus); and neither the Company nor the Subsidiary has
received any notice of infringement of or conflict with asserted rights
of any third party with respect to any of the foregoing which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling
or finding, would result in a Material Adverse Effect.
(xxxi) The Company and the Subsidiary will, as of the Firm
Closing Date, maintain insurance with insurers of recognized financial
responsibility against such losses and risks and in such amounts as are
prudent and customary in the businesses in which they are engaged,
including, but not limited to, insurance covering real and personal
property owned or leased by the Company and the Subsidiary against
theft, damage, destruction, errors and omissions, business interruption
and acts of vandalism; neither the Company nor the Subsidiary has been
refused any insurance coverage sought or applied for; and neither the
Company nor the Subsidiary has any reason to believe that it will not
be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as
may be necessary to continue its business at a cost that would not
result in any Material Adverse Effect.
(xxxii) Each certificate signed by any officer of the Company and
delivered to the Representative or counsel for the Underwriters
pursuant to this Agreement shall be deemed to be a representation and
warranty by the Company and the Selling Securityholder to each
Underwriter as to the matters covered thereby.
(xxxiii) The Securities sold by the Selling Securityholder have
been approved for quotation on the Nasdaq National Market, subject to
official notice of issuance.
(xxxiv) (A) The Company and the Subsidiary are in material
compliance with all rules, laws and regulations relating to the use,
treatment, storage and disposal of toxic substances and protection of
health or the environment ("Environmental Laws") which are applicable
to their respective businesses; (B) the Company and the Subsidiary have
received no notice from any governmental authority or third party of an
asserted claim under Environmental Laws, which claim is required to be
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disclosed in the Registration Statement and the Prospectus; (C) the
Company and the Subsidiary have no reason to believe that either of
them will be required to make future material capital expenditures to
comply with Environmental Laws; and (D) to the best knowledge of the
Company, no property which is owned, leased or occupied by the Company
or the Subsidiary has been designated as a Superfund site pursuant to
the Comprehensive Response, Compensation, and Liability Act of 1980, as
amended (42 U.S.C. Section 9601, et seq.), or otherwise designated as a
contaminated site under applicable state or local law.
(xxxv) There are no outstanding loans, advances (except normal
advances for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company or the Subsidiary to or for
the benefit of any of the officers or directors of the Company or the
Subsidiary or any of the members of the families of any of them, except
as disclosed in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus).
(xxxvi) All action necessary to effect the Reorganization (as
defined in the Prospectus (or, if the Prospectus is not in existence,
the most recent draft of the Preliminary Prospectus)) has been approved
by all necessary corporate action on behalf of the Company, the
Subsidiary and the Selling Securityholder, and all governmental and
other third-party consents and approvals necessary to effect the
Reorganization have been obtained, except for governmental and other
third-party consents the lack of which would not have a Material
Adverse Effect. The Representative and their counsel have been provided
true and correct copies of all the final, signed corporate resolutions,
governmental and other third-party consents and approvals (which
consents have been obtained as of the Firm Closing Date and any Option
Closing Date), the Reorganization Documents, and all other documents
necessary to effect the Reorganization.
(b) The Selling Securityholder hereby additionally represents and
warrants to and agrees with each of the several Underwriters that:
(i) The Selling Securityholder will have on the Firm Closing
Date good and marketable title to all the shares of Securities to be
sold by the Selling Securityholder hereunder, free and clear of all
liens, encumbrances, equities, security interests and claims
whatsoever, with full right and authority to deliver the same
hereunder, and that upon the delivery of and payment for such shares of
the Securities hereunder, the several Underwriters will receive good
and marketable title thereto, free and clear of all liens,
encumbrances, equities, security interests and claims whatsoever.
(ii) The Selling Securityholder has reviewed the Registration
Statement and Prospectus (or, if the Prospectus is not in existence,
the most recent draft of the Preliminary Prospectus) and, on the
Effective Date, to the best knowledge of the Selling Securityholder,
each such document did not and will not contain any untrue statement of
a material fact and did not omit to state any material fact required to
be stated therein or necessary in order to make the statements therein
not misleading; and, on the Firm Closing Date and any later date on
which Option Securities are to be purchased, the Prospectus and the
Registration Statement, will not contain any untrue statement of a
material fact or omitted or omits to state any material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(iii) To the best knowledge of the Selling Securityholder, none
of the representations and warranties of the Company set forth in
Section 2(a) hereof is untrue or inaccurate in any material respect.
(iv) All consents, approvals, authorizations and orders
required for the execution and delivery by such Selling Securityholder
of this Agreement and the sale and delivery of the Securities to be
sold by such Selling Securityholder under this Agreement, other than,
at the time of the execution hereof (if the Registration Statement has
not yet been declared effective by the Commission), the issuance
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of the order of the Commission declaring the Registration Statement
effective and such consents, approvals, authorizations or orders as may
be necessary under state or other securities or Blue Sky laws, have
been obtained and are in full force and effect; and such Selling
Securityholder has full legal right, power and authority to enter into
and perform its obligations under this Agreement and to sell, assign,
transfer and deliver the Securities to be sold by such Selling
Securityholder under this Agreement.
(v) The Selling Securityholder is not in default under the
Reorganization Documents, the Loan Sale Documents or the DOJ
Settlement, which default would have a Material Adverse Effect.
(vi) The execution and delivery of this Agreement have been duly
authorized by the Selling Securityholder and this Agreement has been
duly executed and delivered by the Selling Securityholder, and is the
valid and binding agreement of the Selling Securityholder, enforceable
in accordance with its terms, except as the enforcement hereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally or by
general equitable principles; and, except for a breach or violation
which would not have a Material Adverse Effect, the performance of this
Agreement and the consummation of the transactions contemplated hereby
will not result in a breach or violation of any of the terms and
provisions of or constitute a default under the Reorganization
Documents, or any bond, debenture, note or other evidence of
indebtedness, or under any material lease, contract, indenture,
mortgage, deed of trust, loan agreement, joint venture or other
agreement or instrument to which such Selling Securityholder is a party
or by which such Selling Securityholder, or any Securities to be sold
by such Selling Securityholder hereunder, may be bound or result in any
violation of any law, order, rule, regulation, writ, injunction,
judgment or decree of any court, government or governmental agency or
body, domestic or foreign, having jurisdiction over such Selling
Securityholder or over the properties of such Selling Securityholder.
(vii) No legal or governmental action, suit, claim or other
proceedings are pending to which the Selling Securityholder is a party
or to which the property of the Selling Securityholder is subject that
would have a Material Adverse Effect on the Company or the Subsidiary,
and, to the best knowledge of the Selling Securityholder, no such
actions, suits or proceedings have been threatened against the Selling
Securityholder or with respect to any of its properties or is required
to be described in the Registration Statement or the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus), and is not so described.
(viii) All information furnished by or on behalf of such Selling
Securityholder relating to such Selling Securityholder and the
Securities that is set forth in the Registration Statement or the
Prospectus (or, if the Prospectus is not in existence, the most recent
draft of the Preliminary Prospectus) is, and at the time the
Registration Statement became or becomes, as the case may be, effective
and at all times subsequent thereto up to and on the Firm Closing Date,
and on any later date on which Option Securities are to be purchased,
was or will be, true, correct and complete, and does not, and at the
time the Registration Statement became or becomes, as the case may be,
effective and at all times subsequent thereto up to and on the Firm
Closing Date, and on any later date on which Option Securities are to
be purchased, will not, contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make such information not misleading.
(ix) The Selling Securityholder will review the Prospectus and
will comply with all agreements and satisfy all conditions on its part
to be complied with or satisfied pursuant to this Agreement on or prior
to the Firm Closing Date, or any later date on which Option Securities
are to be purchased, as the case may be, and will advise its attorneys
and the Representative prior to the Firm Closing Date, if any statement
to be made on behalf of such Selling Securityholder in the certificate
contemplated by Section 7(f) hereof would be inaccurate if made as of
the Firm Closing Date or such later date on which Option Securities are
to be purchased, as the case may be.
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(x) The Selling Securityholder does not have, or has waived
prior to the date hereof, any registration right or other similar right
to participate in the offering made by the Prospectus, other than such
rights of participation as have been satisfied by the participation of
such Selling Securityholder in the transactions to which this Agreement
relates in accordance with the terms of this Agreement; and such
Selling Securityholder does not own any warrants, options or similar
rights to acquire, and does not have any right or arrangement to
acquire, any capital stock, rights, warrants, options or other
securities from the Company, other than those described in the
Registration Statement and the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus).
(xi) Except for the sale of the Securities and compensation of
the Underwriters therefor pursuant to this Agreement, the Selling
Securityholder has not directly or indirectly (A) taken any action
designed to cause or to result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities; or (B) since the filing of the
Registration Statement (1) sold, bid for, purchased, or paid anyone any
compensation for soliciting purchases of, the Securities, or (2) paid
or agreed to pay to any person any compensation for soliciting another
to purchase any other securities of the Company.
(xii) The Selling Securityholder has not distributed and will not
distribute, prior to the later of: (A) the Firm Closing Date; and (B)
the completion of the distribution of the Securities, any offering
material in connection with the offering and sale of the Securities
other than any Preliminary Prospectus, the Prospectus, the Registration
Statement or Term Sheet or any amendment or supplement thereto, or
other materials, if any, permitted by the Act.
(xiii) Except as set forth in the Reorganization Documents or the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), no liability or obligations of the Selling
Securityholder have been assigned to or assumed by the Company or the
Subsidiary or otherwise become the joint, several or individual
liabilities or obligations of the Company or the Subsidiary. No
liabilities or obligations of the Selling Securityholder in connection
with any sales or purchases of securities by the Selling Securityholder
prior to the date of this Agreement have been or will be assigned to or
assumed by the Company or the Subsidiary, or by operation or law or
otherwise have or will become the liabilities of the Company or the
Subsidiary.
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3. Purchase, Sale and Delivery of the Securities.
(a) On the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and conditions herein set
forth, the Selling Securityholder agrees to sell to each of the Underwriters,
and each of the Underwriters, severally and not jointly, agrees to purchase from
the Selling Securityholder, at a purchase price of $______ per share, the number
of Firm Securities set forth opposite the name of such Underwriter in Schedule I
hereto. One or more certificates in definitive form for the Firm Securities that
the several Underwriters have agreed to purchase hereunder, and in such
denomination or denominations and registered in such name or names as the
Representative request upon notice to the Company at least 48 hours prior to the
Firm Closing Date, shall be delivered by or on behalf of the Selling
Securityholder to the Representative for the respective accounts of the
Underwriters, against payment by or on behalf of the Underwriters of the
aggregate purchase price therefor by wire transfer in same day funds to the
account of the Selling Securityholder. Such delivery of and payment for the Firm
Securities shall be made at the offices of Xxxxxx, Xxxx & Xxxxxxxx, Jamboree
Center, 0 Xxxx Xxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxxxx 00000, at 9:00 a.m.,
California time, on April __, 1997, or at such other place, time or date as the
Representative and the Company may agree upon or as the Representative may
determine pursuant to Section 9 hereof, such time and date of delivery against
payment being herein referred to as the "Firm Closing Date." The Selling
Securityholder will make such certificate or certificates for the Firm
Securities available for checking and packaging by the Representative at the
offices in New York, New York, of the Company's transfer agent or registrar at
least 24 hours prior to the Firm Closing Date. Notwithstanding the foregoing, if
the Representative elects that the delivery to the Underwriters of all or a
portion of the Firm Securities be effected through the "Full Fast" system of the
Depository Trust Corporation, such that all or a portion of the Firm Securities
will be denominated in book-entry form and there will be no certificate
therefor, then in lieu of certificates for the Firm Securities, the Selling
Stockholder shall deliver to the Company's transfer agent at least 24 hours
prior to the Firm Closing Date, instructions in form and substance satisfactory
to the Representative, instructing such transfer agent to register such shares
through the Full Fast system on the Firm Closing Date.
(b) For the purpose of covering any over-allotments in connection with
the distribution and sale of the Firm Securities as contemplated by the
Prospectus, the Selling Securityholder hereby grants to the several Underwriters
an option to purchase, severally and not jointly, the Option Securities. The
purchase price to be paid for any Option Securities shall be the same price per
share as the price per share for the Firm Securities set forth above in
paragraph (a) of this Section 3. Any Option Securities that the Underwriters
elect to purchase will be purchased from the Selling Securityholder. The option
granted hereby may be exercised as to all or any part of the Option Securities
from time to time within thirty days after the date of the Prospectus (or, if
such 30th day shall be a Saturday or Sunday or a holiday, on the next business
day thereafter when the New York Stock Exchange is open for trading). The
Underwriters shall be obligated to purchase only those Option Securities for
which the Underwriters have exercised such option. The Representative may from
time to time exercise the option granted hereby by giving notice in writing or
by telephone (confirmed in writing) to the Selling Securityholder setting forth
the aggregate number of Option Securities as to which the several Underwriters
are then exercising the option and the date and time for delivery of and payment
for such Option Securities. Any such date of delivery shall be determined by the
Representative but shall not be earlier than two (2) business days or later than
five (5) business days after such exercise of the option and, in any event,
shall not be earlier than the Firm Closing Date. The time and date set forth in
each such notice, or each such other time on such other date as the
Representative and the Selling Securityholder may agree upon or as the
Representative may determine pursuant to Section 9 hereof, is each herein called
an "Option Closing Date" with respect to the Option Securities covered by such
notice. Upon each such exercise of the option as provided herein, the Selling
Securityholder shall become obligated to sell to each of the several
Underwriters, and, subject to the terms and conditions herein set forth, each of
the Underwriters (severally and not jointly) shall become obligated to purchase
from the Selling Securityholder the same percentage of the total number of the
Option Securities as to which the several Underwriters are then exercising the
option as such Underwriter is obligated to purchase of the aggregate number of
Firm Securities, as adjusted by the Representative in such manner as it deems
advisable to avoid fractional shares. If the option is exercised as to all or
any portion of the Option Securities, one or more certificates in definitive
form for such Option Securities, and payment therefor, shall be delivered on the
related Option Closing
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Date in the manner, and upon the terms and conditions, set forth in paragraph
(a) of this Section 3, except that reference therein to the Firm Securities and
the Firm Closing Date shall be deemed, for purposes of this paragraph 3(b), to
refer to such Option Securities and such Option Closing Date, respectively.
(c) It is understood that you, individually and not as the
Representative, may (but shall not be obligated to) make payment on behalf of
any Underwriter or Underwriters for any of the Securities to be purchased by
such Underwriter or Underwriters. No such payment shall relieve such Underwriter
or Underwriters from any of its or their obligations hereunder.
(d) The Selling Securityholder hereby acknowledges that the wire
transfer by or on behalf of the Underwriters of the purchase price for any
Securities does not constitute closing of a purchase and sale of the Securities.
Only execution and delivery of a receipt for the Securities by the Underwriters,
by facsimile or otherwise, indicates completion of the closing of a purchase of
the Securities from the Selling Securityholder. Furthermore, in the event that
the Underwriters wire funds to the Selling Securityholder prior to the
completion of the closing of a purchase of Securities, the Selling
Securityholder hereby acknowledges that until the Underwriters execute and
deliver a receipt for the Securities, by facsimile or otherwise, the Selling
Securityholder will not be entitled to the wired funds and shall return the
wired funds to the Underwriters as soon as practicable (by wire transfer of
same-day funds) upon demand. In the event that the closing of a purchase of
Securities is not completed and the wire funds are not returned by the Selling
Securityholder to the Underwriters on the same day the wired funds were received
by the Selling Securityholder, the Selling Securityholder agrees to pay to the
Underwriters in respect of each day the wire funds are not returned by it, in
same-day funds, interest on the amount of such wire funds at the "Prime Rate"
quoted in the Wall Street Journal on the date hereof.
4. Offering by the Underwriters. Upon your authorization of the release of
the Firm Securities, the several Underwriters propose to offer the Firm
Securities for sale to the public upon the terms set forth in the Prospectus.
5. Covenants of the Company and the Selling Securityholder. The Company
(with respect only to Sections 5(a) through and including 5(n) below) and the
Selling Securityholder (with respect only to Sections 5(d), 5(e), 5(o) and 5(p)
below) covenant and agree with each of the Underwriters that:
(a) The Company will use its best efforts to cause any amendments to
the Registration Statement to become effective as promptly as possible. The
Company will file the Prospectus or any Term Sheet and any amendment or
supplement thereto with the Commission in the manner and within the time period
required by Rules 424(b) and 434 under the Act. During any time when a
prospectus relating to the Securities is required to be delivered under the Act,
the Company: (i) will comply with all requirements imposed upon it by the Act
and the rules and regulations of the Commission thereunder to the extent
necessary to permit the continuance of sales of or dealings in the Securities in
accordance with the provisions hereof and of the Prospectus, as then amended or
supplemented; and (ii) will not file with the Commission the Prospectus, Term
Sheet or the amendment referred to in the second sentence of Section 2(a)
hereof, any amendment or supplement to such Prospectus, Term Sheet or any
amendment to the Registration Statement or any Rule 462(b) Registration
Statement of which the Representative shall not previously have been advised and
furnished with a copy for a reasonable period of time prior to the proposed
filing and as to which filing the Representative shall not have given its
consent. The Company will prepare and file with the Commission, in accordance
with the rules and regulations of the Commission, promptly upon request by the
Representative or counsel for the Underwriters, any amendments to the
Registration Statement or amendments or supplements to the Prospectus that may
be necessary or advisable in connection with the distribution of the Securities
by the several Underwriters, and will use its best efforts to cause any such
amendment to the Registration Statement to be declared effective by the
Commission as promptly as possible. The Company will advise the Representative,
promptly after receiving notice thereof, of the time when the Registration
Statement or any amendment thereto has been filed or declared effective or the
Prospectus or any amendment or supplement thereto has been filed and will
provide to the Representative copies of each such filing.
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(b) The Company will advise the Representative, promptly after
receiving notice or obtaining knowledge thereof, of: (i) the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement or any amendment thereto or
any order preventing or suspending the use of any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto; (ii) the suspension of the
qualification of the Securities for offering or sale in any jurisdiction; (iii)
the institution, threatening or contemplation of any proceeding for any such
purpose; or (iv) any request made by the Commission for amending the Original
Registration Statement or any Rule 462(b) Registration Statement, for amending
or supplementing the Prospectus or for additional information. The Company will
use its best efforts to prevent the issuance of any such stop order and, if any
such stop order is issued, to obtain the withdrawal thereof as promptly as
possible.
(c) The Company will arrange for the qualification of the Securities
for offering and sale under the securities or blue sky laws of such
jurisdictions as the Representative may designate and will continue such
qualifications in effect for as long as may be necessary to complete the
distribution of the Securities; provided, however, that in connection therewith
the Company shall not be required to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction.
(d) If, at any time prior to the later of: (i) the final date when a
prospectus relating to the Securities is required to be delivered under the Act;
or (ii) the Option Closing Date, any event occurs as a result of which the
Prospectus, as then amended or supplemented, would include any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, or if for any other reason it is necessary at any time to
amend or supplement the Prospectus to comply with the Act or the rules or
regulations of the Commission thereunder, the Company or the Selling
Securityholder (whichever first learns of the event or other reason to amend or
supplement the Prospectus) will promptly notify the Representative thereof and,
subject to Section 5(a) hereof, the Company will prepare and file with the
Commission, at the Selling Securityholder's expense, an amendment to the
Registration Statement or an amendment or supplement to the Prospectus that
corrects such statement or omission or effects such compliance.
(e) During a period of one (1) year after the date hereof, none of the
Company, the Subsidiary or the Selling Securityholder will, without the prior
written consent of the Representative (which shall not be unreasonably
withheld), waive any material default or amend in any material respect any
material provision of the Reorganization Documents or any other documents used
to effect the Reorganization.
(f) The Company will, without charge, provide: (i) to the
Representative and to counsel for the Underwriters a signed copy of the Original
Registration Statement filed with respect to the Securities and each amendment
thereto (in each case including exhibits thereto) and any Rule 462(b)
Registration Statement; (ii) to each other Underwriter, a conformed copy of such
registration statement and any Rule 462(b) Registration Statement and each
amendment thereto (in each case without exhibits thereto); and (iii) so long as
a prospectus relating to the Securities is required to be delivered under the
Act, as many copies of each Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto as the Representative may reasonably request;
without limiting the application of clause (iii) of this sentence, the Company,
not later than: (A) 10:00 p.m., New York City time, on the date of determination
of the initial public offering price, if such determination occurred at or prior
to 10:00 a.m., New York City time, on such date or; (B) 2:00 p.m., New York City
time, on the business day following the date of determination of the initial
public offering price, if such determination occurred after 10:00 a.m., New York
City time, on such date, will deliver to the Underwriters, without charge, as
many copies of the Prospectus and any amendment or supplement thereto as the
Representative may reasonably request for purposes of confirming orders that are
expected to settle on the Firm Closing Date. The Company will provide or cause
to be provided to the Representative, and to each Underwriter that so requests
in writing, a copy of each report on Form SR filed by the Company as required by
Rule 463 under the Act.
(g) If the Company elects to rely on Rule 462(b), the Company shall
both file a Rule 462(b) Registration Statement with the Commission in compliance
with Rule 462(b) and the Selling
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Securityholder shall pay the applicable fees in accordance with Rule 111
promulgated under the Act by the earlier of: (i) 10:00 p.m., New York City time,
on the date of this Agreement; and (ii) the time confirmations are sent or
given, as specified by Rule 462(b)(2).
(h) The Company, as soon as practicable, will make generally available
to its securityholders and to the Representative a consolidated earnings
statement of the Company and its subsidiaries that satisfies the provisions of
Section 11(a) of the Act and Rule 158 thereunder.
(i) During a period of three (3) years after the date hereof, the
Company, within the periods prescribed by applicable law, will furnish to its
stockholders annual reports (including financial statements audited by
independent certified public accountants) and will furnish to its stockholders
unaudited quarterly reports of operations for each of the first three quarters
of the fiscal year as required of companies with a class of securities
registered under the Exchange Act, and will make available to you and the other
several Underwriters hereunder upon request: (i) concurrently with making such
reports available to its stockholders, statements of operations of the Company
for each of the first three quarters in the form made available to the Company's
stockholders; (ii) concurrently with the furnishing thereof to its stockholders,
a balance sheet of the Company as of the end of such fiscal year, together with
statements of operations, of stockholders' equity and of cash flow of the
Company for such fiscal year, accompanied by a copy of the certificate or report
thereon of nationally recognized independent certified public accountants; (iii)
concurrently with the furnishing of such reports to its stockholders, copies of
all reports (financial or other) mailed to stockholders; (iv) as soon as they
are available, copies of all reports and financial statements furnished to or
filed with the Commission, any securities exchange or the Nasdaq National Market
by the Company (except for documents for which confidential treatment is
requested); and (v) every material press release and every material news item or
article in respect of the Company or its affairs which was generally released to
stockholders or to the public. During such three (3) year period, if the Company
shall have any active subsidiaries (including the Subsidiary), the foregoing
financial statements shall be on a consolidated basis to the extent that the
accounts of the Company are consolidated with any subsidiaries, and shall be
accompanied by similar financial statements for any significant subsidiary that
is not so consolidated.
(j) Except for issuances pursuant to the exercise of stock options to
be granted as described in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus): the Company will not from
the date hereof until the expiration of the 180 day period after the date of the
Prospectus (the "Lock-up Period"), directly or indirectly, without the prior
written consent of the Representative, on behalf of the Underwriters, offer,
sell, offer to sell, contract to sell, pledge, grant any option to purchase or
otherwise dispose (or announce any offer, sale, offer of sale, contract of sale,
pledge, grant of any option to purchase or other disposition) of any shares of
Common Stock or any securities convertible into, or exchangeable or exercisable
for, shares of Common Stock.
(k) For a period of 180 days after the date hereof, the Company will
not, directly or indirectly: (i) take any action designed to cause or to result
in, or that has constituted or which might reasonably be expected to constitute,
the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities; or (ii)(A) sell, bid for,
purchase, or pay anyone any compensation for soliciting purchases of, the
Securities or; (B) pay or agree to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
(l) The Company will obtain each of the lockup agreements described in
Section 7(g) hereof prior to the Firm Closing Date.
(m) If at any time during the 25-day period after the Registration
Statement becomes effective or the period prior to the Option Closing Date, any
publication or event relating to or affecting the Company shall occur as a
result of which in your opinion the market price of the Common Stock has been or
is likely to be materially affected (regardless of whether such publication or
event necessitates a supplement to or amendment of the Prospectus), the Company
will, after written notice from you advising the Company to the effect set forth
above, and in accordance with applicable law and the rules and policies of The
Nasdaq Stock
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Market, Inc., forthwith prepare, consult with you concerning the substance of,
and disseminate a press release or other public statement, reasonably
satisfactory to you, your counsel and counsel to the Company responding to or
commenting on such rumor, publication or event.
(n) The Company will cause the Securities to be duly included for
quotation on the Nasdaq National Market prior to the Firm Closing Date. The
Company will use its best efforts to ensure that the Securities remain included
for quotation on the Nasdaq National Market for a period of three (3) years
following the Firm Closing Date; provided, however, that during such three (3)
year period, the Company may, with the prior written consent of the
Representative acting in its sole discretion, apply to list the securities on a
national securities exchange in lieu of being included for quotation the Nasdaq
National Market.
(o) The Selling Securityholder will not, directly or indirectly: (i)
take any action designed to cause or result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Securities or; (ii) (A) sell, bid for, purchase, or pay anyone any compensation
for soliciting purchases of, the Securities or; (B) pay or agree to pay to any
person any compensation for soliciting another to purchase any other securities
of the Company (except for the sale of Securities by the Selling Securityholder
under this Agreement).
(p) Except for the Securities to be sold by the Selling Securityholder
to the Underwriters hereunder, the Selling Securityholder will not, during the
Lock-up Period, directly or indirectly, without the prior written consent of the
Representative, on behalf of the Underwriters, offer, sell, offer to sell,
contract to sell, pledge, grant any option to purchase or otherwise dispose (or
announce any offer, sale, offer of sale, contract of sale, pledge, grant of any
option to purchase or other disposition) of any shares of Common Stock or any
securities convertible into, or exchangeable or exercisable for, shares of
Common Stock. The foregoing restriction is expressly agreed to preclude the
holder of the Securities from engaging in any hedging or other transaction which
is designed to or reasonably expected to lead to or result in a disposition of
Securities during the Lock-up Period, even if such Securities would be disposed
of by someone other than the Selling Securityholder. Such prohibited hedging or
other transactions would include, without limitation, any short sale (whether or
not against the box) or any purchase, sale or grant of any right (including,
without limitation, any put or call option) with respect to any Securities or
with respect to any security (other than a broad-based market basket or index)
that includes, relates to or derives any significant part of its value from
Securities. The Selling Securityholder also agrees and consents to the entry of
stop transfer instructions with the Company's transfer agent against the
transfer of the securities held by the Selling Securityholder except in
compliance with this restriction.
6. Expenses. The Selling Securityholder will pay all costs and expenses
incident to the performance of its obligations under this Agreement, whether or
not the transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 11 hereof, including all costs and expenses
incident to: (a) the printing or other production of documents with respect to
the transactions, including any costs of printing the Registration Statement
originally filed with respect to the Securities and any amendment thereto, any
Rule 462(b) Registration Statement, any Preliminary Prospectus and the
Prospectus and any amendment or supplement thereto, this Agreement and any blue
sky memoranda and a reasonable quantity of Preliminary Prospectuses and
Prospectuses as determined by the Representative; (b) all arrangements relating
to the delivery to the Underwriters of copies of the foregoing documents; (c)
the fees and disbursements of its counsel, the accountants and any other experts
or advisors retained by the Company; (d) the preparation, issuance and delivery
to the Underwriters of any certificates evidencing the Securities, including
transfer agent's and registrar's fees; (e) the qualification of the Securities
under state securities and blue sky laws, including filing fees and fees and
disbursements of counsel for the Underwriters relating thereto (not to exceed
$15,000); (f) the filing fees of the Commission and the National Association of
Securities Dealers, Inc. relating to the Securities; (g) the filing and other
fees of securing quotation of the Securities on the Nasdaq National Market; (h)
the direct costs of the Company in connection with any meetings with prospective
investors in the Securities; and (i) advertising relating to the offering of the
Securities (other than as shall have been specifically approved by the
Representative to be paid for by the Underwriters). If the sale of the
Securities provided for herein is not consummated due to the failure, refusal or
inability on the part of the Company or the Selling Securityholder to perform
all obligations and
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satisfy all conditions on its part to be performed or satisfied hereunder other
than by reason of a default by any of the Underwriters, the Representative shall
be entitled to receive certain payments in the circumstances set forth in
Paragraph 4(d) of the engagement letter dated February 19, 1997 among the
Representative, the Company and the Selling Securityholder. Neither the Company
nor the Selling Securityholder shall in any event be liable to any of the
Underwriters for the loss of anticipated profits from the transactions covered
by this Agreement.
7. Conditions of the Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Firm Securities shall be
subject, in the Representative's sole discretion, to the accuracy of the
representations and warranties of the Company and the Selling Securityholder
contained herein as of the date hereof and as of the Firm Closing Date, as if
made on and as of the Firm Closing Date, to the accuracy of the statements of
the Company's officers made pursuant to the provisions hereof, to the
performance by the Company of its covenants and agreements hereunder and to the
following additional conditions:
(a) If the Original Registration Statement or any amendment thereto
filed prior to the Firm Closing Date has not been declared effective as of the
time of execution hereof, the Registration Statement or such amendment, and if
the Company has elected to rely upon Rule 462(b), the Rule 462(b) Registration
Statement, shall have been declared effective not later than the earlier of: (i)
11:00 a.m., New York City time, on the date on which the amendment to the
Registration Statement originally filed with respect to the Securities or to the
Registration Statement, as the case may be, containing information regarding the
initial public offering price of the Securities has been filed with the
Commission; and (ii) the time confirmations are sent or given as specified by
Rule 462(b) or, with respect to the Original Registration Statement, such later
time and date as shall have been consented to by the Representative; if
required, the Prospectus or any Term Sheet that constitutes a part thereof and
any amendment or supplement thereto shall have been filed with the Commission in
the manner and within the time period required by Rules 434 and 424(b) under the
Act; no stop order suspending the effectiveness of the Registration Statement or
any amendment thereto shall have been issued, and no proceedings for that
purpose shall have been instituted or threatened or, to the knowledge of the
Company or the Selling Securityholder, shall be contemplated by the Commission;
and the Company shall have complied with any request of the Commission for
additional information (to be included in the Registration Statement or the
Prospectus or otherwise).
(b) The Representative shall have received an opinion, dated the Firm
Closing Date, of Xxxxxx, Xxxx & Xxxxxxxx, LLP, counsel for the Company and the
Selling Securityholder, to the effect that:
(i) Each of the Selling Securityholder, the Company and the
Subsidiary has been duly organized and is validly existing and in good
standing under the laws of its jurisdiction of organization and each of
the Company and the Subsidiary is duly qualified to transact business
as a foreign entity and is in good standing under the laws of all other
jurisdictions where the ownership or leasing of its properties or the
conduct of its businesses requires such qualification, except where the
failure to be so qualified would not have a Material Adverse Effect.
(ii) Each of the Selling Securityholder, the Company and the
Subsidiary has the corporate power and authority to own or lease its
properties and conduct its businesses as described in the Registration
Statement and the Prospectus; and the Company and the Selling
Securityholder has the corporate power and authority to enter into this
Agreement and to carry out the terms and provisions hereof to be
carried out by it.
(iii) The issued and outstanding shares of the Subsidiary have
been duly authorized and validly issued, are fully paid and
nonassessable, and, to the knowledge of such counsel, have not been
issued in violation of or subject to any preemptive right, co-sale
right, registration right, right of first refusal or other similar
right; and, to the knowledge of such counsel, are owned by the Company
free and clear of any perfected security interests that have been in
existence for at least 21 days preceding the Firm Closing Date or any
other pledge, security interests, liens, encumbrances, claims or
equitable interests. The Company does not own or control, directly or
indirectly, any corporation, association or other entity other than the
Subsidiary.
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(iv) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus. All of the issued and
outstanding shares of capital stock of the Company (including the
Securities to be sold by the Selling Securityholder) have been duly
authorized and validly issued and are fully paid and nonassessable,
have been issued to the Selling Securityholder in compliance with all
Federal and state securities laws, and, to the knowledge of such
counsel, were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities. The
Securities have been approved for quotation on the Nasdaq National
Market, subject to official notice of issuance.
(v) The sale by the Selling Securityholder of the Securities to
the Underwriters under this Agreement has been duly authorized by the
Selling Securityholder; the Selling Securityholder is the record holder
of the Securities being sold by the Selling Securityholder under this
Agreement; and upon delivery of and payment for the Securities held by
the Selling Securityholder as contemplated by this Agreement, each of
the Underwriters will acquire all right, title and interest of the
Selling Securityholder to the Securities purchased by it from the
Selling Securityholder, to the knowledge of such counsel, free and
clear of any adverse claims.
(vi) The statements set forth under the heading "Description of
Capital Stock" in the Prospectus, insofar as such statements purport to
summarize certain provisions of the capital stock of the Company,
provide a fair summary of such provisions; and the statements set forth
under the heading "Shares Eligible for Future Sale" in the Prospectus,
insofar as such statements constitute a summary of the legal matters,
documents or proceedings referred to therein, provide a fair summary of
such legal matters, documents and proceedings in all material respects;
and the description in the Prospectus of the governmental rules and
regulations described under the captions "Risk Factors" and
"Business--Regulation" provides a fair summary of such rules and
regulations in all material respects (except for the DOJ Settlement
with respect to which such counsel need express no opinion).
(vii) The execution and delivery of this Agreement have been duly
authorized by all necessary corporate action of the Selling
Securityholder and the Company and this Agreement has been duly
executed and delivered by the Selling Securityholder and the Company.
(viii) To the knowledge of such counsel: (A) no legal or
governmental proceedings are pending to which the Selling
Securityholder, the Company or the Subsidiary is a party or to which
the property of the Selling Securityholder, the Company or the
Subsidiary is subject that are required to be described in the
Registration Statement or the Prospectus and are not described therein,
and no such proceedings have been threatened against the Company or the
Subsidiary or with respect to any of their respective properties; and
(B) no contract or other document is required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit
to the Registration Statement that is not described therein or filed as
required.
(ix) To the knowledge of such counsel, neither the Selling
Securityholder, the Company, nor the Subsidiary is: (A) in violation of
its certificate of incorporation or bylaws; or (B) in violation, to an
extent which could result in a Material Adverse Effect, of any law,
order, rule, regulation, writ, injunction, judgment or decree of any
court or governmental agency or body to which the Company or the
Subsidiary is subject (except for the DOJ Settlement, as to which such
counsel need express no opinion).
(x) The compliance and performance by the Selling
Securityholder and the Company with the other provisions of this
Agreement and the consummation of the transactions herein contemplated
do not: (A) require the consent, approval, authorization, registration
or qualification of or with any governmental authority, domestic or
foreign, except counsel need express no opinion regarding regulatory
matters referenced in Section 7(c) hereof, such as have been obtained
under the Act, the
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Exchange Act, or such as may be required under state securities or blue
sky laws, as to which such counsel need express no opinion; or (B)
result in a breach or violation of any of the terms and provisions of,
or constitute a default under the certificate of incorporation or
bylaws of the Selling Securityholder or the Company; or (C) to the
knowledge of such counsel, result in a breach or violation of any of
the terms and provisions of, or constitute a default under any
obligation, agreement, covenant or condition contained in the
Reorganization Documents, which default would have a Material Adverse
Effect; or (D) to the knowledge of such counsel, result in a breach or
violation of any of the terms and provisions of, or constitute a
default under any law, order, rule, regulation, writ, injunction,
judgment or decree of any court or governmental agency or body to which
the Selling Securityholder, the Company or the Subsidiary is subject,
which breach, violation or default would have a Material Adverse
Effect.
(xi) The Registration Statement is effective under the Act; any
required filing of the Prospectus, or any Term Sheet that constitutes a
part thereof, pursuant to Rules 424(b) and 434 has been made in the
manner and within the time period required by Rules 424(b) and 434;
and, to the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement or any amendment thereto
has been issued, and no proceedings for that purpose have been
instituted or threatened by the Commission.
(xii) The Registration Statement filed, as amended, with respect
to the Securities and each amendment thereto, any Rule 462(b)
Registration Statement and the Prospectus (in each case, other than the
financial statements and other financial and statistical information
contained therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the applicable
requirements of the Act and the rules and regulations of the Commission
thereunder.
(xiii) If the Company elects to rely on Rule 434, the Prospectus
is not "materially different," as such term is used in Rule 434, from
the prospectus included in the Registration Statement at the time of
its effectiveness or an effective post-effective amendment thereto
(including such information that is permitted to be omitted pursuant to
Rule 430A).
(xiv) The Company is not, and the transactions contemplated by
this Agreement will not cause the Company to become, an investment
company subject to registration under the Investment Company Act of
1940, as amended.
(xv) The specimen stock certificate of the Company filed as an
exhibit to the Registration Statement is in due and proper form to
evidence shares of Common Stock, has been duly authorized and approved
by the Board of Directors of the Company and complies with all legal
requirements applicable under the corporate laws of the State of
Delaware.
(xvi) The execution and delivery of the Reorganization Documents
have been duly authorized by all necessary corporate action on the part
of the Company, and the Selling Securityholder.
Such counsel shall also state that they have no reason to believe that
the Registration Statement, as of its effective date and the date of such
opinion, contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus, as of its date and
the date of such opinion, included or includes any untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading (except such counsel need express no view as to the
financial statements and notes thereto, schedules and reports thereon, and other
financial and statistical data included or incorporated by reference in the
Registration Statement or Prospectus).
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deem(s) proper, on certificates of responsible
officers of the Selling Securityholder, the Company and the Subsidiary, and
public officials and opinions of counsel as are reasonably acceptable to the
Representative.
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References to the Registration Statement and the Prospectus in this
paragraph (b) shall include any amendment or supplement thereto at the date of
such opinion.
(c) The Representative shall have received a memorandum dated as of
the Firm Closing Date from special regulatory counsel acceptable to the
Representative that sets forth the governmental or regulatory agency licenses,
consents and approvals that the Subsidiary has obtained in connection with the
conduct of its business.
(d) The Representative shall have received from Deloitte & Touche LLP
a letter or letters dated, respectively, the date hereof and the Firm Closing
Date, in form and substance satisfactory to the Representative, to the effect
that:
(i) They are independent public accountants with respect to the
Company and its consolidated Subsidiary within the meaning of the Act
and the applicable rules and regulations thereunder.
(ii) In their opinion, the audited consolidated financial
statements and schedules examined by them and included in the
Registration Statement and the Prospectus comply in form in all
material respects with the applicable accounting requirements of the
Act and the related published rules and regulations.
(iii) On the basis of carrying out certain specified procedures
(which do not constitute an examination made in accordance with
generally accepted auditing standards) that would not necessarily
reveal matters of significance with respect to the comments set forth
in this paragraph (iii), a reading of the minute books of the
stockholders, the Board of Directors and any committees thereof of the
Company and its consolidated Subsidiary, and inquiries of certain
officials of the Company and its consolidated Subsidiary who have
responsibility for financial and accounting matters, nothing came to
their attention that caused them to believe that at a specific date not
more than five business days prior to the date of such letter, there
were any changes in the capital stock or long-term debt of the Company
and its consolidated Subsidiary or any decreases in net current assets
or stockholders' equity of the Company and its consolidated Subsidiary,
in each case compared with amounts shown on the December 31, 1996
consolidated balance sheet included in the Registration Statement and
the Prospectus, or for the period from January 1, 1997 to such
specified date there are any decreases, as compared to total revenues,
net income or pro forma net income per share, respectively, of the
Company and its consolidated Subsidiary, except in all instances for
changes, decreases or increases set forth in such letter.
(iv) They have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages and
financial information that are derived from the general accounting
records of the Company and its consolidated Subsidiary and are included
in the Registration Statement and the Prospectus, and have compared
such amounts, percentages and financial information with such records
of the Company and its consolidated Subsidiary and with information
derived from such records and have found them to be in agreement,
excluding any questions of legal interpretation.
In the event that the letters referred to above set forth any such
changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that: (A) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the
Representative deems such explanation unnecessary; and (B) such changes,
decreases or increases do not, in the sole judgment of the Representative, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Securities as contemplated by the Registration Statement, as amended as of the
date hereof.
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References to the Registration Statement and the Prospectus in this
paragraph (d) with respect to either letter referred to above shall include any
amendment or supplement thereto at the date of such letter.
(e) The Representative shall have received a certificate, dated the
Firm Closing Date, of the principal executive officer, the principal financial
or accounting officer, respectively, of the Company to the effect that:
(i) The representations and warranties of the Company in this
Agreement are true and correct as if made on and as of the Firm Closing
Date; the Registration Statement, as amended as of the Firm Closing
Date, does not include any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not
misleading, and the Prospectus, as amended or supplemented as of the
Firm Closing Date, does not include any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; and the Company has performed all covenants
and agreements and satisfied all conditions on its part to be performed
or satisfied at or prior to the Firm Closing Date.
(ii) No stop order suspending the effectiveness of the
Registration Statement or any amendment thereto has been issued, and no
proceedings for that purpose have been instituted or threatened or, to
the Company's knowledge, are contemplated by the Commission.
(iii) When the Registration Statement was declared effective, and
at all times subsequent thereto up to the delivery of such certificate,
the Registration Statement and the Prospectus contained all statements
required to be stated therein in accordance with, and complied in all
material respects with the requirements of, the Act and the rules and
regulations of the Commission promulgated thereunder, the Registration
Statement, and any amendment or supplement thereto, did not and does
not include any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not
misleading, the Prospectus did not and does not include any untrue
statement of a material fact or omit to state any material fact
necessary in order 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 amended or supplemented Prospectus
which has not been so set forth.
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(iv) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus: (A) there
has not been any change in the business, properties, business
prospects, financial condition or results of operations of the Company
and the Subsidiary which would have a Material Adverse Effect; (B)
neither the Company nor the Subsidiary has been involved in any
transaction that is material to the Company and the Subsidiary, taken
as a whole, except transactions entered into in the ordinary course of
business; (C) neither the Company nor the Subsidiary has incurred any
obligation, direct or contingent, that is material to the Company and
the Subsidiary, taken as a whole, except obligations incurred in the
ordinary course of business; (D) there has not been any change in the
capital stock or outstanding indebtedness of the Company or the
Subsidiary that is material to the Company and the Subsidiary, taken as
a whole; (E) neither the Company nor the Subsidiary has declared or
paid any dividend or distribution of any kind on the capital stock of
the Company or the Subsidiary; or (F) neither the Company nor the
Subsidiary has sustained any loss or damage (whether or not insured) to
the property of the Company or the Subsidiary which has a Material
Adverse Effect.
(f) The Representative shall have received a certificate, dated the
Firm Closing Date, of the Selling Securityholder to the effect that the
representations and warranties of such Selling Securityholder in this Agreement
are true and correct as if made on and as of the Firm Closing Date; the
Registration Statement, as amended as of the Firm Closing Date, does not include
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading, and the Prospectus, as
amended or supplemented as of the Firm Closing Date, does not include any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and such Selling Securityholder has
performed all covenants and agreements on its part to be performed or satisfied
at or prior to the Firm Closing Date.
(g) The Representative shall have received from the Selling
Stockholder and each person who is a director or executive officer of the
Company an agreement to the effect that such person will not, except to the
extent otherwise specifically permitted by the terms of each such person's
agreement, directly or indirectly, without the prior written consent of the
Representative, offer, sell, offer to sell, contract to sell, pledge, grant any
option to purchase or otherwise sell or dispose (or announce any offer, sale,
offer of sale, contract of sale, pledge, grant of an option to purchase or other
sale or disposition) of any shares of Common Stock or any securities convertible
into, or exchangeable or exercisable for, shares of Common Stock during the
Lock-Up Period.
(h) The Representative and counsel for the Underwriters shall have
received such further certificates, documents or other information as they may
have reasonably requested from the Company and the Selling Securityholder.
(i) Prior to the commencement of the offering of the Securities, the
Securities shall have been approved for quotation on the Nasdaq National Market,
subject to official notice of issuance.
(j) The Representative shall have received an opinion, dated the Firm
Closing Date, of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, counsel for the Underwriters,
with respect to the issuance and sale of the Firm Securities, the Registration
Statement and Prospectus, and such other related matters as the Representative
may reasonably require, and the Company shall have furnished to such counsel
such documents as they may reasonably request for the purpose of enabling them
to pass upon such matters.
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representative and
counsel for the Underwriters. The Company shall furnish to the Representative
such conformed copies of such opinions, certificates, letters and documents in
such quantities as the Representative and counsel for the Underwriters shall
reasonably request.
The respective obligations of the several Underwriters to purchase and
pay for any Option Securities shall be subject, in their discretion, to each of
the foregoing conditions to purchase the Firm Securities,
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except that all references to the Firm Securities and the Firm Closing Date
shall be deemed to refer to such Option Securities and the related Option
Closing Date, respectively.
8. Indemnification and Contribution.
(a) The Company and the Selling Securityholder, jointly and severally
agree to indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter or such controlling
person may become subject under the Act and the Exchange Act, or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon the following (except for liability
arising under Section 8(a)(ii) for which such indemnification is given by the
Selling Securityholder individually and not by the Company):
(i) any untrue statement or alleged untrue statement made by
the Company in Section 2(a) of this Agreement;
(ii) any untrue statement or alleged untrue statement made by
the Selling Securityholder in Section 2(b) of this Agreement;
(iii) any untrue statement or alleged untrue statement of any
material fact contained in: (A) the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto and including any Rule 462(b)
Registration Statement; or (B) any application or other document, or
any amendment or supplement thereto, executed by the Company or Selling
Securityholder or based upon written information furnished by or on
behalf of the Company or Selling Securityholder filed in any
jurisdiction in order to qualify the Securities under the securities or
blue sky laws thereof or filed with the Commission or any securities
association or securities exchange (each an "Application");
(iv) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or any Preliminary Prospectus or the Prospectus
or any amendment or supplement thereto, or any Application a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; or
(v) any untrue statement or alleged untrue statement of any
material fact contained in any audio or visual materials prepared,
approved or used by the Company in connection with the marketing of the
Securities, including without limitation, slides, videos, films and
tape recordings.
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating, defending against
or any other proceeding in connection with any such loss, claim, damage,
liability or action; provided, however, that neither the Company nor the Selling
Securityholder will be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in such
Registration Statement or any amendment thereto, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto or any Application in reliance
upon and in conformity with written information furnished to the Company by such
Underwriter through the Representative specifically for use therein; and
provided, further, that neither the Company nor the Selling Securityholder will
be liable to any Underwriter or any person controlling such Underwriter with
respect to any such untrue statement or omission made in any Preliminary
Prospectus that is corrected in the Prospectus (or any amendment or supplement
thereto) if the person asserting any such loss, claim, damage or liability
purchased Securities from such Underwriter but was not sent or given a copy of
the Prospectus (as amended or supplemented) at or prior to the written
confirmation of the sale of such Securities to such person in any case where
such delivery of the Prospectus (as amended or supplemented) is required by the
Act, unless such failure to
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deliver the Prospectus (as amended or supplemented) was a result of
noncompliance by the Company with this Agreement. This indemnity agreement will
be in addition to any liability which the Company or the Selling Securityholder
may otherwise have. Neither the Company nor the Selling Securityholder will,
without the prior written consent of the Underwriter or Underwriters purchasing,
in the aggregate, more than 50% of the Securities, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action,
suit or proceeding in respect of which indemnification may be sought hereunder
(whether or not any such Underwriter or any person who controls any such
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act is a party to such claim, action, suit or proceeding), unless such
settlement, compromise or consent includes an unconditional release of all of
the Underwriters and such controlling persons from all liability arising out of
such claim, action, suit or proceeding.
(b) Each Underwriter, severally and not jointly, will indemnify and
hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement, the Selling Securityholder and each person,
if any, who controls the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act against any losses, claims, damages or
liabilities to which the Company or any such director, officer of the Company,
Selling Securityholder or controlling person of the Company may become subject
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto, or any
Application, or (ii) the omission or the alleged omission to state therein a
material fact required to be stated in the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus or any amendment
or supplement thereto, or any Application or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through the Representative
specifically for use therein; and, subject to the limitation set forth
immediately preceding this clause, will reimburse, as incurred, any legal or
other expenses reasonably incurred by the Company or any such director, officer
or controlling person, or the Selling Securityholder in connection with
investigating or defending any such loss, claim, damage, liability or any action
in respect thereof. This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 8. In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party;
provided, however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to direct the defense of such action on behalf of such indemnified
party or parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party will not be liable to such indemnified party under this Section 8 for any
legal or other expenses, other than reasonable costs of investigation,
subsequently incurred by such indemnified party in connection with the defense
thereof, unless: (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the
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Representative in the case of paragraph (a) of this Section 8, representing the
indemnified parties under such paragraph (a) who are parties to such action or
actions); or (ii) the indemnifying party does not promptly retain counsel
satisfactory to the indemnified party; or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party. After such notice from the indemnifying party to such
indemnified party, the indemnifying party will not be liable for the costs and
expenses of any settlement of such action effected by such indemnified party
without the consent of the indemnifying party.
(d) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 8 is unavailable or insufficient, for
any reason, to hold harmless an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect: (i) the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Securities; or (ii) if
the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions or alleged statements
or omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Securityholder on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total proceeds from the offering (before
deducting expenses) received by the Company and the Selling Securityholder bear
to the total underwriting discounts and commissions received by the
Underwriters. The relative fault of the parties shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the Selling Securityholder or
the Underwriters, the parties' relative intents, knowledge, access to
information and opportunity to correct or prevent such statement or omission,
and any other equitable considerations appropriate in the circumstances. The
Company, the Selling Securityholder and the Underwriters agree that it would not
be equitable if the amount of such contribution were determined by pro rata or
per capita allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take into
account the equitable considerations referred to above in this paragraph (d).
Notwithstanding any other provision of this paragraph (d), no Underwriter shall
be obligated to make contributions hereunder that in the aggregate exceed the
total public offering price of the Securities purchased by such Underwriter
under this Agreement, less the aggregate amount of any damages that such
Underwriter has otherwise been required to pay in respect of the same or any
substantially similar claim, and no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute hereunder are
several in proportion to their respective underwriting obligations and not
joint, and contributions among Underwriters shall be governed by the provisions
of the Representative's Master Agreement Among Underwriters. For the purposes of
this paragraph 8(d), each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act shall have
the same rights to contribution as such Underwriter, and each director of the
Company, each officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company or the Selling Securityholder
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
shall have the same rights to contribution as the Company or the Selling
Securityholder, as the case may be.
9. Default of Underwriters. If one or more Underwriters default in their
obligations to purchase Firm Securities or Option Securities hereunder and the
aggregate number of such Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase is ten percent or less of the
aggregate number of Firm Securities or Option Securities to be purchased by all
of the Underwriters at such time hereunder, then the other Underwriters may make
arrangements satisfactory to the Representative for the purchase of such
Securities by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representative), but if no such arrangements are
made by the Firm Closing Date or the related Option Closing Date, as the case
may be, the other Underwriters shall be obligated severally in proportion to
their respective commitments
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hereunder to purchase the Firm Securities or Option Securities that such
defaulting Underwriter or Underwriters agreed but failed to purchase. If one or
more Underwriters so default with respect to an aggregate number of Securities
that is more than ten percent of the aggregate number of Firm Securities or
Option Securities, as the case may be, to be purchased by all of the
Underwriters at such time hereunder, and if arrangements satisfactory to the
Representative are not made within 36 hours after such default for the purchase
by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representative) of the Securities with respect to
which such default occurs, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter or the Company other than as provided
in Section 10 hereof. In the event of any default by one or more Underwriters as
described in this Section 9, the Representative shall have the right to postpone
the Firm Closing Date or the Option Closing Date, as the case may be,
established as provided in Section 3 hereof for not more than seven business
days in order that any necessary changes may be made in the arrangements or
documents for the purchase and delivery of the Firm Securities or Option
Securities, as the case may be. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 9. Nothing herein shall relieve any defaulting Underwriter from
liability for its default.
10. Survival. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company, its officers, the
Selling Securityholder and the several Underwriters set forth in this Agreement
or made by or on behalf of them, respectively, pursuant to this Agreement shall
remain in full force and effect, regardless of (i) any investigation made by or
on behalf of the Company, any of its officers or directors, the Selling
Securityholder and any Underwriter or any controlling person referred to in
Section 8 hereof and (ii) delivery of and payment for the Securities. The
respective agreements, covenants, indemnities and other statements set forth in
Sections 6 and 8 hereof shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement.
11. Termination.
(a) This Agreement may be terminated with respect to the Firm
Securities or any Option Securities in the sole discretion of the Representative
by notice to the Company given prior to the Firm Closing Date or the related
Option Closing Date, respectively, in the event that the Company or the Selling
Securityholder shall have failed, refused or been unable to perform all
obligations and satisfy all conditions on its part to be performed or satisfied
hereunder at or prior thereto or, if at or prior to the Firm Closing Date or,
with respect to the Company, such Option Closing Date, respectively:
(i) the Company or the Subsidiary shall have, in the sole
judgment of the Representative, sustained any loss or interference with
their respective businesses or properties having a Material Adverse
Effect from fire, flood, hurricane, accident or other calamity, whether
or not covered by insurance, or from any labor dispute or any legal or
governmental proceeding or there shall have been any event,
circumstance or development in the business, properties, business
prospects, financial condition or results of operations of the Company
and the Subsidiary, that results in, or could be expected to result in,
a Material Adverse Effect, except in each case as described in or
contemplated by the Prospectus (exclusive of any amendment or
supplement thereto);
(ii) trading in the Common Stock shall have been suspended by
the Commission or the Nasdaq National Market or trading in securities
generally on the New York Stock Exchange or Nasdaq National Market
shall have been suspended (including automatic halts in trading
pursuant to market decline triggers other than those in which solely
program trading is temporarily halted) or minimum or maximum prices
shall have been established on either such exchange or market system;
(iii) a banking moratorium shall have been declared by New York
or United States authorities;
(iv) the enactment, publication, decree or other promulgation of
any Federal or state statute, regulation, rule or order of, or
commencement of any proceeding or investigation of the
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Company by, any court, legislative body, agency or other government
authority which in the Underwriters' sole opinion materially and
adversely affects or will materially or adversely affect the business
or operations of the Company; or
(v) there shall have been: (A) an outbreak or escalation of
hostilities between the United States and any foreign power; (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States; or (C) any other calamity or crisis or
material adverse change in general economic, political or financial
conditions having an effect on the U.S. financial markets that, in the
sole judgment of the Representative, makes it impractical or
inadvisable to proceed with the public offering or the delivery of the
Securities as contemplated by the Registration Statement, as amended as
of the date hereof.
(b) Termination of this Agreement pursuant to this Section 11 shall be
without liability of any party to any other party except as provided in Section
10 hereof.
12. Information Supplied by Underwriters. The statements set forth: (a) in
the last paragraph on the front cover page; (ii) under the heading
"Underwriting" in any Preliminary Prospectus or the Prospectus; and (iii) on
page 2 in any Preliminary Prospectus or the Prospectus pertaining to
stabilization (to the extent such statements relate to the Underwriters)
constitute the only information furnished by any Underwriter through the
Representative to the Company for the purposes of Sections 2(b) and 8 hereof.
The Underwriters confirm that such statements (to such extent) are correct.
13. Notices. All communications hereunder shall be in writing and, if sent
to any of the Underwriters, shall be delivered or sent by mail or facsimile
transmission and confirmed in writing to Friedman, Billings, Xxxxxx & Co., Inc.,
0000 00xx Xxxxxx Xxxxx, 00xx Xxxxx, Xxxxxxxxx, XX 00000, Facsimile (703)
312-9756, Attention: Xxxxxx Xxxxx, with a copy to Xxxxxxx, Phleger & Xxxxxxxx
LLP, 0000 XxxXxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx Xxxxx, XX 00000, Attention: Xxxxx
X. Xxxxxxx, Esq.; and if sent to the Company, shall be delivered or sent by mail
or facsimile transmission and confirmed in writing to the Company at 0000 Xxxx &
Xxxxxxx Xxxx, Xxxxx 0000, Xxxxxx, XX 00000, Facsimile: (000) 000-0000,
Attention: M. Xxxx Xxxxxx, with a copy to Xxxxxx, Xxxx & Xxxxxxxx LLP, Jamboree
Center, 0 Xxxx Xxxxx, Xxxxx 0000, Xxxxxx, XX 00000, Facsimile: (000) 000-0000,
Attention: Xxxxxx X. Xxxx, Esq., and if sent to Selling Securityholder, shall be
delivered by mail or facsimile transmission and confirmed in writing to Selling
Securityholder at 0000 Xxxx & Xxxxxxx Xxxx, Xxxxx 0000, Xxxxxx, XX 00000,
Facsimile: (000) 000-0000, Attention: Xxxxxx X. Xxxxxxx, with a copy to Xxxxxx,
Xxxx & Xxxxxxxx LLP, Jamboree Center, 0 Xxxx Xxxxx, Xxxxx 0000, Xxxxxx, XX
00000, Facsimile: (000) 000-0000, Attention: Xxxxxx X. Xxxx, Esq.
14. Successors. This Agreement shall inure to the benefit of and shall be
binding upon the several Underwriters, the Company, the Selling Securityholder
and their respective successors and legal representatives, and nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
other person any legal or equitable right, remedy or claim under or in respect
of this Agreement, or any provisions herein contained, this Agreement and all
conditions and provisions hereof being intended to be and being for the sole and
exclusive benefit of such persons and for the benefit of no other person except
that (i) the indemnities of the Company and the Selling Securityholder contained
in Section 8 of this Agreement shall also be for the benefit of any person or
persons who control any Underwriter within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act and (ii) the indemnities of the Underwriters
contained in Section 8 of this Agreement shall also be for the benefit of the
directors of the Company, the officers of the Company who have signed the
Registration Statement, the Selling Securityholder and any person or persons who
control the Company or the Selling Securityholder within the meaning of Section
15 of the Act or Section 20 of the Exchange Act. No purchaser of Securities from
any Underwriter shall be deemed a successor because of such purchase.
15. Applicable Law. The validity and interpretation of this Agreement,
and the terms and conditions set forth herein, shall be governed by and
construed in accordance with the laws of the State of California, without giving
effect to any provisions relating to conflicts of laws.
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16. Consent to Jurisdiction and Service of Process. All judicial
proceedings arising out of or relating to this Agreement may be brought in any
state or federal court of competent jurisdiction in the State of California, and
by execution and delivery of this Agreement, the Company and the Selling
Securityholder each accepts for itself and in connection with their respective
properties, generally and unconditionally, the nonexclusive jurisdiction of the
aforesaid courts and waives any defense of forum non conveniens and irrevocably
agree to be bound by any judgment rendered thereby in connection with this
Agreement. The Selling Securityholder designates and appoints Xxxxxx X. Xxxxxxx,
and the Company designates and appoints Xxxxx X. Xxxxxxxx and such other persons
as may hereafter be selected by the Company or the Selling Securityholder
irrevocably agreeing in writing to so serve, as their respective agents to
receive on its behalf service of all process in any such proceedings in any such
court, such service being hereby acknowledged by the Company and the Selling
Securityholder to be effective and binding service in every respect. A copy of
any such process so served shall be mailed by registered mail to the Company
and/or the Selling Securityholder at their respective addresses provided in
Section 13 hereof; provided, however, that, unless otherwise provided by
applicable law, any failure to mail such copy shall not affect the validity of
service of such process. If any agent appointed by the Company or the Selling
Securityholder refuses to accept service, the Company and the Selling
Securityholder each hereby agrees that service of process sufficient for
personal jurisdiction in any action against the Company or the Selling
Securityholder in the State of California may be made by registered or certified
mail, return receipt requested, to the Company and/or the Selling
Securityholder, as applicable, at their respective addresses provided in Section
13 hereof, and the Selling Securityholder and the Company each hereby
acknowledge that such service shall be effective and binding in every respect.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of any Underwriter to bring
proceedings against the Company and the Selling Securityholder in the courts of
any other jurisdiction.
17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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If the foregoing correctly sets forth our understanding please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter shall constitute an agreement binding the Company, the Selling
Securityholder and each of the several Underwriters.
Very truly yours,
"COMPANY"
LONG BEACH FINANCIAL CORPORATION
By______________________________________
Name:
Title:
"SELLING SECURITYHOLDER"
LONG BEACH MORTGAGE COMPANY
By______________________________________
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
By___________________________
Name:
Title:
For itself and as the Representative.
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Schedule I
UNDERWRITERS
Number of Firm
Underwriter Securities to be Purchased
----------- --------------------------
Friedman, Billings, Xxxxxx & Co., Inc........
----------
Total........................................ 21,750,000
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