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CONTIFINANCIAL STRYPES TRUST
(a Delaware business trust)
PURCHASE AGREEMENT
Dated: __________ __, 1997
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TABLE OF CONTENTS
SECTION 1. Representations and Warranties.................................................... 4
(a) Representations and Warranties by the Trust....................................... 4
(i) Compliance with Registration Requirements.................................... 4
(ii) Independent Accountants............................................. 5
(iii) Financial Statement................................................. 5
(iv) No Material Adverse Change in Business.............................. 5
(v) Good Standing of the Trust; No Subsidiaries......................... 5
(vi) Registration Under the 1940 Act..................................... 6
(vii) Outstanding STRYPES................................................. 6
(viii) Authorization of Agreement.......................................... 6
(ix) Authorization and Description of the Securities..................... 6
(x) Authorization of Fundamental Agreements............................. 6
(xi) Compliance with Acts................................................ 7
(xii) Description of Trust Agreement and Fundamental
Agreements.......................................................... 7
(xiii) Absence of Defaults and Conflicts................................... 7
(xiv) Absence of Proceedings.............................................. 8
(xv) No Investment Restrictions, etc..................................... 8
(xvi) Exhibits............................................................ 8
(xvii) Absence of Further Requirements..................................... 8
(xviii) Title to Property................................................... 8
(b) Representations and Warranties by Continental Grain............................... 9
(i) Authority........................................................... 9
(ii) Delivery of ContiFinancial Common Stock............................. 9
(iii) Authorization of Agreement.......................................... 9
(iv) Authorization of the Forward Purchase Contract and
the Security and Pledge Agreement................................... 9
(v) Absence of Defaults and Conflicts................................... 10
(vi) Absence of Further Requirements..................................... 10
(vii) Trust Registration Statement and Prospectus......................... 11
(viii) ContiFinancial Registration Statement and
Prospectus.......................................................... 11
(ix) Security and Pledge Agreement....................................... 12
(c) Officer's Certificates............................................................ 12
SECTION 2. Sale and Delivery to Underwriters; Closing........................................ 12
(a) Initial Securities................................................................ 12
(b) Option Securities................................................................. 12
(c) Payment........................................................................... 13
(d) Denominations; Registration....................................................... 13
SECTION 3. Covenants......................................................................... 13
(a) Covenants of the Trust............................................................ 13
(i) Compliance with Securities Regulations and
Commission Requests................................................. 13
i
(ii) Filing of Amendments................................................ 14
(iii) Delivery of Trust Registration Statements........................... 14
(iv) Delivery of Trust Prospectuses...................................... 14
(v) Continued Compliance with Securities Laws........................... 15
(vi) Blue Sky Qualifications............................................. 15
(vii) Rule 158............................................................ 16
(viii) Use of Proceeds..................................................... 16
(ix) Listing............................................................. 16
(x) Reporting Requirements.............................................. 16
(b) Covenants of Continental Grain.................................................... 16
(i) Restriction on Sale of Securities................................... 16
(ii) Purpose Statement................................................... 16
SECTION 4. Payment of Expenses............................................................... 16
(a) Expenses Payable by Continental Grain............................................. 16
(b) Termination of Agreement.......................................................... 17
(c) Allocation of Expenses............................................................ 17
SECTION 5. Conditions........................................................................ 17
(a) Conditions of Underwriters' Obligations........................................... 17
(i) Effectiveness of Trust Registration Statement....................... 17
(ii) Effectiveness of ContiFinancial Registration
Statement........................................................... 18
(iii) Opinion of Counsel for Underwriters and Trust....................... 18
(iv) Opinion of Special Delaware Counsel for the
Trust............................................................... 18
(v) Opinions of Counsel for ContiFinancial.............................. 18
(vi) Opinions of Counsel for Continental Grain........................... 18
(vii) Managing Trustee's Certificate...................................... 19
(viii) ContiFinancial Officers' Certificate................................ 19
(ix) Continental Grain Officers' Certificate............................. 19
(x) ContiFinancial Accountant's Comfort Letter.......................... 20
(xi) ContiFinancial Accountant's Bring-down Comfort
Letter.............................................................. 20
(xii) Approval of Listing................................................. 20
(xiii) No Objection........................................................ 20
(xiv) Lock-up Agreements.................................................. 20
(xv) Fundamental Agreements.............................................. 20
(xvi) Conditions to Purchase of Option Securities......................... 20
(xvii) Additional Documents................................................ 20
(b) Termination of Agreement.......................................................... 22
SECTION 6. Indemnification................................................................... 22
(a) Indemnification of the Underwriters and the Trust by
Continental Grain................................................................. 22
(b) Indemnification of the Trust and Continental Grain................................ 24
(c) Actions against Parties; Notification............................................. 24
(d) Settlement without Consent if Failure to Reimburse................................ 25
SECTION 7. Contribution...................................................................... 25
ii
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery.......................................................................... 26
SECTION 9. Termination of Agreement.......................................................... 27
(a) Termination; General.............................................................. 27
(b) Liabilities....................................................................... 27
SECTION 10. Default by One or More of the Underwriters........................................ 27
SECTION 11. Notices........................................................................... 28
SECTION 12. Parties........................................................................... 28
SECTION 13. GOVERNING LAW AND TIME............................................................ 28
SECTION 14. Effect of Headings................................................................ 29
SCHEDULE A List of Underwriters..........................................................Sch A-1
SCHEDULE B Price of STRYPES..............................................................Sch B-1
SCHEDULE C List of persons and entities
subject to lock-up............................................................Sch C-1
EXHIBIT A Form of Lock-up Letter............................................................A-1
iii
CONTIFINANCIAL STRYPES Trust
(a Delaware business trust)
STRYPES(SM)
Exchangeable for Shares of Common Stock of ContiFinancial Corporation
PURCHASE AGREEMENT
_________ __, 1997
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
as Representatives of the several Underwriters
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
ContiFinancial STRYPES Trust (such trust and the trustees thereof
acting in their capacities as such being referred to herein as the "Trust"), a
business trust organized pursuant to the Business Trust Act (the "Delaware Act")
of the State of Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C.
(Sections 3801 et seq.)), and Continental Grain Company, a Delaware corporation
("Continental Grain"), confirm their respective agreements with ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), Bear,
▇▇▇▇▇▇▇ & Co. Inc. and each of the other Underwriters named in Schedule A hereto
(collectively, the "Underwriters", which term shall also include any underwriter
substituted as provided in Section 10 hereof), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇ and Bear,
▇▇▇▇▇▇▇ & Co. Inc. are acting as representatives (in such capacity, the
"Representatives"), with respect to (i) the issue and sale by the Trust and the
purchase by the Underwriters, acting severally and not jointly, of the
respective numbers of the Trust's STRYPESSM (each, a "STRYPES") set forth in
Schedule A
--------
SM Service ▇▇▇▇ of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc.
1
hereto, and (ii) the grant by the Trust to the Underwriters, acting severally
and not jointly, of the option described in Section 2(b) hereof to purchase all
or any part of [420,000] additional STRYPES to cover over-allotments, if any.
The aforesaid 2,800,000 STRYPES (the "Initial Securities") to be purchased by
the Underwriters pursuant to this Agreement and all or any part of the [420,000]
STRYPES subject to the option described in Section 2(b) hereof (the "Option
Securities") are hereinafter called, collectively, the "Securities." The
Securities are to be issued pursuant to an Amended and Restated Trust Agreement,
dated as of March 26, 1997, among the trustees of the Trust (the "Trustees") and
ML IBK Positions, Inc. and Bear, ▇▇▇▇▇▇▇ & Co. Inc., as Sponsors (the "Trust
Agreement").
The STRYPES will be exchanged for the Reference Property (as defined in
the Trust Agreement) or, in certain circumstances, cash with an equal value,
upon the conclusion of the term of the Trust on May 15, 2000 (the "Exchange
Date"). The Trust, ContiFinancial Corporation, a Delaware corporation
("ContiFinancial"), and the Underwriters are concurrently entering into an
agreement, dated the date hereof (the "Registration Agreement"), relating to the
registration of shares of common stock, par value $.01 per share (the
"ContiFinancial Common Stock"), of ContiFinancial deliverable upon exchange of
the STRYPES.
The Trust and Continental Grain understand that the Underwriters
propose to make a public offering of the Securities as soon as the
Representatives deem advisable after this Agreement has been executed and
delivered.
The Trust has filed with the Securities and Exchange Commission (the
"Commission") (i) a notification on Form N-8A (the "Notification") of
registration of the Trust as an investment company; and (ii) a registration
statement on Form N-2 (No. 333-1787 and 811-7565) for the registration of the
Securities under the Securities Act of 1933, as amended (the "1933 Act"), and
Pre-Effective Amendments ▇▇. ▇, ▇▇. ▇ and No. 3 thereto, including a preliminary
prospectus relating to the offering of the Securities. Promptly after execution
and delivery of this Agreement, the Trust will either (i) prepare and file a
prospectus in accordance with the provisions of Rule 430A ("Rule 430A") of the
rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations") and paragraph (h) of Rule 497 ("Rule 497(h)") of the 1933 Act
Regulations or (ii) if the Trust has elected to rely upon Rule 434 ("Rule 434")
of the 1933 Act Regulations, prepare and file a term sheet (a "Trust Term
Sheet") in accordance with the provisions of Rule 434 and Rule 497(h). The
information included in such prospectus or in such Trust Term Sheet, as the case
may be, that was omitted from such registration statement (as so amended) at the
time it became effective but that is deemed to be part of such registration
statement (as so amended) at the time it became effective (i) pursuant to
paragraph (b) of Rule 430A is referred to as "Rule 430A Information" or (ii)
pursuant to paragraph (d) of Rule 434 is referred to as "Rule 434 Information."
Any prospectus relating to the offering of the Securities used before such
registration statement (as so amended) became effective, and any prospectus
relating to the offering of the Securities that omitted, as applicable, the Rule
430A Information or the Rule 434 Information, that was used after such
effectiveness and prior to the execution and delivery of this Agreement, in each
case excluding any ContiFinancial preliminary prospectus (as defined below)
attached thereto, is herein called a "Trust preliminary prospectus." Such
registration statement (as so amended), including the exhibits thereto and the
schedules thereto, if any, at the time it became effective and including the
Rule 430A Information and the
2
Rule 434 Information, as applicable, is herein called the "Trust Registration
Statement." Any registration statement filed by the Trust pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Trust Rule
462(b) Registration Statement," and after such filing the term "Trust
Registration Statement" shall include the Trust Rule 462(b) Registration
Statement. The final prospectus relating to the offering of the Securities,
excluding any ContiFinancial Prospectus (as defined below) attached thereto, in
the form first furnished to the Underwriters for use in connection with the
offering of the Securities is referred to herein as the "Trust Prospectus." If
Rule 434 is relied on, the term "Trust Prospectus" shall refer to the Trust
preliminary prospectus dated March 11, 1997 together with the Trust Term Sheet
and all references in this Agreement to the date of the Trust Prospectus shall
mean the date of the Trust Term Sheet. For purposes of this Agreement, all
references to the Trust Registration Statement, any Trust preliminary
prospectus, the Trust Prospectus or any Trust Term Sheet or any amendment or
supplement to any of the foregoing shall be deemed (i) to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system ("▇▇▇▇▇") and (ii) to exclude the Trust premilinary prospectus
dated , 1996.
ContiFinancial has filed with the Commission a registration statement
on Form S-3 (No. 333-21839) covering the registration of the shares of
ContiFinancial Common Stock deliverable by the Trust on the Exchange Date under
the 1933 Act, including the related preliminary prospectus or prospectuses. Each
prospectus used before such registration statement became effective is herein
called a "ContiFinancial preliminary prospectus." Such registration statement,
including the exhibits thereto, the schedules thereto, if any, and the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933
Act, at the time it became effective, is herein called the "ContiFinancial
Registration Statement." Any registration statement filed by ContiFinancial
pursuant to Rule 462(b) of the 1933 Act Regulations is herein referred to as the
"ContiFinancial Rule 462(b) Registration Statement," and after such filing the
term "ContiFinancial Registration Statement" shall include the ContiFinancial
Rule 462(b) Registration Statement. The final prospectus, including the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, in the form first furnished to the Underwriters for use in
connection with the offering of the Securities is herein called the
"ContiFinancial Prospectus." For purposes of this Agreement, all references to
the ContiFinancial Registration Statement, any ContiFinancial preliminary
prospectus, the ContiFinancial Prospectus or any amendment or supplement to any
of the foregoing shall be deemed (i) to include the copy filed with the
Commission pursuant to ▇▇▇▇▇ and (ii) to exclude any prospectus or other portion
of ContiFinancial's registration statement on Form S-3 (No. 333-21839) relating
to the offer and sale by ContiFinancial of up to 3,220,000 shares of
ContiFinancial Common Stock in concurrent U.S. and international offerings.
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
ContiFinancial Registration Statement, any ContiFinancial preliminary prospectus
or the ContiFinancial Prospectus (or other references of like import) shall be
deemed to mean and include all such financial statements and schedules and other
information which is incorporated by reference in the ContiFinancial
Registration Statement, any ContiFinancial preliminary prospectus or the
ContiFinancial Prospectus, as the case may be; and all references in this
Agreement to amendments or supplements to the ContiFinancial Registration
Statement, any ContiFinancial preliminary
3
prospectus or the ContiFinancial Prospectus shall be deemed to mean and include
the filing of any document under the Securities Exchange Act of 1934, as amended
(the "1934 Act"), which is incorporated by reference in the ContiFinancial
Registration Statement, such ContiFinancial preliminary prospectus or the
ContiFinancial Prospectus, as the case may be.
Prior to the closing under this Agreement, the Trust, Continental Grain
and The Chase Manhattan Bank ("Chase"), as collateral agent, will enter into a
forward purchase contract (the "Forward Purchase Contract"), pursuant to which
Continental Grain will agree to sell and the Trust will agree to purchase,
immediately prior to the Exchange Date, the Reference Property required by the
Trust to exchange all of the Securities on the Exchange Date as described in the
Trust Prospectus, subject to Continental Grain's right to satisfy its
obligations thereunder through a cash payment based on the value of such
Reference Property (the "Forward Purchase"). Continental Grain's obligations
under the Forward Purchase Contract will be secured by a pledge of collateral
pursuant to the terms of a security and pledge agreement (the "Security and
Pledge Agreement") among Continental Grain, the Trust and Chase, as collateral
agent (the "Collateral Agent").
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Trust. The Trust represents
and warrants to each Underwriter as of the date hereof, as of the Closing Time
referred to in Section 2(c) hereof, and as of each Date of Delivery (if any)
referred to in Section 2(b) hereof, and agrees with each Underwriter, as
follows:
(i) Compliance with Registration Requirements. Each of the
Trust Registration Statement and any Trust Rule 462(b) Registration
Statement has become effective under the 1933 Act and no stop order
suspending the effectiveness of the Trust Registration Statement or any
Trust Rule 462(b) Registration Statement pursuant to Section 8(d) of
the 1933 Act, or order pursuant to Section 8(e) of the Investment
Company Act of 1940, as amended (the "1940 Act"), has been issued and
no proceedings for either such purpose have been instituted or are
pending or, to the knowledge of the Trust, are contemplated by the
Commission, and any request on the part of the Commission for
additional information has been complied with.
At the respective times the Trust Registration Statement, any
Trust Rule 462(b) Registration Statement and any post-effective
amendments thereto became effective and at the Closing Time (and, if
any Option Securities are purchased, at the Date of Delivery), the
Notification, the Trust Registration Statement, the Trust Rule 462(b)
Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements
of the 1933 Act and the 1933 Act Regulations and the 1940 Act and the
rules and regulations of the Commission under the 1940 Act (the "1940
Act Regulations"), and did not and will not contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading. Neither the Trust Prospectus nor any amendments or
supplements thereto, at the time the Trust Prospectus or any such
amendment or supplement was issued and at the Closing Time (and, if any
Option
4
Securities are purchased, at the Date of Delivery), included or will
include an untrue statement of a material fact or omitted or will 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. If Rule 434 is used, the Trust will comply with the
requirements of Rule 434. The representations and warranties in this
subsection shall not apply to statements in or omissions from the Trust
Registration Statement (or any amendments or supplements thereto) or
the Trust Prospectus (or any amendments or supplements thereto) made in
reliance upon and in conformity with information furnished to the Trust
in writing by any Underwriter through the Representatives expressly for
use in the Trust Registration Statement (or any amendments or
supplements thereto) or Trust Prospectus (or any amendments or
supplements thereto).
Each of the Trust preliminary prospectus dated February 14,
1997, the Trust preliminary prospectus dated March 11, 1997 and the
Trust preliminary prospectus dated March 28, 1997, and the prospectus
relating to the offering of the Securities filed pursuant to Rule 497
under the 1933 Act, complied when so filed in all material respects
with the 1933 Act Regulations and the 1940 Act Regulations, and, if
applicable, each such Trust preliminary prospectus and the Trust
Prospectus delivered to the Underwriters for use in connection with the
offering of the Securities was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to ▇▇▇▇▇,
except to the extent permitted by Regulation S-T.
(ii) Independent Accountants. The accountants who certified
certain financial statements and supporting schedules included in the
Trust Registration Statement are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.
(iii) Financial Statement. The statement of assets,
liabilities and capital included in the Trust Registration Statement
and the Trust Prospectus, together with the notes thereto, present
fairly the financial position of the Trust at the date indicated; said
financial statement has been prepared in conformity with generally
accepted accounting principles in the United States.
(iv) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Trust
Registration Statement and the Trust Prospectus, except as otherwise
stated therein, (A) there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, business
affairs, investment objectives or investment policies of the Trust,
whether or not arising in the ordinary course of business (a "Material
Adverse Effect") and (B) there have been no transactions entered into
by the Trust, other than those in the ordinary course of business,
which are material with respect to the Trust.
(v) Good Standing of the Trust; No Subsidiaries. The Trust has
been duly created and is validly existing as a business trust in good
standing under the Delaware Act with power and authority to own its
properties and to conduct its business as described in the Trust
Prospectus and to enter into and perform its obligations under this
5
Agreement, the Trust Agreement and the Forward Purchase Contract; the
Trust is and will, under current law, be classified for United States
federal income tax purposes as a grantor trust and not as an
association taxable as a corporation; and the Trust has no
subsidiaries.
(vi) Registration Under the 1940 Act. The Trust is registered
with the Commission as a non-diversified, closed-end management
investment company under the 1940 Act. No order of suspension or
revocation of such registration has been issued or proceedings therefor
initiated or, to the knowledge of the Trust, threatened by the
Commission. No person is serving or acting as an officer or trustee of
the Trust, except in accordance with the provisions of the 1940 Act.
(vii) Outstanding STRYPES. All of the outstanding STRYPES have
been duly and validly authorized and issued and are fully paid and
non-assessable undivided beneficial interests in the assets of the
Trust; and the form of certificate used to evidence the STRYPES is in
due and proper form and complies in all material respects with all
provisions of applicable law.
(viii) Authorization of Agreement. This Agreement has been
duly authorized, executed and delivered by the Trust.
(ix) Authorization and Description of the Securities. The
Securities have been duly authorized by the Trust for issuance and sale
to the Underwriters pursuant to this Agreement and, when issued and
delivered by the Trust pursuant to this Agreement against payment of
the purchase price therefor as provided herein, will be validly issued
and fully paid and non-assessable undivided beneficial interests in the
assets of the Trust; the STRYPES conform in all material respects to
all statements relating thereto contained in the Trust Prospectus and
such description conforms in all material respects to the rights set
forth in the instruments defining the same; no holder of the Securities
will be subject to personal liability by reason of being such a holder;
and the issuance of the Securities is not subject to the preemptive or
other similar rights of any securityholder of the Trust.
(x) Authorization of Fundamental Agreements. Each of the
Forward Purchase Contract, the Security and Pledge Agreement, the
Administration Agreement, to be dated April __, 1997, between the Trust
and Chase (the "Administration Agreement"), the Custodian Agreement,
dated as of March 26, 1997, between the Trust and Chase (the "Custodian
Agreement"), the Paying Agent Agreement, dated as of March 26, 1997,
between the Trust and ChaseMellon Shareholder Services, L.L.C. (the
"Paying Agent Agreement"), and the Fund Indemnity Agreement, to be
dated April __, 1997, among the Trust, ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc. and
Continental Grain (the "Fund Indemnity Agreement") (the Forward
Purchase Contract, the Security and Pledge Agreement, the
Administration Agreement, the Custodian Agreement, the Paying Agent
Agreement and the Fund Indemnity Agreement are collectively referred to
herein as the "Fundamental Agreements"), has been duly authorized by
the Trust and, at the Closing Time, will have been duly executed and
delivered by the Trust and (assuming the due
6
authorization, execution and delivery by the other parties thereto)
will constitute a valid and binding agreement of the Trust, enforceable
against the Trust in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
(xi) Compliance with Acts. The Trust Agreement and the
Fundamental Agreements comply in all material respects with all
applicable provisions of the 1933 Act and the 1940 Act, and all
approvals of such documents required under the 1940 Act by the holders
of the STRYPES and the Trustees have been obtained and are in full
force and effect.
(xii) Description of Trust Agreement and Fundamental
Agreements. The Trust Agreement and the Fundamental Agreements will
conform in all material respects to the respective statements relating
thereto contained in the Trust Prospectus and, to the extent forms
thereof were filed as exhibits to the Trust Registration Statement,
will be in substantially the respective forms so filed.
(xiii) Absence of Defaults and Conflicts. The execution,
delivery and performance by the Trust of this Agreement and each
Fundamental Agreement and the consummation of the transactions
contemplated herein, therein and in the Trust Registration Statement
(including the issuance and sale of the Securities and the delivery of
shares of ContiFinancial Common Stock pursuant thereto, the
consummation of the Forward Purchase and the use of the proceeds from
the sale of the Securities as described in the Trust Prospectus under
the caption "Use of Proceeds") and compliance by the Trust with its
obligations hereunder, under the Securities and under each Fundamental
Agreement do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach
of, or default or Repayment Event (as defined below) under, or result
in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Trust pursuant to, any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Trust is a party or
by which it may be bound, or to which any of the property or assets of
the Trust is subject (collectively, "Agreements and Instruments")
(except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not result in a Material Adverse Effect), nor
will such action result in any violation of the provisions of the Trust
Agreement or the Restated Trust Certificate of the Trust filed with the
State of Delaware on February __, 1997 or any applicable law, statute,
rule or regulation (other than any state securities or "blue sky" law,
statute, rule or regulation, as to which no representation or warranty
is made), or any applicable judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Trust or any of its assets or properties
(except for such violations of law, statute, rule, regulation,
judgment, order, writ or decree that would not result in a Material
Adverse Effect). As used herein, a "Repayment Event" means any event
or condition which gives the holder of any note, debenture or other
evidence of indebtedness of the Trust (or any person acting on such
holder's behalf) the right to require the
7
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Trust.
(xiv) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending with
respect to which the Trust has received service of process, or, to the
knowledge of the Trust, threatened, against or affecting the Trust,
which is required to be disclosed in the Trust Registration Statement
(other than as disclosed therein), or which might, individually or in
the aggregate, reasonably be expected to result in a Material Adverse
Effect, or which might, individually or in the aggregate, reasonably be
expected to materially and adversely affect the properties or assets
thereof or the consummation of the transactions contemplated in this
Agreement or the Fundamental Agreements (including the issuance and
sale of the Securities and the delivery of shares of ContiFinancial
Common Stock pursuant thereto and the consummation of the Forward
Purchase) or the performance by the Trust of its obligations hereunder
or thereunder; the aggregate of all pending legal or governmental
proceedings (with respect to which the Trust has received service of
process) to which the Trust is a party or of which any of its property
or assets is the subject which are not described in the Trust
Registration Statement, including ordinary routine litigation
incidental to the business, could not reasonably be expected to result
in a Material Adverse Effect.
(xv) No Investment Restrictions, etc. There are no material
restrictions, limitations or regulations with respect to the ability of
the Trust to invest its assets as described in the Trust Prospectus,
other than as described therein.
(xvi) Exhibits. There are no contracts or documents which are
of a character required to be described in the Trust Registration
Statement or the Trust Prospectus or to be filed as exhibits thereto
which have not been so described or filed as required.
(xvii) Absence of Further Requirements. No declaration or
filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental
authority or agency is necessary or required for the Trust to own and
use its assets and to conduct its business in the manner described in
the Trust Prospectus or for the performance by the Trust of its
obligations under this Agreement, the Trust Agreement or any
Fundamental Agreement or the consummation by the Trust of the
transactions contemplated herein or therein (including the issuance and
sale of the Securities and the delivery of shares of ContiFinancial
Common Stock pursuant thereto and the consummation of the Forward
Purchase), except such as have been already obtained or as may be
required under the 1933 Act or the 1933 Act Regulations or the 1940 Act
or the 1940 Act Regulations or state securities laws.
(xviii) Title to Property. The Trust has good title to all
properties owned by it, in each case, free and clear of all mortgages,
pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (A) are described in the Trust
Prospectus or (B) do not, singly or in the aggregate, materially affect
the value of such
8
property and do not interfere with the use made and proposed to be made
of such property by the Trust.
(b) Representations and Warranties by Continental Grain. Continental
Grain represents and warrants to each of the Underwriters and the Trust as of
the date hereof, as of the Closing Time referred to in Section 2(c) hereof, and
as of each Date of Delivery (if any) referred to in Section 2(b) hereof, and
agrees with each of the Underwriters and the Trust, as follows:
(i) Authority. Continental Grain has the corporate power and
authority to enter into this Agreement, the Forward Purchase Contract
and the Security and Pledge Agreement, to pledge and assign the shares
of ContiFinancial Common Stock to be pledged and assigned by
Continental Grain pursuant to the Security and Pledge Agreement, and to
sell, transfer and deliver the shares of ContiFinancial Common Stock to
be sold by Continental Grain pursuant to the Forward Purchase Contract.
(ii) Delivery of ContiFinancial Common Stock. Continental
Grain is the sole registered owner of and has, and at the Closing Time
(and, if any Option Securities are purchased, at the Date of Delivery)
will have, all rights in and to the shares of ContiFinancial Common
Stock to be pledged and assigned pursuant to the Security and Pledge
Agreement, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity, other than those created pursuant
to the Security and Pledge Agreement. If immediately prior to the
Exchange Date Continental Grain delivers to the Trust shares of
ContiFinancial Common Stock pursuant to the Forward Purchase Contract,
upon delivery by Continental Grain to the Trust of the shares of
ContiFinancial Common Stock to be sold by Continental Grain pursuant to
the Forward Purchase Contract, then assuming the Trust purchased for
value in good faith and without notice of any adverse claim, the Trust
will have acquired all rights in and to such shares of ContiFinancial
Common Stock, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity (except for any security
interest, mortgage, pledge, lien, encumbrance, claim or equity created
by the Trust or Chase, as Collateral Agent). The sale, transfer and
delivery of shares of ContiFinancial Common Stock by Continental Grain
to the Trust as contemplated by the Forward Purchase Contract is not,
and at the time of delivery of such shares will not be, subject to any
right of first refusal or similar rights of any person pursuant to any
contract to which Continental Grain or any subsidiary of Continental
Grain is a party or by which any of them is bound.
(iii) Authorization of Agreement. This Agreement has
been duly authorized, executed and delivered by Continental Grain.
(iv) Authorization of the Forward Purchase Contract and the
Security and Pledge Agreement. Each of the Forward Purchase Contract
and the Security and Pledge Agreement has been duly authorized by
Continental Grain and, at the Closing Time, will have been duly
executed and delivered by Continental Grain and (assuming the due
authorization, execution and delivery by the other parties thereto)
will constitute a valid and binding agreement of Continental Grain,
enforceable against Continental Grain in accordance with its terms,
except as the enforcement thereof may be limited by
9
bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding
in equity or at law). Amounts received by Continental Grain at Closing
Time and at each Date of Delivery, if any, pursuant to the Forward
Purchase Contract will not be used by Continental Grain for the
purpose, whether immediate, incidental or ultimate, of buying or
carrying a margin stock, as such terms are defined in Regulation G
promulgated by the Board of Governors of the Federal Reserve System.
(v) Absence of Defaults and Conflicts. The execution, delivery
and performance by Continental Grain of this Agreement, the Forward
Purchase Contract and the Security and Pledge Agreement and the
consummation by Continental Grain of the transactions contemplated
herein and therein and compliance by Continental Grain with its
obligations hereunder and thereunder do not and will not, whether with
or without the giving of notice or passage of time or both, conflict
with or constitute a breach of, or default or Continental Grain
Repayment Event (as defined below) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of Continental Grain or any subsidiary of Continental Grain
pursuant to, any other contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or any other agreement or
instrument to which Continental Grain or any subsidiary of Continental
Grain is a party or by which it or any of them may be bound, or to
which any of the property or assets of Continental Grain or any
subsidiary of Continental Grain is subject (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would not,
singly or in the aggregate, materially and adversely affect the ability
of Continental Grain to perform its obligations under this Agreement,
the Forward Purchase Contract or the Security and Pledge Agreement),
nor will such action result in any violation of any applicable law,
statute, rule or regulation of any government or government
instrumentality having jurisdiction over Continental Grain or any
subsidiary of Continental Grain or any of their assets, properties or
operations (other than any state securities or "blue sky" law, statute,
rule or regulation, as to which no representation and warranty is
made), or any applicable judgment, order, writ or decree of any
government, government instrumentality or domestic court having
jurisdiction over Continental Grain or any subsidiary of Continental
Grain or any of their assets, properties or operations (except in all
cases for such violations that would not, singly or in the aggregate,
materially and adversely affect the ability of Continental Grain to
perform its obligations under this Agreement, the Forward Purchase
Contract or the Security and Pledge Agreement). As used herein, a
"Continental Grain Repayment Event" with respect to Continental Grain
means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on
such holder's behalf) the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by Continental
Grain or any subsidiary of Continental Grain.
(vi) Absence of Further Requirements. No declaration or
filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of,
10
any court or governmental authority or agency is necessary or required
for the execution, delivery or performance by Continental Grain of this
Agreement, the Forward Purchase Contract or the Security and Pledge
Agreement or the consummation by Continental Grain of the transactions
contemplated herein or therein, except such as have been already
obtained or as may be required under the 1933 Act or the 1933 Act
Regulations or state securities laws.
(vii) Trust Registration Statement and Prospectus. At the
respective times the Trust Registration Statement, any Trust Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time (and, if any Option Securities
are purchased, at the Date of Delivery), the Notification, the Trust
Registration Statement, the Trust Rule 462(b) Registration Statement
and any amendments and supplements thereto complied and will comply in
all material respects with the requirements of the 1933 Act and the
1933 Act Regulations and the 1940 Act and the 1940 Act Regulations, and
did not and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. Neither the
Trust Prospectus nor any amendments or supplements thereto, at the time
the Trust Prospectus or any such amendment or supplement was issued and
at the Closing Time (and, if any Option Securities are purchased, at
the Date of Delivery), included or will include an untrue statement of
a material fact or omitted or will 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. The
representations and warranties in this subsection shall not apply to
statements in or omissions from the Trust Registration Statement (or
any amendments or supplements thereto) or the Trust Prospectus (or any
amendments or supplements thereto) made in reliance upon and in
conformity with information furnished to the Trust in writing by any
Underwriter through the Representatives expressly for use in the Trust
Registration Statement (or any amendments or supplements thereto) or
Trust Prospectus (or any amendments or supplements thereto).
Each of the Trust preliminary prospectus dated February 14,
1997, the Trust preliminary prospectus dated March 11, 1997 and the
Trust preliminary prospectus dated March 28, 1997, and the prospectus
relating to the offering of the Securities filed pursuant to Rule 497
under the 1933 Act, complied when so filed in all material respects
with the 1933 Act Regulations and the 1940 Act Regulations.
(viii) ContiFinancial Registration Statement and Prospectus.
The ContiFinancial Registration Statement, any ContiFinancial Rule
462(b) Registration Statement or any post-effective amendments thereto,
at the respective times the ContiFinancial Registration Statement, any
ContiFinancial Rule 462(b) Registration Statement or any post-effective
amendments thereto became effective, did not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading. The ContiFinancial Prospectus or any amendment or
supplement thereto, at the time the ContiFinancial Prospectus was
issued, at the time any such amended or supplemented prospectus was
issued or at the Closing Time (and, if any Option Securities are
purchased, at the Date
11
of Delivery), did not and will not include an untrue statement of a
material fact and did not and will not 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. The
representations and warranties in this subsection shall apply only to
statements in or omissions from the ContiFinancial Registration
Statement (or any amendment thereto) or the ContiFinancial Prospectus
(or any amendment or supplement thereto) made in reliance upon and in
conformity with information furnished to ContiFinancial in writing by
Continental Grain expressly for use in the ContiFinancial Registration
Statement (or any amendment thereto) or the ContiFinancial Prospectus
(or any amendment or supplement thereto).
(ix) Security and Pledge Agreement. The representations and
warranties of Continental Grain set forth in Section 8(a) of the
Security and Pledge Agreement are true and correct on and as of the
date hereof with the same effect as though such representations and
warranties had been set forth in full in this Agreement.
(c) Officer's Certificates. Any certificate signed by any Trustee of
the Trust and delivered to the Representatives or counsel for the Underwriters
shall be deemed a representation and warranty by the Trust to each Underwriter
as to the matters covered thereby. Any certificate signed by any duly authorized
officer of Continental Grain and delivered to the Representatives or counsel to
the Underwriters or to the Trust or counsel to the Trust shall be deemed a
representation and warranty by Continental Grain to the Underwriters or the
Trust, as the case may be, as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Trust agrees to sell to each Underwriter, severally and not jointly,
and each Underwriter, severally and not jointly, agrees to purchase from the
Trust, at the price per STRYPES set forth in Schedule B, the number of Initial
Securities set forth in Schedule A opposite the name of such Underwriter, plus
any additional number of Initial Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Trust hereby grants an option to the Underwriters, severally and
not jointly, to purchase up to an additional [420,000] STRYPES at the price per
STRYPES set forth in Schedule B. The option hereby granted will expire 30 days
after the date hereof and may be exercised in whole or in part from time to time
only for the purpose of covering over-allotments which may be made in connection
with the offering and distribution of the Initial Securities upon notice by the
Representatives to the Trust setting forth the number of Option Securities as to
which the several Underwriters are then exercising the option and the time and
date of payment and delivery for such Option Securities. Any such time and date
of delivery (a "Date of Delivery") shall be determined by the Representatives,
but shall not be later than seven full business days after the exercise of said
option, nor in any event prior to the Closing Time, as hereinafter defined. If
the option is
12
exercised as to all or any portion of the Option Securities, each of the
Underwriters, acting severally and not jointly, will purchase that proportion of
the total number of Option Securities then being purchased which the number of
Initial Securities set forth in Schedule A opposite the name of such Underwriter
bears to the total number of Initial Securities, subject in each case to such
adjustments as the Representatives in their discretion shall make to eliminate
any sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of ▇▇▇▇▇ &
▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other
place as shall be agreed upon by the Representatives and the Trust, at 9:00 A.M.
(Eastern time) on the third (fourth, if the pricing occurs after 4:30 P.M.
(Eastern time) on any given day) business day after the date hereof, or such
other time not later than ten business days after such date as shall be agreed
upon by the Representatives and the Trust (such time and date of payment and
delivery being herein called "Closing Time"). In addition, in the event that any
or all of the Option Securities are purchased by the Underwriters, payment of
the purchase price for, and delivery of certificates for, such Option Securities
shall be made at the above-mentioned offices, or at such other place as shall be
agreed upon by the Representatives and the Trust, on each Date of Delivery as
specified in the notice from the Representatives to the Trust.
Payment shall be made to the Trust by wire transfer of immediately
available funds to a bank account designated by the Trust, against delivery to
the Representatives for the respective accounts of the Underwriters of
certificates for the Securities to be purchased by them. It is understood that
each Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Securities which it has agreed to purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not
as representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the Initial Securities or the Option
Securities, if any, to be purchased by any Underwriter whose funds have not been
received by the Closing Time or the relevant Date of Delivery, as the case may
be, but such payment shall not relieve such Underwriter from its obligations
hereunder.
(d) Denominations; Registration. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such denominations and
registered in such names as the Representatives may request in writing at least
one full business day before the Closing Time or the relevant Date of Delivery,
as the case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representatives in The City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time or the relevant Date of Delivery,
as the case may be.
SECTION 3. Covenants.
(a) Covenants of the Trust. The Trust covenants with each
Underwriter as follows:
(i) Compliance with Securities Regulations and
Commission Requests. The Trust, subject to Section 3(a)(ii), will
comply with the requirements of Rule 430A or Rule 434, as applicable,
and will notify the Representatives immediately, and confirm
13
the notice in writing, (A) when any post-effective amendment to the
Trust Registration Statement shall become effective, or any supplement
to the Trust Prospectus or any amended Trust Prospectus shall have been
filed, (B) of the receipt of any comments from the Commission, (C) of
any request by the Commission for any amendment to the Trust
Registration Statement or any amendment or supplement to the Trust
Prospectus or for additional information, and (D) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Trust Registration Statement or of any order preventing or suspending
the use of any Trust preliminary prospectus or any order pursuant to
Section 8(e) of the 1940 Act, or of the suspension of the qualification
of the Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes.
The Trust will promptly effect the filings necessary pursuant to Rule
497(h) and will take such steps as it deems necessary to ascertain
promptly whether the form of prospectus transmitted for filing under
Rule 497(h) was received for filing by the Commission and, in the event
that it was not, it will promptly file such prospectus. The Trust will
make every reasonable effort to prevent the issuance of any stop order
pursuant to Section 8(d) of the 1933 Act or any order pursuant to
Section 8(e) of the 1940 Act and, if any such order is issued, to
obtain the lifting thereof at the earliest possible moment.
(ii) Filing of Amendments. The Trust will give the
Representatives notice of its intention to file or prepare any
amendment to the Trust Registration Statement (including any filing
under Rule 462(b)), any Trust Term Sheet or any amendment, supplement
or revision to either the prospectus relating to the offering of the
Securities included in the Trust Registration Statement at the time it
became effective or to the Trust Prospectus, whether pursuant to the
1933 Act, the 1940 Act or otherwise, will furnish the Representatives
with copies of any such documents a reasonable amount of time prior to
such proposed filing or use, as the case may be, and will not file or
use any such document to which the Representatives or counsel for the
Underwriters shall reasonably object in a timely manner.
(iii) Delivery of Trust Registration Statements. The Trust has
furnished or will deliver to the Representatives and counsel for the
Underwriters, without charge, signed copies of the Trust Registration
Statement as originally filed and of each amendment thereto (including
exhibits filed therewith or incorporated by reference therein) and
signed copies of all consents and certificates of experts, and will
also deliver to the Representatives, without charge, a conformed copy
of the Trust Registration Statement as originally filed and of each
amendment thereto (without exhibits) for each of the Underwriters. If
applicable, the copies of the Trust Registration Statement and each
amendment thereto furnished to the Underwriters will be identical to
the electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(iv) Delivery of Trust Prospectuses. The Trust has delivered
to each Underwriter, without charge, as many copies of each Trust
preliminary prospectus as such Underwriter reasonably requested, and
the Trust hereby consents to the use of such copies for purposes
permitted by the 1933 Act. The Trust will furnish to each
14
Underwriter, without charge, during the period when the Trust
Prospectus is required to be delivered under the 1933 Act or the 1934
Act, such number of copies of the Trust Prospectus (as amended or
supplemented) as such Underwriter may reasonably request. If
applicable, the Trust Prospectus and any amendments or supplements
thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(v) Continued Compliance with Securities Laws. The Trust will
comply with the 1933 Act and the 1933 Act Regulations, the 1934 Act and
the 1934 Act Regulations, and the 1940 Act and the 1940 Act Regulations
so as to permit the completion of the distribution of the Securities as
contemplated in this Agreement and in the Trust Prospectus. If at any
time prior to the expiration of nine months after the time of issuance
of the Trust Prospectus a prospectus is required by the 1933 Act to be
delivered in connection with sales of the Securities, and if at such
time any event shall occur or condition shall exist as a result of
which it is necessary, in the opinion of counsel for the Underwriters
or for the Trust, to amend the Trust Registration Statement or amend or
supplement the Trust Prospectus in order that the Trust Prospectus will
not include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion
of either such counsel, at any such time to amend the Trust
Registration Statement or amend or supplement the Trust Prospectus in
order to comply with the requirements of the 1933 Act or the 1933 Act
Regulations or the 1940 Act or the 1940 Act Regulations, the Trust will
promptly prepare and file with the Commission, subject to Section
3(a)(ii), such amendment or supplement as may be necessary to correct
such statement or omission or to make the Trust Registration Statement
or the Trust Prospectus comply with such requirements, and the Trust
will furnish to the Underwriters such number of copies of such
amendment or supplement as the Underwriters may reasonably request.
(vi) Blue Sky Qualifications. The Trust will use its best
efforts, in cooperation with the Underwriters, to qualify the
Securities for offering and sale under the applicable securities laws
of such states and other jurisdictions of the United States as the
Representatives may designate and to maintain such qualifications in
effect for a period of not less than one year from the later of the
effective date of the Trust Registration Statement and any Trust Rule
462(b) Registration Statement; provided, however, that the Trust shall
not be obligated to file any general consent to service of process or
to qualify as a foreign trust or association or as a dealer in
securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the Trust
will file such statements and reports as may be required by the laws of
such jurisdiction to continue such qualification in effect for a period
of not less than one year from the effective date of the Trust
Registration Statement and any Trust Rule 462(b) Registration
Statement.
15
(vii) Rule 158. The Trust will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally
available to its securityholders as soon as practicable an earnings
statement for the purposes of, and to provide the benefits contemplated
by, the last paragraph of Section 11(a) of the 1933 Act.
(viii) Use of Proceeds. The Trust will use the net
proceeds received by it from the sale of the Securities in the manner
specified in the Trust Prospectus under "Use of Proceeds."
(ix) Listing. The Trust will use its best efforts to effect
and maintain the quotation of the Securities on the American Stock
Exchange (the "AMEX").
(x) Reporting Requirements. The Trust, during the period when
the Trust Prospectus is required to be delivered under the 1933 Act or
the 1934 Act, will file all documents required to be filed with the
Commission pursuant to the 1934 Act within the time periods required by
the 1934 Act and the 1934 Act Regulations and all documents required to
be filed with the Commission pursuant to the 1940 Act within the time
periods required by the 1940 Act and the 1940 Act Regulations.
(b) Covenants of Continental Grain. Continental Grain covenants
with each Underwriter and the Trust as follows:
(i) Restriction on Sale of Securities. During a period of 90
days from the date of the Trust Prospectus, Continental Grain will not,
without the prior written consent of the ▇▇▇▇▇▇▇ ▇▇▇▇▇, (x) offer,
sell, contract to sell or otherwise dispose of, directly or indirectly,
any shares of ContiFinancial Common Stock, securities convertible into,
exchangeable for or repayable with shares of ContiFinancial Common
Stock, or rights or warrants to acquire shares of ContiFinancial Common
Stock, or (y) cause to be filed any registration statement under the
1933 Act with respect to any shares of ContiFinancial Common Stock,
securities convertible into, exchangeable for or repayable with shares
of ContiFinancial Common Stock, or rights or warrants to acquire shares
of ContiFinancial Common Stock. The foregoing sentence shall not apply
to the execution and delivery by Continental Grain of the Forward
Purchase Contract or the consummation by Continental Grain of the
transactions contemplated therein.
(ii) Purpose Statement. At or prior to Closing Time,
Continental Grain will deliver to the Trust a duly executed purpose
statement on Form F. R. G-3 of the Board of Governors of the Federal
Reserve System.
SECTION 4. Payment of Expenses.
(a) Expenses Payable by Continental Grain. Continental Grain will pay
all expenses incident to the performance by the Trust and Continental Grain of
their respective obligations under this Agreement and the Registration
Agreement, including (i) the preparation, printing and filing of the
Notification and the Trust Registration Statement (including financial
statements and exhibits) as originally filed and of each amendment thereto, (ii)
the printing and delivery to the
16
Underwriters of this Agreement, the Forward Purchase Contract and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Securities, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriters, (iv) the
fees and disbursements of the Trust's counsel, (v) the fees and disbursements of
Continental Grain's counsel and other advisors, (vi) the qualification of the
Securities under securities laws in accordance with the provisions of Section
3(a)(vi) hereof, including filing fees and the reasonable fees and disbursements
of the counsel for the Underwriters in connection therewith and in connection
with the preparation of the Blue Sky Survey and any supplement thereto, (vii)
the printing and delivery to the Underwriters of copies of each Trust
preliminary prospectus, any Trust Term Sheets and of the Trust Prospectus and
any amendments or supplements thereto, (viii) the printing and delivery to the
Underwriters of copies of the Blue Sky Survey and any supplement thereto, (ix)
the fees and expenses of any transfer agent or registrar for the Securities, (x)
the filing fees incident to, and the reasonable fees and disbursements of
counsel to the Underwriters in connection with, securing any required review by
the National Association of Securities Dealers, Inc. (the "NASD") of the terms
of the sale of the Securities and (xi) the fees and expenses incurred in
connection with the listing of the Securities on the AMEX.
(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, Continental Grain shall reimburse the Underwriters for all of
their reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Underwriters.
(c) Allocation of Expenses. The provisions of this Section 4 shall not
affect any agreement that Continental Grain may make for the sharing of the
costs and expenses to be borne by it pursuant to this Section 4.
SECTION 5. Conditions.
(a) Conditions of Underwriters' Obligations. The obligations of the
several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Trust and Continental Grain contained in
Sections 1(a) and 1(b) hereof, respectively, to the accuracy of the
representations and warranties of ContiFinancial contained in the Registration
Agreement, to the accuracy of the statements in certificates of any Trustee of
the Trust, any officer of ContiFinancial or Continental Grain delivered pursuant
to the provisions hereof, to the performance by the Trust and Continental Grain
of their respective covenants and other obligations hereunder, to the
performance by ContiFinancial of its covenants and other obligations under the
Registration Agreement, and to the following further conditions:
(i) Effectiveness of Trust Registration Statement. The Trust
Registration Statement, including any Trust Rule 462(b) Registration
Statement, has become effective and at Closing Time no stop order
suspending the effectiveness of the Trust Registration Statement
pursuant to Section 8(d) of the 1933 Act, or order pursuant to Section
8(e) of the 1940 Act, shall have been issued and no proceedings
therefor shall have been initiated or threatened by the Commission, and
any request on the part of the Commission for additional information
shall have been complied with to the reasonable satisfaction of
17
counsel to the Underwriters. A prospectus containing the Rule 430A
Information shall have been filed with the Commission in accordance
with Rule 497(h) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance
with the requirements of Rule 430A) or, if the Trust has elected to
rely upon Rule 434, a Trust Term Sheet shall have been filed with the
Commission in accordance with Rule 497(h).
(ii) Effectiveness of ContiFinancial Registration Statement.
The ContiFinancial Registration Statement, including any ContiFinancial
Rule 462(b) Registration Statement, has become effective and at Closing
Time no stop order suspending the effectiveness of the ContiFinancial
Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission, and any
request on the part of the Commission for additional information shall
have been complied with to the reasonable satisfaction of counsel to
the Underwriters.
(iii) Opinion of Counsel for Underwriters and Trust. At
Closing Time, the Representatives shall have received the favorable
opinion, dated as of Closing Time, of ▇▇▇▇▇ & Wood LLP, counsel for the
Underwriters and the Trust, together with signed or reproduced copies
of such letter for each of the other Underwriters, with respect to such
matters as the Representatives may reasonably request. In giving such
opinion such counsel may rely, as to all matters governed by the laws
of jurisdictions other than the law of the State of New York and the
federal law of the United States, upon the opinions of counsel
satisfactory to the Representatives. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to
the extent they deem proper, upon certificates of public officials.
(iv) Opinion of Special Delaware Counsel for the Trust. At
Closing Time, the Representatives shall have received the favorable
opinion, dated as of Closing Time, of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger,
special Delaware counsel for the Trust, in form and substance
reasonably satisfactory to counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other
Underwriters.
(v) Opinions of Counsel for ContiFinancial. At Closing Time,
the Representatives shall have received (1) the favorable opinion,
dated as of Closing Time, of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, counsel for
ContiFinancial, in form and substance reasonably satisfactory to
counsel for the Underwriters, together with signed or reproduced copies
of such letter for each of the other Underwriters, and (2) the
favorable opinion, dated as of Closing Time, of ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.,
Chief Counsel for ContiFinancial, in form and substance reasonably
satisfactory to counsel for the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters.
(vi) Opinions of Counsel for Continental Grain. At Closing
Time, the Representatives shall have received (1) the favorable
opinion, dated as of Closing Time, of ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel for Continental Grain, in form and substance
reasonably satisfactory to counsel for the Underwriters, together with
18
signed or reproduced copies of such letter for each of the other
Underwriters, and (2) the favorable opinion, dated as of Closing Time,
of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., Vice President and General
Counsel-Corporate of Continental Grain, in form and substance
reasonably satisfactory to counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other
Underwriters.
(vii) Managing Trustee's Certificate. At Closing Time, there
shall not have been, since the date hereof or since the respective
dates as of which information is given in the Trust Prospectus, any
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs, investment objectives or investment
policies of the Trust, whether or not arising in the ordinary course of
business, and the Representatives shall have received a certificate of
the Managing Trustee, dated as of Closing Time, to the effect that (i)
there has been no such material adverse change, (ii) the
representations and warranties in Section 1(a) hereof are true and
correct with the same force and effect as though expressly made at and
as of Closing Time, (iii) the Trust has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied
at or prior to Closing Time, and (iv) no stop order suspending the
effectiveness of the Trust Registration Statement pursuant to Section
8(d) of the 1933 Act, or order pursuant to Section 8(e) of the 1940
Act, has been issued and no proceedings for that purpose have been
instituted or, to the best of his knowledge, are pending or are
contemplated by the Commission.
(viii) ContiFinancial Officers' Certificate. At Closing Time,
there shall not have been, since the date hereof or since the
respective dates as of which information is given in the ContiFinancial
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, operations or business of ContiFinancial
and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Representatives
shall have received a certificate of the President or a Vice President
of ContiFinancial and of the chief financial or chief accounting
officer of ContiFinancial, dated as of Closing Time, to the effect that
(i) there has been no such material adverse change, (ii) the
representations and warranties of ContiFinancial contained in Section
1(a) of the Registration Agreement are true and correct with the same
force and effect as though expressly made at and as of Closing Time,
(iii) ContiFinancial has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to
Closing Time pursuant to the Registration Agreement, and (iv) no stop
order suspending the effectiveness of the ContiFinancial Registration
Statement has been issued and no proceedings for that purpose have been
instituted or, to the best of their knowledge, are pending or are
contemplated by the Commission.
(ix) Continental Grain Officers' Certificate. At Closing Time,
the Representatives shall have received a certificate of the President,
a Vice President or an Assistant Treasurer of Continental Grain, dated
as of Closing Time, to the effect that (i) the representations and
warranties of Continental Grain contained in Section 1(b) hereof are
true and correct with the same force and effect as though expressly
made at and as of Closing Time and (ii) Continental Grain has complied
with all agreements and satisfied
19
all conditions on its part to be performed or satisfied at or prior to
Closing Time pursuant to this Agreement and the transactions
contemplated hereby.
(x) ContiFinancial Accountant's Comfort Letter. At the time of
the execution of this Agreement, the Representatives shall have
received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP a letter dated such date, in form and
substance satisfactory to counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other
Underwriters, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in the ContiFinancial Registration Statement and
the ContiFinancial Prospectus.
(xi) ContiFinancial Accountant's Bring-down Comfort Letter. At
Closing Time, the Representatives shall have received from ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP a letter, dated as of Closing Time, to the effect that
they reaffirm the statements made in the letter furnished by them
pursuant to Section 5(a)(x) hereof, except that the "specified date"
referred to shall be a date not more than three business days prior to
Closing Time.
(xii) Approval of Listing. At Closing Time, the Securities
shall have been approved for inclusion on the AMEX, subject only to
official notice of issuance.
(xiii) No Objection. The NASD shall not have raised any
objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
(xiv) Lock-up Agreements. At the date of this Agreement, the
Representatives shall have received an agreement substantially in the
form of Exhibit A hereto signed by each of the persons and entities
listed on Schedule C hereto.
(xv) Fundamental Agreements. Each Fundamental Agreement shall
have been executed and delivered by all parties thereto, and
Continental Grain shall have delivered to the Collateral Agent the
number of shares of ContiFinancial Common Stock required by the
Security and Pledge Agreement to be initially pledged and assigned by
Continental Grain thereunder in accordance with the requirements of the
Security and Pledge Agreement.
(xvi) Conditions to Purchase of Option Securities. In the
event that the Underwriters exercise their option provided in Section
2(b) hereof to purchase all or any portion of the Option Securities,
the representations and warranties of the Trust and Continental Grain
contained herein, the representations and warranties of ContiFinancial
contained in the Registration Agreement and the statements in any
certificates furnished by the Trust, ContiFinancial or Continental
Grain hereunder shall be true and correct as of each Date of Delivery
and, at the relevant Date of Delivery, the Representatives shall have
received:
(A) Managing Trustee's Certificate. A
certificate, dated such Date of
Delivery, of the Managing Trustee confirming that the
certificate delivered at
20
Closing Time pursuant to Section 5(a)(vii) hereof is true and
correct as of such Date of Delivery.
(B) ContiFinancial Officers' Certificate. A
certificate, dated such Date of Delivery, of the President or
a Vice President of ContiFinancial and of the chief financial
or chief accounting officer of ContiFinancial confirming that
the certificate delivered at Closing Time pursuant to Section
5(a)(viii) hereof is true and correct as of such Date of
Delivery.
(C) Continental Grain Officers' Certificate. A
certificate, dated such Date of Delivery, of the President, a
Vice President or an Assistant Treasurer of Continental Grain
confirming that the certificate delivered at Closing Time
pursuant to Section 5(a)(ix) hereof is true and correct as of
such Date of Delivery.
(D) Opinion of Counsel for Underwriters and Trust.
The favorable opinion of ▇▇▇▇▇ & Wood LLP, counsel for the
Underwriters and the Trust, in form and substance reasonably
satisfactory to the Representatives, dated such Date of
Delivery, relating to the Option Securities to be purchased on
such Date of Delivery and otherwise to the same effect as the
opinion required by Section 5(a)(iii) hereof.
(E) Opinion of Special Delaware Counsel for the
Trust. The favorable opinion of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger,
special Delaware counsel for the Trust, in form and substance
reasonably satisfactory to counsel for the Underwriters, dated
such Date of Delivery, relating to the Option Securities to be
purchased on such Date of Delivery and otherwise to the same
effect as the opinion required by Section 5(a)(iv) hereof.
(F) Opinions of Counsel for ContiFinancial. The
favorable opinions of (1) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, counsel for
ContiFinancial, and (2) ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., Chief Counsel
for ContiFinancial, in form and substance reasonably
satisfactory to counsel for the Underwriters, dated such Date
of Delivery, to the same effect as the opinion required by
Section 5(a)(v) hereof.
(G) Opinions of Counsel for Continental Grain. The
favorable opinions of (1) ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel for Continental Grain, and (2) ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Esq., Vice President and General Counsel-Corporate of
Continental Grain, in form and substance reasonably
satisfactory to counsel for the Underwriters, dated such Date
of Delivery, to the same effect as the opinion required by
Section 5(a)(vi) hereof.
(H) ContiFinancial Accountant's Bring-down Comfort
Letter. A letter from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, in form and
substance satisfactory to counsel for the Underwriters and
dated such Date of Delivery, substantially the same in form
and substance as the letter furnished to the Underwriters
pursuant to Section 5(a)(xi)
21
hereof, except that the "specified date" in the letter
furnished pursuant to this paragraph shall be a date not more
than five days prior to such Date of Delivery.
(xvii) Additional Documents. At Closing Time and at each Date
of Delivery, counsel for the Underwriters shall have been furnished
with such documents and opinions as they may reasonably require for the
purpose of enabling them to pass upon the issuance and sale of the
Securities as herein contemplated, or in order to evidence the accuracy
of any of the representations or warranties, or the fulfillment of any
of the conditions, contained herein or in the Registration Agreement;
and all proceedings taken by the Trust in connection with the issuance
and sale of the Securities as herein contemplated shall be reasonably
satisfactory in form and substance to the Representatives and counsel
for the Underwriters.
(b) Termination of Agreement. If any condition specified in subsection
(a) of this Section shall not have been fulfilled when and as required to be
fulfilled, this Agreement, or, in the case of any condition to the purchase of
Option Securities on a Date of Delivery which is after the Closing Time, the
obligations of the Underwriters to purchase the relevant Option Securities, may
be terminated by the Representatives by notice to the Trust and Continental
Grain at any time at or prior to Closing Time or such Date of Delivery, as the
case may be, and such termination shall be without liability of any party to any
other party except as provided in Section 4 and except that Sections 6 and 7
shall survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of the Underwriters and the Trust by Continental
Grain. Continental Grain agrees to indemnify and hold harmless each Underwriter,
the Trust and each person, if any, who controls any Underwriter or the Trust
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Trust
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any Trust preliminary
prospectus or the Trust Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
ContiFinancial Registration Statement (or any amendment thereto), or
the omission or alleged omission therefrom of a material fact
22
required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any
ContiFinancial preliminary prospectus or the ContiFinancial Prospectus
(or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(iii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, referred to
under (i) or (ii) above; provided that (subject to Section 6(d) below)
any such settlement is effected with the written consent of Continental
Grain; and
(iv) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by the
Representatives), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, referred to under (i) or
(ii) above, to the extent that any such expense is not paid under (i),
(ii) or (iii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with (A) written information furnished to the Trust by
any Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Trust
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any Trust
preliminary prospectus or the Trust Prospectus (or any amendment or supplement
thereto) or (B) written information furnished to ContiFinancial by any
Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the ContiFinancial
Registration Statement (or any amendment thereto) or any ContiFinancial
preliminary prospectus or the ContiFinancial Prospectus (or any amendment or
supplement thereto); provided, further, however, that the foregoing indemnity
with respect to any untrue statement contained in an omission from a Trust
preliminary prospectus or a ContiFinancial preliminary prospectus, as the case
may be, shall not inure to the benefit of any Underwriter (or any person
controlling such Underwriter) from whom such person asserting any such loss,
liability, claim, damage or expense purchased any of the Securities which are
the subject thereof, if such person was not sent or given a copy of the Trust
Prospectus (as amended or supplemented) or the ContiFinancial Prospectus (or the
ContiFinancial Prospectus as amended or supplemented), as the case may be, at or
prior to the written confirmation of the sale of such Securities to such person
and the untrue statement contained in or omission from the Trust Prospectus (as
amended or supplemented) or the ContiFinancial preliminary prospectus, as the
case may be, was corrected in the Trust Prospectus (or the Trust Prospectus as
amended or supplemented) or the ContiFinancial Prospectus (or the ContiFinancial
Prospectus as amended or supplemented), as the case may be.
23
In the event that any claim for indemnification under Section
6(a)(ii), (iii) or (iv) or contribution under Section 7 hereof is made against
Continental Grain and such indemnified parties seek indemnification or
contribution hereunder against any loss, liability, claim, damage or expense
arising out of any untrue statement or omission, or alleged untrue statement or
omission, referred to under (ii) above (each such circumstance or event, a
"Loss") such indemnified parties shall first seek to satisfy the Loss in full
from ContiFinancial by making a written demand upon ContiFinancial for such
satisfaction, and shall copy Continental Grain on each such written demand.
Only if such Loss shall remain unsatisfied in whole or in part 90 days
following the date of receipt by ContiFinancial of the relevant demand shall
any such indemnified party have the right to take action to satisfy such Loss
by making demand directly on Continental Grain (but only if and to the extent
that ContiFinancial has not already satisfied (and does not thereafter satisfy)
such Loss, whether by settlement, release or otherwise). Continental Grain
shall not be responsible for payment of any amount pursuant to this Section
6(a) or Section 7 in respect of any Loss which exceeds 60% of the sum of (X)
the Firm Consideration Amount (as defined in the Forward Purchase Contract) and
(Y) each Option Consideration Amount (as defined in the Forward Purchase
Contract).
(b) Indemnification of the Trust and Continental Grain. Each
Underwriter severally agrees to indemnify and hold harmless the Trust,
Continental Grain and each person, if any, who controls the Trust or Continental
Grain within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act, against any and all loss, liability, claim, damage and expense described in
the indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to (A) untrue statements or omissions, or alleged untrue statements
or omissions, made in the Trust Registration Statement (or any amendment
thereto), including the Rule 430A Information and the Rule 434 Information, if
applicable, or any Trust preliminary prospectus or the Trust Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Trust by such Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇
expressly for use in the Trust Registration Statement (or any amendment thereto)
or such Trust preliminary prospectus or the Trust Prospectus (or any amendment
or supplement thereto) or (B) untrue statements or omissions, or alleged untrue
statements or omissions, made in the ContiFinancial Registration Statement (or
any amendment thereto) or any ContiFinancial preliminary prospectus or the
ContiFinancial Prospectus (or any amendment or supplement thereto) in reliance
upon and in conformity with written information furnished to ContiFinancial by
such Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the ContiFinancial
Registration Statement (or any amendment thereto) or any ContiFinancial
preliminary prospectus or the ContiFinancial Prospectus (or any amendment or
supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder which it may have otherwise than
on account of this indemnity agreement. In the case of parties indemnified
pursuant to Section 6(a) above, counsel to the indemnified parties shall be
selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇, and, in the case of parties indemnified pursuant to
Section 6(b) above, counsel to the indemnified parties shall be selected by
Continental Grain. An indemnifying party may participate at its own expense in
the defense of any such action; provided, however, that counsel
24
to the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 6 or Section 7 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(iii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement for all such fees and expenses counsel, other than such fees and
expenses of counsel which are being contested in good faith by an indemnifying
party.
SECTION 7. Contribution. If the indemnification provided for in Section
6 is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Trust and
Continental Grain on the one hand and the Underwriters on the other hand from
the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Trust and Continental
Grain on the one hand and of the Underwriters on the other hand in connection
with the statements or omissions which resulted in such losses, liabilities,
claims, damages or expenses, as well as any other relevant equitable
considerations.
The relative benefits received by the Trust and Continental Grain on
the one hand and the Underwriters on the other hand in connection with the
offering of the Securities pursuant to this Agreement shall be deemed to be such
that the Underwriters shall be responsible for that portion of the aggregate
amount of such losses, liabilities, claims, damages and expenses represented by
the percentage that the total underwriting discount received by the Underwriters
as set forth on the cover of the Trust Prospectus, or, if Rule 434 is used, the
corresponding
25
location on the Trust Term Sheet, bears to the aggregate initial public offering
price of the Securities as set forth on such cover and Continental Grain shall
be responsible for the balance. The relative fault of the Trust and Continental
Grain on the one hand and the Underwriters on the other hand shall be determined
by reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Trust or Continental Grain on the
one hand or by the Underwriters on the other hand and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Trust, Continental Grain and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
7. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each person, if any, who controls the Trust or Continental Grain within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have
the same rights to contribution as the Trust or Continental Grain, as the case
may be. The Underwriters' respective obligations to contribute pursuant to this
Section 7 are several in proportion to the number of Securities set forth
opposite their respective names in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or contained in certificates of the Trust, ContiFinancial or
Continental Grain submitted pursuant hereto, shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of any
Underwriter or controlling person, or by or on behalf of the Trust or
Continental Grain, and shall survive delivery of the Securities to the
Underwriters.
26
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Trust and Continental Grain, at any time at or prior
to Closing Time (i) if there has been, since the time of execution of this
Agreement or since the respective dates as of which information is given in the
Trust Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs, investment objectives or
investment policies of the Trust, whether or not arising in the ordinary course
of business, or (ii) if there has been, since the time of execution of this
Agreement, or since the respective dates as of which information is given in the
ContiFinancial Prospectus, any material adverse change in the condition,
financial or otherwise, or in the earnings, operations or business of
ContiFinancial and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (iii) if there has occurred any
material adverse change in the financial markets in the United States, any
outbreak of hostilities or escalation thereof or other calamity or crisis or any
change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Representatives,
impracticable to market the Securities or to enforce contracts for the sale of
the Securities, or (iv) if trading in the Securities or in the ContiFinancial
Common Stock has been suspended or limited by the Commission or the New York
Stock Exchange, or if trading generally on the American Stock Exchange or the
New York Stock Exchange or in the Nasdaq National Market has been suspended or
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the NASD or any other governmental authority, or
(v) if a banking moratorium has been declared by either federal or New York
authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section 9, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
6 and 7 shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at Closing Time or a Date of Delivery to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representatives shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10%
of the number of Securities to be purchased on such date, each of the
non-defaulting Underwriters shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that
their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Underwriters, or
27
(b) if the number of Defaulted Securities exceeds 10% of the
number of Securities to be purchased on such date, this Agreement or,
with respect to any Date of Delivery which occurs after the Closing
Time, the obligation of the Underwriters to purchase and of the Trust
to sell the Option Securities to be purchased and sold on such Date of
Delivery, shall terminate without liability on the part of any
non-defaulting Underwriter.
No action taken pursuant to this Section 10 shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Trust to sell the relevant Option Securities,
as the case may be, either the Representatives or the Trust shall have the right
to postpone Closing Time or the relevant Date of Delivery, as the case may be,
for a period not exceeding seven days in order to effect any required changes in
the Trust Registration Statement or Trust Prospectus or in any other documents
or arrangements. As used herein, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 10.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, attention ▇▇▇▇ ▇. ▇▇▇▇▇▇▇; notices
to the Trust shall be directed to it at c/o Puglisi & Associates, ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and
notices to Continental Grain shall be directed to it at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, attention of the Treasurer, with a copy to the Vice
President and General Counsel-Corporate, at the address specified for
Continental Grain herein.
SECTION 12. Parties. This Agreement shall each inure to the benefit of
and be binding upon the Underwriters, the Trust and Continental Grain and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the parties hereto and their respective successors and the controlling
persons referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the parties hereto and their respective successors, and
said controlling persons and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY
TIME.
28
SECTION 14. Effect of Headings. The Article and Section
headings herein and the Table of Contents are for convenience only and shall
not affect the construction hereof.
29
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Trust and Continental Grain a
counterpart hereof, whereupon this instrument, along with all counterparts, will
become a binding agreement among the Underwriters, the Trust and Continental
Grain in accordance with its terms.
Very truly yours,
CONTIFINANCIAL STRYPES TRUST
By _________________________________
Name:
Title:
CONTINENTAL GRAIN COMPANY
By _________________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
By: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By__________________________________
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
30
SCHEDULE A
Number of
Initial
Name of Underwriter Securities
------------------- ----------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated....................................................................
Bear, ▇▇▇▇▇▇▇ & Co. Inc.....................................................................
---------
Total ............................................................................ 2,800,000
=========
Sch A - 1
SCHEDULE B
CONTIFINANCIAL STRYPES TRUST
STRYPES(SM)
1. The initial public offering price of the Securities
shall be $ per STRYPES.
2. The purchase price for the Securities to be paid by the
Underwriters shall be $ per STRYPES, being an amount equal to
the initial public offering price set forth above less $ per
STRYPES.
3. The "Threshold Appreciation Price" with respect to
the Securities shall be $ .
--------------------------
SM Service ▇▇▇▇ of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc.
Sch B - 1
SCHEDULE C
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. Major
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
A. ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Sch C - 1
Exhibit A
[Form of lock-up from Directors, Officers or other
stockholders pursuant to Section 5(a)(xiv)]
_______ __, 1997
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
as Representatives of the several Underwriters
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Re: Proposed Public Offering of STRYPES by the Underwriters
Ladies and Gentlemen:
The undersigned, a stockholder [and an officer and/or director] of
ContiFinancial Corporation, a Delaware corporation (the "Company"), understands
that ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
("▇▇▇▇▇▇▇ ▇▇▇▇▇") and Bear, ▇▇▇▇▇▇▇ & Co. Inc. propose to enter into a Purchase
Agreement (the "Purchase Agreement") with CONTIFINANCIAL STRYPES Trust, a
Delaware business trust (the "Trust"), and Continental Grain Company providing
for the public offering of the Trust's STRYPES(SM), which are exchangeable on
May 15, 2000 for shares of the Company's Common Stock, par value $.01 per share
(the "ContiFinancial Common Stock"). For good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the undersigned
agrees with each underwriter to be named in the Purchase Agreement that, during
a period of 90 days from the date of the Purchase Agreement, the undersigned
will not, without the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, offer, sell,
contract to sell or otherwise dispose of, directly or indirectly, any shares of
ContiFinancial Common Stock or any securities convertible into, exchangeable
for or repayable with shares of ContiFinancial Common Stock, whether now owned
or hereafter acquired by the undersigned or with respect to which the
undersigned has or hereafter acquires the power of disposition, or cause to be
filed any registration statement under the Securities Act of 1933, as amended,
with respect to any of the foregoing.
Very truly yours,
Signature:_____________________
Print Name:____________________
A-1