EXHIBIT 1
▇▇▇▇▇▇▇ PREFERRED CAPITAL CORPORATION
(a Connecticut corporation)
40,000 Shares
% Cumulative Redeemable Preferred Stock, Series A
(Liquidation Preference $1,000 Per Share)
1,000,000 Shares
% Cumulative Redeemable Preferred Stock, Series B
(Liquidation Preference $10 Per Share)
PURCHASE AGREEMENT
------------------
December , 1997
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇▇▇ Preferred Capital Corporation, a Connecticut corporation (the
"Company"), hereby confirms its agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇
Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and ▇▇▇▇▇, ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇, Inc. (collectively, the "Underwriters," which term shall also include
any underwriter substituted as hereinafter provided in Section 10 hereof), with
respect to the issue and sale by the Company and the purchase by the
Underwriters, acting severally and not jointly, of the respective numbers of
shares of the Company's (i) ___% Cumulative Redeemable Preferred Stock, Series A
(liquidation preference $1,000 per share) (the "Series A Preferred Shares") and
(ii) ___% Cumulative Redeemable Preferred Stock, Series B (liquidation
preference $10 per share) (the "Series B Preferred Shares" and together with the
Series A Preferred Shares, the "Preferred Shares") set forth in Schedule A
hereto. As the organizer of the Company and as an inducement to the Underwriters
to enter into this Agreement, ▇▇▇▇▇▇▇ Bank, a federal savings bank
(the "Bank"), also joins as a party to this Agreement for the purpose of making
certain representations and warranties to the Underwriters as set forth in
Section 1 hereof.
The Company understands that the Underwriters propose to make a public
offering of the Preferred Shares as soon as the Underwriters deem such offering
advisable after this Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-11, as amended (No. 333-38685),
covering the registration of the Securities under the Securities Act of 1933, as
amended (the "1933 Act"), including the related preliminary prospectus or
prospectuses. Promptly after execution and delivery of this Agreement, the
Company 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 (b) of
Rule 424 ("Rule 424(b)") of the 1933 Act Regulations or (ii) if the Company has
elected to rely upon Rule 434 ("Rule 434") of the 1933 Act Regulations, prepare
and file a term sheet (a "Term Sheet") in accordance with the provisions of Rule
434 and Rule 424(b). The information included in such prospectus or in such Term
Sheet, as the case may be, that was omitted from such registration statement at
the time it became effective but that is deemed to be part of such registration
statement 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." Each prospectus used
before such registration statement became effective, and any prospectus 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, is herein called a "preliminary prospectus." Such
registration statement, including the exhibits thereto and schedules thereto at
the time it became effective and including the Rule 430A Information and the
Rule 434 Information, as applicable, is herein called the "Registration
Statement." Any registration statement filed pursuant to Rule 462(b) of the 1933
Act Regulations is herein referred to as the "Rule 462(b) Registration
Statement," and after such filing the term "Registration Statement" shall
include the Rule 462(b) Registration Statement. The final prospectus in the form
first furnished to the Underwriters for use in connection with the offering of
the Securities is herein called the "Prospectus." If Rule 434 is relied on, the
term "Prospectus" shall refer to the preliminary prospectus dated December 15,
1997 together with the Term Sheet and all references in this Agreement to the
date of the Prospectus shall mean the date of the Term Sheet. For purposes of
this Agreement, all references to the Registration Statement, any preliminary
prospectus, the Prospectus or any Term Sheet or any amendment or supplement to
any of the foregoing shall be deemed to include the copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
system ("▇▇▇▇▇").
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SECTION 1. Representations and Warranties.
------------------------------
(a) Representations and Warranties by the Company. The Company
represents and warrants to each Underwriter as of the date hereof and as of the
Closing Time referred to in Section 2(c) hereof, and agrees with each
Underwriter, as follows:
(i) Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement
has become effective under the 1933 Act and no stop order
suspending the effectiveness of the Registration Statement or any
Rule 462(b) Registration Statement has been issued under the 1933
Act and no proceedings for that purpose have been instituted or
are pending or, to the knowledge of the Company, 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 Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments
thereto became or become effective and at the Closing Time, the
Registration Statement, the 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 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 Prospectus nor any
amendments or supplements thereto, at the time the Prospectus or
any such amendment or supplement was issued and at the Closing
Time, 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 Company will comply with the requirements of Rule
434 and the Prospectus shall not be "materially different", as
such term is used in Rule 434, from the prospectus included in the
Registration Statement at the time it became effective. The
representations and warranties in this subsection shall not apply
to statements in or omissions from the Registration Statement or
the Prospectus made in reliance upon and in conformity with
information furnished to the Company in writing by any Underwriter
expressly for use in the Registration Statement or the Prospectus.
Each preliminary prospectus and the prospectus filed as part
of the Registration Statement as originally filed or as part of
any amendment thereto, or filed pursuant to Rule 424 under the
1933 Act, complied when so filed in all material respects with the
1933 Act Regulations and each preliminary prospectus and the
Prospectus delivered to the Underwriters for use in connection
with this offering was identical in all material aspects to the
electronically transmitted copies
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thereof filed with the Commission pursuant to ▇▇▇▇▇, except to the
extent permitted by Regulation S-T.
(ii) Independent Accountants. KPMG Peat Marwick LLP, the
accountants who certified the financial statements included in the
Registration Statement, are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.
(iii) Financial Statements. The financial statements and the
related notes thereto included in the Prospectus present fairly
the financial position of the Company as of the dates indicated
and the results of operations, stockholder=s equity and cash flows
for the periods specified; said financial statements have been
prepared in conformity with generally accepted accounting
principles in the United States applied on a consistent basis
throughout the periods involved, except as disclosed in the notes
to such financial statements; the supporting schedules, if any,
included in the Prospectus present fairly, in all material
respects, the information required to be stated therein; and the
summary financial data included in the Prospectus present fairly,
in all material respects, the information shown therein and have
been compiled on a basis consistent with that of the audited
financial statements included in the Prospectus.
(iv) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the
Registration Statement and the Prospectus, except as otherwise
stated therein, (A) there has been no material adverse change, or
any development involving a prospective material adverse change,
in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company, whether or
not arising in the ordinary course of business (a "Material
Adverse Effect"), (B) there have been no transactions entered into
by the Company, other than those in the ordinary course of
business, which are material with respect to the Company, and (C)
there has been no dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock.
(v) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good
standing under the laws of the State of Connecticut and has
corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under
this Agreement; and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each
other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to
be in good standing would not result in a Material Adverse Effect.
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(vi) No Subsidiaries. The Company has no subsidiaries.
(vii) Capitalization and Authorization. The authorized,
issued and outstanding capital stock of the Company is as set
forth in the Prospectus under the caption "Capitalization" (except
for subsequent issuances, if any, pursuant to this Agreement). The
shares of issued and outstanding capital stock of the Company have
been duly authorized and validly issued and are fully paid and
non-assessable. None of the outstanding shares of capital stock of
the Company was issued in violation of the preemptive or other
similar rights of any securityholder of the Company. All of the
outstanding shares of common stock, par value $.01 per share, of
the Company (the "Common Stock") are owned by the Bank, free and
clear of any liens, charges or encumbrances.
(viii) Authorization of Agreement. This Agreement has been
duly authorized, executed and delivered by the Company.
(ix) Description of Common Stock. The Common Stock conforms
to all statements relating thereto contained in the Prospectus and
such description conforms to the rights set forth in the
instruments defining the same.
(x) Authorization and Description of Preferred Shares. The
Preferred Shares have been duly authorized for issuance and sale
to the Underwriters pursuant to this Agreement and, when issued
and delivered by the Company pursuant to this Agreement against
payment of the consideration set forth herein, will be validly
issued and fully paid and non-assessable; the Preferred Shares
conform to the statements relating thereto contained in the
Prospectus and such description conforms to the provisions of the
Amended and Restated Certificate of Incorporation of the Company
(the "Certificate of Incorporation"); the relative rights,
preferences, interests and powers of the Preferred Shares are as
set forth in the Certificate of Incorporation; no holder of the
Preferred Shares will be subject to personal liability by reason
of being such a holder; and the issuance of the Preferred Shares
is not subject to the preemptive or other similar rights of any
securityholder of the Company.
(xi) Absence of Defaults and Conflicts. The Company is not in
violation of its charter or by-laws or in default in the
performance or observance of any obligation, agreement, covenant
or condition contained in any indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or
instrument to which the Company is a party or by which it may be
bound, or to which any of the property or assets of the Company is
subject (collectively, "Agreements and Instruments") except for
such defaults that would not result in a Material Adverse Effect;
and the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated herein and in
the Registration Statement (including the issuance and sale of the
Preferred Shares
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and the use of the proceeds from the sale of the Preferred Shares
as described in the Prospectus under the caption "Use of
Proceeds") and compliance by the Company with its obligations
hereunder have been duly authorized by all necessary corporate
action and 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 Company pursuant
to, the 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 charter or
by-laws of the Company or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, known to
the Company, having jurisdiction over the Company or any of its
assets, properties or operations. As used herein, a "Repayment
Event" 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 the Company.
(xii) 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, or, to the knowledge of the Company, threatened, against
or affecting the Company, which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or which
in the reasonable judgment of the Company might result in a
Material Adverse Effect, or which in the reasonable judgment of
the Company might materially and adversely affect the properties
or assets thereof or the consummation of the transactions
contemplated in this Agreement or the performance by the Company
of its obligations hereunder; the aggregate of all pending legal
or governmental proceedings to which the Company is a party or of
which any of its property or assets is the subject which are not
described in the Registration Statement, including ordinary
routine litigation incidental to the business, could not, in the
reasonable judgment of the Company, result in a Material Adverse
Effect.
(xiii) Authorization of Other Agreements. Each of the
agreements listed in Schedule C hereto has been duly authorized,
executed and delivered by the Company and constitutes a valid and
legally binding obligation of the Company and is enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general
applicability relating to or affecting the enforcement of
creditors' rights.
(xiv) Accuracy of Exhibits. There are no contracts or
documents which are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits thereto
which have not been so described and filed as required.
6
(xv) Absence of Further Requirements. No 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 performance by the Company
of its obligations hereunder, in connection with the offering,
issuance or sale of the Preferred Shares hereunder or the
consummation of the transactions contemplated by this Agreement,
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, and except for the filing of the Certificate of
Incorporation with the appropriate agency in the State of
Connecticut.
(xvi) Title to Property. The Company has good and marketable
title to all of its properties, in each case free and clear of all
liens, encumbrances and defects, except such as stated in the
Prospectus or such as do not materially affect the value of such
properties in the aggregate to the Company.
(xvii) Possession of Licenses and Permits. The Company
possesses such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by
the appropriate federal, state, local or foreign regulatory
agencies or bodies necessary to conduct the business now operated
by it or proposed to be operated by it as described in the
Prospectus; the Company is in compliance with the terms and
conditions of all such Governmental Licenses, except where the
failure so to comply would not, singly or in the aggregate, in the
reasonable judgment of the Company, have a Material Adverse
Effect; all of the Governmental Licenses are valid and in full
force and effect, except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in
full force and effect would not, in the reasonable judgment of the
Company, have a Material Adverse Effect; and the Company has not
received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling
or finding, would, in the reasonable judgment of the Company,
result in a Material Adverse Effect.
(xviii) Investment Company Act. The Company is not, and upon
the issuance and sale of the Preferred Shares as herein
contemplated and the application of the net proceeds therefrom as
described in the Prospectus will not be, an "investment company"
or an entity "controlled" by an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended.
(xix) Registration Rights. There are no persons with
registration rights or other similar rights to have any securities
registered pursuant to the Registration Statement or otherwise
registered by the Company under the 1933 Act.
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(xx) Agreements. The representations and warranties of the
Company contained in the servicing agreements between the Company
and the Bank are, as of the date hereof and will be as of Closing
Time, true and correct.
(xxi) REIT Qualification. The Company is organized and
carries on its business so as to qualify as a "real estate
investment trust" (a "REIT") under Sections 856 through 860 of the
Internal Revenue Code of 1986, as amended (the "Code"), and no
transaction or other event has occurred which would cause the
Company not to enable it to qualify as a REIT for its current
taxable year or for future taxable years.
(xxii) Lack of Dividend Taxation. Dividends paid or to be
paid by the Company with respect to the capital stock of the
Company are or will be fully deductible by the Company for United
States federal income tax purposes and the dividends received or
to be received by the Bank from the Company are or will be fully
deductible by the Bank for Connecticut corporation income tax
purposes.
(b) Representations and Warranties by the Bank. The Bank represents and warrants
to each Underwriter as of the date hereof and as of the Closing Time referred to
in Section 2(c) hereof, and agrees with each Underwriter as follows:
(i) No Material Adverse Change in Business. Except as
otherwise provided in a report filed pursuant to the Securities
Exchange Act of 1934, as amended (the A1934 Act@), since the
respective dates as of which information is given in the
Prospectus, except as otherwise stated therein, (A) there has been
no material adverse change, or any development involving a
prospective material adverse change, in the condition (financial
or otherwise), earnings, business affairs or business prospects of
the Bank and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, (B)
there have been no transactions entered into by the Bank or any of
its subsidiaries, other than those in the ordinary course of
business, which are material with respect to the Bank and its
subsidiaries considered as one enterprise and (C) there has been
no dividend or distribution of any kind declared, paid or made by
the Bank on any class of its capital stock except for quarterly
dividends paid on the Bank's common stock.
(ii) Good Standing of the Bank . The Bank has been duly
organized and is validly existing as a federal savings bank under
the laws of the United States of America with full power
(corporate and other) and authority to own, lease and operate its
properties and to conduct its business as described in the
Prospectus and as presently conducted. The Bank is duly qualified
as a foreign corporation to transact business in all places where
such qualification is necessary or, to the extent not so
qualified, where the failure to obtain such qualification would
not have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs or business prospects of
the Bank and its subsidiaries, considered as one
8
enterprise, whether or not arising in the ordinary course of
business. The Bank is a member in good standing of the Federal
Home Loan Bank of Boston, and the Bank's deposit accounts are
insured by the Federal Deposit Insurance Corporation (the "FDIC")
to the fullest extent provided under applicable law and the rules
and regulations of the FDIC, and no proceedings for the
termination or revocation of such insurance are pending or, to the
knowledge of the Bank, threatened.
(iii) Good Standing of the Subsidiaries. Each subsidiary of
the Bank has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of
its incorporation, has full power (corporate and other) and
authority to own, lease and operate its properties and conduct its
business as described in the Prospectus and as presently conducted
and is duly qualified as a foreign corporation to transact
business and is in good standing in all places where such
qualification or good standing is necessary or to the extent not
so qualified or not in good standing, where the failure to obtain
such qualification or to be in good standing would not have a
material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the Bank and
its subsidiaries, considered as one enterprise, whether or not
arising in the ordinary course of business; no proceeding has been
instituted in any such jurisdiction, revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification; the activities of the subsidiaries of
the Bank are permitted to subsidiaries of a federal savings bank
under applicable law and the rules and regulations of the Office
of Thrift Supervision (the AOTS@); all of the issued and
outstanding capital stock of each subsidiary of the Bank has been
duly authorized and validly issued and is fully paid and
non-assessable and is owned, directly or through other
subsidiaries of the Bank, by the Bank; and all of the capital
stock of each subsidiary of the Bank that is owned by the Bank,
directly or through other subsidiaries of the Bank, is owned free
and clear of any pledge, lien, encumbrance, claim or equity.
(iv) Capitalization. All of the outstanding shares of common
stock of the Bank have been duly authorized and validly issued to
and are owned of record by ▇▇▇▇▇▇▇ Financial Corporation, a
Delaware corporation, are fully paid and nonassessable, and are
not subject to any pledges, liens, security interests, charges,
claims, equities and encumbrances of any kind.
(v) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Bank.
(vi) Absence of Defaults and Conflicts. Neither the Bank nor
any of its subsidiaries is in violation of its federal stock
charter or certificate of incorporation, as the case may be, or
by-laws; nor is the Bank or any of its subsidiaries in default in
the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture,
mortgage,
9
loan agreement, note, lease or other agreement or instrument to
which the Bank or any of its subsidiaries is a party or by which
it or any of them or any of their properties may be bound, except
for such defaults which would not, in the aggregate, have a
material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the Bank and
its subsidiaries, considered as one enterprise, whether or not
arising in the ordinary course of business; and the execution and
delivery of this Agreement, the incurrence of the obligations
herein set forth and the consummation of the transactions herein
contemplated have been duly authorized by all necessary corporate
action of the Bank and will not result in any violation of the
federal stock charter or by-laws of the Bank or the certificate of
incorporation or by-laws of any of its subsidiaries, and do not
and will not contravene or conflict with, or constitute a default
under, or result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of the Bank or any of
its subsidiaries under, (A) any contract, indenture, mortgage,
loan agreement, note, lease or other agreement or instrument to
which the Bank or any of its subsidiaries is a party or by which
it or any of them or any of their properties may be bound, except
for breaches or defaults which would not, in the aggregate, have a
material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the Bank and
its subsidiaries, considered as one enterprise, whether or not
arising in the ordinary course of business, (B) any existing
applicable law, rule or regulation or (C) any judgment, order or
decree of, or agreement with, any government or governmental
instrumentality or court, domestic or foreign, having jurisdiction
over the Bank or any of its subsidiaries or any of their
respective properties.
(vii) Regulatory Compliance. Except as disclosed in the
Prospectus, the Bank and its subsidiaries are conducting their
respective businesses in compliance in all material respects with
all laws, rules, regulations, decisions, directives and orders
(including, without limitation, all regulations and orders of, or
agreements with, the OTS and the FDIC) applicable to them. There
is no action, suit, investigation or proceeding before or by any
government, governmental instrumentality or court, domestic or
foreign, now pending or, to the knowledge of the Bank, threatened
against or affecting the Bank or any of its subsidiaries (A) that
is required to be disclosed in the Prospectus and not disclosed
therein, (B) that could result in any material adverse change in
the condition (financial or otherwise), earnings, business affairs
or business prospects of the Bank and its subsidiaries, considered
as one enterprise, (C) that could materially and adversely affect
the properties, assets or leasehold interests thereof or (D) that
could adversely affect the consummation of the transactions
contemplated in this Agreement. All pending legal or governmental
proceedings to which the Bank or any of its subsidiaries is a
party or of which any of their property is the subject, which are
not described in the Prospectus, including ordinary routine
litigation incidental to their respective businesses, would not
have a material adverse effect
10
on the condition (financial or otherwise), earnings, business
affairs or business prospects of the Bank and its subsidiaries,
considered as one enterprise.
(viii) Absence of Labor Dispute. No labor dispute with the
employees of the Bank or any subsidiary exists or, to the
knowledge of the Bank, is imminent, which may reasonably be
expected to result in a material adverse change in the condition
(financial or otherwise), earnings, business affairs or business
prospects of the Bank and its subsidiaries, considered as one
enterprise, whether or not arising in the ordinary course of
business.
(ix) Absence of Further Requirements. No 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 performance by the Bank of
its obligations hereunder, in connection with the offering,
issuance or sale of the Preferred Shares hereunder or the
consummation of the transactions contemplated by this Agreement
except such as have been already obtained or as may be required
under applicable law, or the rules and regulations of the OTS, the
rules and regulations of the FDIC or state securities laws.
(x) Possession of Licenses and Permits. The Bank and its
subsidiaries possess Governmental Licenses issued by the
appropriate federal, state, local or foreign regulatory agencies
or bodies necessary to conduct the business now operated by each
of them; the Bank and its subsidiaries are in compliance with the
terms and conditions of all such Governmental Licenses, except
where the failure so to comply would not, singly or in the
aggregate, in the reasonable judgment of the Bank, result in a
material adverse change in the condition (financial or otherwise),
earnings, business affairs or business prospects of the Bank and
its subsidiaries, considered as one enterprise; all of the
Governmental Licenses are valid and in full force and effect,
except when the invalidity of such Governmental Licenses or the
failure of such Governmental Licenses to be in full force and
effect would not, in the reasonable judgment of the Bank, result
in a material adverse change in the condition (financial or
otherwise), earnings, business affairs or business prospects of
the Bank and its subsidiaries, considered as one enterprise,
whether or not arising in the ordinary course of business; and
neither the Bank nor any of its subsidiaries has received any
notice of proceedings relating to the revocation or modification
of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would result, in the reasonable judgment of the Bank, in
a material adverse change in the condition (financial or
otherwise), earnings, business affairs or business prospects of
the Bank and its subsidiaries, considered as one enterprise,
whether or not arising in the ordinary course of business.
(xi) Title to Property. The Bank and its subsidiaries have
good and marketable title to all of their respective properties,
in each case free and clear of
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all liens, encumbrances and defects, except such as stated in the
Prospectus or such as do not materially affect the value of such
properties in the aggregate to the Bank and its subsidiaries
considered as one enterprise.
(xii) Bank Ownership of Company Common Stock. At the Closing
Time and so long as any Preferred Shares remain outstanding, the
Bank will be the beneficial owner of 100% of the outstanding
Common Stock of the Company.
(xiii) Intellectual Property. The Bank and its subsidiaries
own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual
property (collectively, "Intellectual Property") presently
employed by them in connection with the business now operated by
them or reasonably necessary in order to conduct such business,
and neither the Bank nor any of its subsidiaries has received any
notice or is otherwise aware of any infringement of or conflict
with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the
interest of the Bank or any of its subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable
decision, ruling or finding) or invalidity or inadequacy, singly
or in the aggregate, in the reasonable judgment of the Bank, is
likely to result in a material adverse effect in the condition
(financial or otherwise), earnings, business affairs or business
prospects of the Bank and its subsidiaries, considered as one
enterprise, whether or not arising in the ordinary course of
business.
(xiv) Authorization of Other Agreements. Each of the
agreements listed in Schedule C hereto to which the Bank is a
party has been duly authorized, executed and delivered by the Bank
and constitutes a valid and legally binding obligation of the Bank
and is enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and similar
laws of general applicability relating to or affecting the
enforcement of creditors' rights.
(xv) Agreements. The representations and warranties of the
Bank contained in the mortgage assignment agreement between the
Company and the Bank and the servicing agreements between the
Company and the Bank are, as of the date hereof and will be as of
Closing Time, true and correct.
(c) Officer's Certificates. Any certificate signed by any
officer of the Company or the Bank delivered to the Underwriters or to counsel
for the Underwriters shall be deemed a representation and warranty by the
Company or the Bank, as applicable, to each Underwriter as to the matters
covered thereby.
12
SECTION 2. Sale and Delivery to Underwriters; Closing.
------------------------------------------
(a) Preferred Shares. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to purchase
from the Company, at the price per share set forth in Schedule B for each of the
Series A Preferred Shares and the Series B Preferred Shares, the number of
Series A Preferred Shares and Series B Preferred Shares set forth in Schedule A
opposite the name of such Underwriter, plus any additional number of Series A
Preferred Shares and Series B Preferred Shares which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof.
(b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Preferred Shares shall be made at the offices of ▇▇▇▇▇ &
▇▇▇▇ LLP at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other
place as shall be agreed upon by the Underwriters and the Company, 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 (unless
postponed in accordance with the provisions of Section 10), or such other time
not later than ten business days after such date as shall be agreed upon by the
Underwriters and the Company (such time and date of payment and delivery being
herein called "Closing Time").
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Underwriters for the respective accounts of the Underwriters of certificates
for the Preferred Shares to be purchased by them. It is understood that each
Underwriter has authorized the Underwriters, for its account, to accept delivery
of, receipt for, and make payment of the purchase price for the Preferred Shares
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 Preferred Shares to be purchased by any
Underwriter whose funds have not been received by the Closing Time but such
payment shall not relieve such Underwriter from its obligations hereunder.
(c) Denominations; Registration. Certificates for the Preferred
Shares shall be in such denominations and registered in such names as the
Underwriters may request in writing at least one full business day before the
Closing Time. The certificates for the Preferred Shares will be made available
for examination and packaging by the Underwriters in The City of New York not
later than 10:00 A.M. (Eastern time) on the business day prior to the Closing
Time.
13
SECTION 3. Covenants.
---------
The Company covenants with each Underwriter as follows:
(a) Compliance with Securities Regulations and Commission
Requests. The Company, subject to Section 3(b), will comply with the
requirements of Rule 430A or Rule 434, as applicable, and will notify the
Underwriters immediately, and confirm the notice in writing, (i) when any
post-effective amendment to the Registration Statement shall become effective,
or any supplement to the Prospectus or any amended Prospectus shall have been
filed, (ii) of the receipt of any comments from the Commission, (iii) of any
request by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information, (iv) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or of any order preventing or suspending the use of
any preliminary prospectus, or 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, and (v) of any action
by the OTS that would have a material adverse effect on the transactions
contemplated by this Agreement. The Company will promptly effect the filings
necessary pursuant to Rule 424(b) and will take such steps as it deems necessary
to ascertain promptly whether the form of prospectus transmitted for filing
under Rule 424(b) was received for filing by the Commission and, in the event
that it was not, it will promptly file such prospectus. The Company will make
every reasonable effort to prevent the issuance of any stop order and, if any
stop order is issued, to obtain the lifting thereof at the earliest possible
moment.
(b) Filing of Amendments. The Company will give the Underwriters
notice of its intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b)), any Term Sheet or any
amendment, supplement or revision to either the prospectus included in the
Registration Statement at the time it became effective or to the Prospectus,
will furnish the Underwriters 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 without the consent of the Underwriters
or counsel for the Underwriters, which consent shall not be unreasonably
withheld.
(c) Delivery of Registration Statements. The Company has furnished
or will deliver to the Underwriters and counsel for the Underwriters, without
charge, signed copies of the 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 Underwriters, without charge, a conformed
copy of the Registration Statement as originally filed and of each amendment
thereto (without exhibits). The copies of the 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.
(d) Delivery of Prospectuses. The Company has delivered to
each Underwriter, without charge, as many copies of each preliminary prospectus
as such Underwriter
14
reasonably requested, and the Company hereby consents to the use of such copies
for purposes permitted by the 1933 Act. The Company will furnish to each
Underwriter, without charge, during the period when the Prospectus is required
to be delivered under the 1933 Act or the 1934 Act such number of copies of the
Prospectus (as amended or supplemented) as such Underwriter may reasonably
request. The 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.
(e) Continued Compliance with Securities Laws. The Company will
comply with the 1933 Act and the 1933 Act Regulations so as to permit the
completion of the distribution of the Preferred Shares as contemplated in this
Agreement and in the Prospectus. If at any time when a prospectus is required by
the 1933 Act to be delivered in connection with sales of the Preferred Shares,
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 Company, to
amend the Registration Statement or amend or supplement the Prospectus in order
that the 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 such
counsel, at any such time to amend the Registration Statement or amend or
supplement the Prospectus in order to comply with the requirements of the 1933
Act or the 1933 Act Regulations, the Company will promptly prepare and file with
the Commission, subject to Section 3(b), such amendment or supplement as may be
necessary to correct such statement or omission or to make the Registration
Statement or the Prospectus comply with such requirements, and the Company will
furnish to the Underwriters such number of copies of such amendment or
supplement as the Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best
efforts, in cooperation with the Underwriters, to qualify the Preferred Shares
for offering and sale under the applicable securities laws of such states and
other jurisdictions as the Underwriters 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 Registration Statement and any Rule 462(b)
Registration Statement; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation 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 Preferred Shares have been so qualified, the Company
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 Registration Statement and any Rule
462(b) Registration Statement.
(g) Rule 158. The Company 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.
15
(h) Use of Proceeds. The Company will use the net proceeds
received by it from the sale of the Preferred Shares in the manner specified in
the Prospectus under "Use of Proceeds".
(i) Listing. The Company will use its best efforts to effect and
maintain the quotation of the Series B Preferred Shares on the Nasdaq National
Market and will file with the Nasdaq National Market all documents and notices
required by the Nasdaq National Market of companies that have securities that
are traded in the over-the-counter market and quotations for which are reported
by the Nasdaq National Market.
(j) Restriction on Sale of Preferred Shares. During a period of 90
days from the date of the Prospectus, the Company will not, without the prior
written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, (i) directly or indirectly, offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of any Preferred Shares or any securities
convertible into or exercisable or exchangeable for Preferred Shares or file any
registration statement under the 1933 Act with respect to any of the foregoing
or (ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of the Preferred Shares, whether any such swap or transaction
described in clause (i) or (ii) above is to be settled by delivery of the
Preferred Shares or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to the Preferred Shares being sold pursuant to this
Agreement.
(k) Reporting Requirements. The Company, during the period when
the 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 and to the extent required by the 1934 Act and
the rules and regulations of the Commission thereunder.
(l) REIT Qualification. Except to the extent that a Tax Event (as
defined in the Prospectus) shall have occurred, the Company will, in a timely
manner, make the elections and take the procedural steps described in the
Prospectus under the heading "Federal Income Tax Consequences" to meet the
requirements to qualify, for its taxable year ending December 31, 1997, as a
REIT under the Code, as is in effect on the date hereof and use every reasonable
effort to do so.
(m) No Objection. The National Association of Securities Dealers,
Inc. (the "NASD") has confirmed that it has not raised any objection with
respect to the fairness and reasonableness of the underwriting terms and
arrangement.
16
SECTION 4. Payment of Expenses.
(a) Expenses. The Company covenants and agrees with the several
Underwriters to pay or cause to be paid all expenses incident to the performance
of their obligations under this Agreement, including (i) the preparation,
printing and filing of the Registration Statement (including financial
statements and exhibits) as originally filed and of each amendment thereto, (ii)
the preparation, printing and delivery to the Underwriters of this Agreement and
such other documents as may be required in connection with the offering,
purchase, sale, issuance or delivery of the Preferred Shares, (iii) the
preparation, issuance and delivery of the certificates for the Preferred Shares
to the Underwriters, including any stock or other transfer taxes and any stamp
or other duties payable upon the sale, issuance or delivery of the Preferred
Shares to the Underwriters, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors, (v) the qualification of the Preferred
Shares under securities laws in accordance with the provisions of Section 3(f)
hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection therewith and in connection with the
preparation of the Blue Sky Survey and any supplement thereto, (vi) the printing
and delivery to the Underwriters of copies of each preliminary prospectus, any
Term Sheets and of the Prospectus and any amendments or supplements thereto,
(vii) the preparation, printing and delivery to the Underwriters of copies of
the Blue Sky Survey and any supplement thereto, (viii) the fees and expenses of
any transfer agent or registrar for the Preferred Shares, (ix) any fees charged
by securities rating services for rating the Preferred Shares, (x) the filing
fees incident to, and the reasonable fees and disbursements of counsel to the
Underwriters in connection with, the review by NASD of the terms of the sale of
the Preferred Shares, and (xi) the fees and expenses incurred in connection with
the listing of the Series B Preferred Shares on the Nasdaq National Market.
(b) Termination of Agreement. If this Agreement is terminated by
the Underwriters in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company covenants and agrees with the Underwriters to
reimburse the Underwriters for all of their out-of-pocket expenses, including
the reasonable fees and disbursements of counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company and the Bank contained in Section
1 hereof or in certificates of any officer of the Company delivered pursuant to
the provisions hereof, to the performance by the Company of its covenants and
other obligations hereunder, and to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of the
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. A prospectus
containing the Rule 430A
17
Information shall have been filed with the Commission in accordance with Rule
424(b) (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 Company has elected to rely upon Rule 434, a Term Sheet shall have
been filed with the Commission in accordance with Rule 424(b).
(b) Opinion of Counsel for Company. At Closing Time, the
Underwriters shall have received the favorable opinion, dated as of Closing
Time, of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, together with signed or reproduced
copies of such letter for each Underwriter.
(c) Opinion of Counsel for Bank. At Closing Time, the Underwriters
shall have received the favorable opinion, dated as of Closing Time, of ▇▇▇▇▇ &
▇▇▇▇▇▇▇ L.L.P., counsel for the Bank, in form and substance satisfactory to
counsel for the Underwriters, together with signed or reproduced copies of such
letter for each Underwriter.
(d) Opinion of Counsel for Underwriters. At Closing Time, the
Underwriters shall have received the favorable opinion, dated as of Closing
Time, of ▇▇▇▇▇ & Wood LLP, counsel for the Underwriters. 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 Underwriters. 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 officers
of the Company and certificates of public officials.
(e) 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 Prospectus, any material adverse change, or any
development involving a material adverse change, in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company or the Bank and its subsidiaries considered as one enterprise, whether
or not arising in the ordinary course of business, and the Underwriters shall
have received a certificate of the Chairman and Chief Executive Officer, the
President or a Vice President and of the chief financial or chief accounting
officer of each of the Company and the Bank, dated as of Closing Time, to the
effect that (i) there has been no such material adverse change with respect to
the Company or the Bank and its subsidiaries considered as one enterprise, as
the case may be, (ii) the representations and warranties in Sections l(a) and/or
l(b) hereof, as the case may be, are true and correct with the same force and
effect as though expressly made at and as of Closing Time, (iii) the Company or
the Bank, as the case may be, have complied with all agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to Closing
Time, (iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or are contemplated by the Commission, and (v) there
has been no action by the OTS that would have a material adverse effect on the
transactions contemplated by this Agreement.
18
(f) Accountants' Comfort Letter. At the time of the execution of
this Agreement, the Underwriters shall have received from KPMG Peat Marwick LLP
a letter dated such date, in form and substance satisfactory to the
Underwriters, together with signed or reproduced copies of such letter for each
Underwriter 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
Registration Statement and the Prospectus.
(g) Bring-down Comfort Letter. At Closing Time, the Underwriters
shall have received from KPMG Peat Marwick LLP a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (f) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.
(h) Maintenance of Rating. At Closing Time, the Series A Preferred
Shares shall be rated ___ by Fitch IBCA, Inc. ("Fitch IBCA") and "___" by
Standard & Poor's Ratings Services, a division of ▇▇▇▇▇▇-▇▇▇▇, Inc. ("S&P"), and
the Series B Preferred Shares shall be rated by ___ Fitch IBCA and "___" by S&P,
and the Company shall have delivered to the Underwriters a letter dated the
Closing Time, from each such rating agency, or other evidence satisfactory to
the Underwriters, confirming that the Preferred Shares have such ratings; and
since the date of this Agreement, there shall not have occurred a downgrading in
the rating assigned to the Preferred Shares or any of the Company's securities
by any "nationally recognized statistical rating agency," as that term is
defined by the Commission for purposes of Rule 436(g)(2) under the 1933 Act, and
no such organization shall have publicly announced that it has under
surveillance or review its rating of the Preferred Shares or any of the
Company's securities.
(i) Approval of Listing. At Closing Time, the Series B Preferred
Shares shall have been approved for inclusion on the Nasdaq National Market,
subject only to official notice of issuance.
(j) Additional Documents. At Closing Time, counsel for the
Underwriters shall have been furnished with such documents and opinions as they
may require for the purpose of enabling them to pass upon the issuance and sale
of the Preferred Shares 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, herein contained; and all proceedings taken by the Company
and the Bank in connection with the issuance and sale of the Preferred Shares as
herein contemplated shall be satisfactory in form and substance to the
Underwriters and counsel for the Underwriters.
(k) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Underwriters by notice to the Company at any
time at or prior to Closing Time and such termination shall be without liability
of any party to any other party except as provided in Section
19
4 and except that Sections 1, 6, 7, and 8 shall survive any such termination and
remain in full force and effect.
SECTION 6. Indemnification.
---------------
(a) Indemnification of Underwriters. The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter 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 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 included in any preliminary prospectus or the
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, 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; provided that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company ; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇ ▇▇▇▇▇),
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,
to the extent that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not
apply to any (x) 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 written information furnished to
the Company by any Underwriter expressly for use in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) or (y) with respect to any preliminary
prospectus to the extent that any such loss, liability, claim, damage or expense
of an Underwriter results solely from the fact that such Underwriter sold
Preferred Shares to a person as to whom the Company shall establish that there
was not sent by commercially reasonable means, at or prior to the written
confirmation of such
20
sale, a copy of the Prospectus in any case where such delivery is required by
the 1933 Act Regulations, if the Company has previously furnished copies thereof
in sufficient quantity to such Underwriter and the loss, claim, damage or
liability of such Underwriter results from an untrue statement or omission of a
material fact contained in the preliminary prospectus that was corrected in the
Prospectus.
(b) Indemnification of Company, Directors and Officers. Each
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each officer of the Company who signed the Registration Statement,
and each person, if any, who controls the Company 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 untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter expressly for use in the Registration Statement (or
any amendment thereto) or such preliminary prospectus or the 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 to the extent it is
not materially prejudiced as a result thereof and in any event shall not relieve
it from any liability 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 the Company. An indemnifying
party may participate at its own expense in the defense of any such action;
provided, however, that counsel 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.
21
(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)(ii) 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; provided that an indemnifying party shall not be
liable for any such settlement effected without its consent if such indemnifying
party (1) reimburses such indemnified party in accordance with such request to
the extent it considers such request to be reasonable and (2) provides written
notice to the indemnified party substantiating the unpaid balance as
unreasonable, in each case prior to the date of such settlement.
SECTION 7. Contribution. If the indemnification provided for in Section
6 hereof 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 Company on the one
hand and the Underwriters on the other hand from the offering of the Preferred
Shares 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 Company 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 Company on the one hand and the
Underwriters on the other hand in connection with the offering of the Preferred
Shares pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Preferred Shares
pursuant to this Agreement (before deducting expenses) received by the Company
and the total underwriting discount received by the Underwriters, in each case
as set forth on the cover of the Prospectus, or, if Rule 434 is used, the
corresponding location on the Term Sheet, bear to the aggregate initial public
offering price of the Preferred Shares as set forth on such cover.
The relative fault of the Company 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 Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
22
The Company 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 Preferred Shares 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 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 director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number of Preferred Shares 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 in certificates of officers of the Company or the Bank 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 Company or the Bank, and shall survive
delivery of the Preferred Shares to the Underwriters.
SECTION 9. Termination of Agreement.
------------------------
(a) Termination; General. The Underwriters may terminate this
Agreement, by notice to the Company, 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 Prospectus, any
material adverse change, or any development involving a prospective
23
material adverse change, in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company or the Bank and
its subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) 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 ▇▇▇▇▇▇▇ ▇▇▇▇▇, impracticable to market
the Preferred Shares or to enforce contracts for the sale of the Preferred
Shares, or (iii) if trading in any securities of the Company has been suspended
or materially limited by the Commission or the Nasdaq National Market, 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 (iv) if a banking
moratorium has been declared by either Federal, New York or Connecticut
authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, 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
1, 6, 7, and 8 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 to
purchase any of the Preferred Shares which it or they are obligated to purchase
under this Agreement (the "Defaulted Preferred Shares"), the Underwriters 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 Preferred Shares in such amounts as may
be agreed upon and upon the terms herein set forth; if, however, the
Underwriters shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Preferred Shares does not exceed
10% of the number of Preferred Shares 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
(b) if the number of Defaulted Preferred Shares exceeds 10% of the
number of Preferred Shares to be purchased on such date, this Agreement shall
terminate without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
24
In the event of any such default which does not result in a termination
of this Agreement, either the Underwriters or the Company shall have the right
to postpone Closing Time for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or 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
▇▇▇▇▇▇▇ ▇▇▇▇▇ at North Tower, World Financial Center, New York, New York
10281-1201, attention of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇; notices to the Bank shall be directed
to it at ▇▇▇▇▇▇▇ Plaza, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention
of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇; and notices to the Company shall be directed to it at ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
SECTION 12. Parties.
-------
This Agreement shall inure to the benefit of and be binding upon the
Underwriters, the Company and the Bank 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 Underwriters, the Company
and the Bank and their respective successors and the controlling persons and
officers and directors 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 Underwriters, the Company and the Bank and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Preferred Shares 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. EXCEPT AS OTHERWISE SET FORTH HEREIN,
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect Of Headings.
------------------
The Article and Section headings herein are for convenience only and
shall not affect the construction hereof.
25
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to each of the Company and the Bank a
counterpart hereof, whereupon this instrument, along with all counterparts, will
become a binding agreement between the Underwriters and the Company and the Bank
in accordance with its terms.
Very truly yours,
▇▇▇▇▇▇▇ PREFERRED CAPITAL
CORPORATION
By
Name:
Title:
▇▇▇▇▇▇▇ BANK
By
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
By: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By
--------------------------------
Authorized Signatory
26
SCHEDULE A
Number of Preferred Shares
Series A Preferred Series B Preferred
Shares Shares
------ ------
Underwriters
------------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated..................
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc..............
Total...........................
27
SCHEDULE B
▇▇▇▇▇▇▇ PREFERRED CAPITAL CORPORATION
40,000 Shares
____% Cumulative Redeemable Preferred Stock, Series A
(Liquidation Preference $1,000 Per Share)
1,000,000 Shares
____% Cumulative Redeemable Preferred Stock, Series B
(Liquidation Preference $10 Per Share)
1. The initial public offering price per share for the Series A
Preferred Shares, determined as provided in said Section 2, shall be $____. The
initial public offering price per share for the Series B Preferred Shares,
determined as provided for in said Section 2, shall be $____.
2. The purchase price per share for the Series A Preferred Shares to be
paid by the Underwriters shall be $___, being an amount equal to the initial
public offering price set forth above less $___ per share. The purchase price
per share for the Series B Preferred Shares to be paid by the Underwriters shall
be $____, being an amount equal to the initial public offering price set forth
above less $___ per share.
3. The dividend rate on the Series A Preferred Shares will be ____ %
per annum. The dividend rate on the Series B Preferred Shares will be ____% per
annum.
28
SCHEDULE C
LIST OF OTHER AGREEMENTS ENTERED INTO BY THE COMPANY
1. Mortgage Assignment Agreement, dated as of March 17, 1997, by
and between the Company and the Bank.
2. Master Service Agreement, dated as of March 17, 1997, by and
between the Company and the Bank.
3. Advisory Service Agreement, dated as of October 20 , 1997, by
and between the Company and the Bank.
29