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EXHIBIT 1.1
1,600,000 Capital Securities
STERLING CAPITAL TRUST I
____% Cumulative Capital Securities
(Liquidation Preference of $25 per Capital Security)
UNDERWRITING AGREEMENT
May __, 1997
▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated
▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
▇/▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
Sterling Financial Corporation, a Washington corporation (the
"Company"), and its subsidiary, Sterling Capital Trust I, a statutory business
trust organized under the Delaware Business Trust Act (the "Delaware Act") (the
"Trust" and, together with the Company, the "Offerors"), propose, subject to the
terms and conditions stated herein, to issue and sell to you (the
"Underwriters"), an aggregate of 1,600,000 of the Trust's ____% Cumulative
Capital Securities, with a liquidation preference of $25.00 per capital security
(the "Capital Securities"). The Offerors propose that the Trust issue the
Capital Securities pursuant to a Trust Agreement, as amended and restated, among
Bankers Trust Company as Property Trustee and Bankers Trust (Delaware) as
Delaware Trustee and the Company (the "Trust Agreement"). The Capital Securities
will be guaranteed by the Company (the "Guarantee") as set forth in a Guarantee
Agreement (the "Guarantee Agreement"), to be dated May __, 1997, between the
Company and Bankers Trust Company, as trustee (the "Guarantee Trustee"), and
entitled to the benefits of certain backup undertakings described in the
Prospectus (as defined herein) with respect to the Company's agreement to pay
all expenses relating to administration of the Trust.
The proceeds of the sale of the Capital Securities will be used to
purchase junior subordinated deferrable interest debentures (the "Junior
Subordinated Debentures") issued by the Company pursuant to an Indenture, to be
dated May __, 1997, between the Company and Bankers Trust Company as trustee
(the "Indenture").
The Offerors have filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (File Nos. 333-_____
333-_____-01) and a related preliminary prospectus for the registration of the
Capital Securities, the Guarantee and the Junior Subordinated Debentures, under
the Securities Act of 1933, as amended (the "Act") and the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act") and the rules and regulations
thereunder. The registration statement, as amended, at the time it was declared
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effective, including the information (if any) deemed to be part thereof pursuant
to Rule 430A under the Act, is herein referred to as the "Registration
Statement." The form of prospectus first filed by the Offerors with the
Commission pursuant to Rules 424(b) and 430A under the Act is referred to herein
as the "Prospectus." Each preliminary prospectus included in the Registration
Statement prior to the time it becomes effective or filed with the Commission
pursuant to Rule 424(a) under the Act is referred to herein as a "Preliminary
Prospectus." References to the Registration Statement, the Prospectus and the
Preliminary Prospectus include all information incorporated therein by
reference. Copies of the Registration Statement, including all exhibits and
schedules thereto, any amendments thereto and all Preliminary Prospectuses have
been delivered to the Underwriters.
The Offerors hereby confirm their agreement with respect to the purchase
of the Capital Securities by the Underwriters as follows:
1. Representations and Warranties of the Offerors.
(a) The Offerors jointly and severally represent and warrant to,
and agree with, each of the Underwriters that:
(i) The Registration Statement has been declared effective
under the Act, and no post-effective amendment to the Registration Statement has
been filed with the Commission as of the date of this Agreement. No stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceeding for that purpose has been instituted or threatened by the
Commission.
(ii) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material respects to
the requirements of the Act and the Trust Indenture Act and the rules and
regulations of the Commission promulgated thereunder, and 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, in light of the
circumstances under which they were made, not misleading; provided, however,
that the Offerors make no representation or warranty as to information contained
in or omitted in reliance upon, and in conformity with, written information
furnished to the Offerors by or on behalf of any Underwriter, expressly for use
in the preparation thereof.
(iii) The Registration Statement conforms, and the Prospectus
and any amendments or supplements thereto will conform, in all material respects
to the requirements of the Act and the Trust Indenture Act and the rules and
regulations thereunder. Neither the Registration Statement nor any amendment
thereto, and neither the Prospectus nor any supplement thereto, contains or will
contain, as the case may be, any untrue statement of a material fact or omits or
will omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that the Offerors make no
representation or warranty as to (i) information contained in or omitted from
the Registration Statement or the Prospectus, or any such amendment or
supplement, in reliance upon, and in conformity with, written information
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furnished to the Offerors by or on behalf of any Underwriter, expressly for use
in the preparation thereof or (ii) information in those parts of the
Registration Statement which constitute Statements of Eligibility and
Qualification ("Form T-1") under the Trust Indenture Act.
(iv) The documents of the Company incorporated by reference
in the Registration Statement and the Prospectus, when they were filed with the
Commission, conformed in all material respects to the requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and the rules
and regulations of the Commission thereunder, and none of such documents
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading; and any further documents so filed and incorporated by reference
in the Registration Statement and the Prospectus or any further amendment or
supplement thereto, when such documents are filed with the Commission will
conform in all material respects to the requirements of the Exchange Act and the
rules and regulations of the Commission thereunder, 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.
(v) The Trust has been duly created and is validly existing
in good standing as a business trust under the Delaware Act with full trust
power and authority to own property and to conduct its business as described in
the Registration Statement and Prospectus and is authorized to do business in
each jurisdiction in which such qualification is required, except where the
failure to so qualify would not have a material adverse effect on the Trust's
condition (financial or otherwise), earnings, business, prospects, assets,
results of operations or properties taken as a whole; the Trust has conducted
and will conduct no business other than the transactions contemplated by the
Trust Agreement and described in the Prospectus; the Trust is not a party to or
otherwise bound by any agreement other than those described in the Prospectus;
the Trust is and will 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 is and will be treated as a consolidated subsidiary of the Company
pursuant to generally accepted accounting principles.
(vi) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Washington, is duly registered as a savings and loan holding company under the
Home Owners' Loan Act, and is in good standing with the Office of Thrift
Supervision ("OTS"). The significant operating subsidiary of the Company is
Sterling Savings Association ("Sterling Savings"). The principal operating
subsidiaries of Sterling Savings are Action Mortgage Company ("Action
Mortgage"), INTERVEST-Mortgage Investment Company ("INTERVEST") and Harbor
Financial Services, Inc. ("Harbor Financial") (Sterling Savings and such other
entities being collectively referred to herein as the "Subsidiaries"). Sterling
Savings is a savings and loan association chartered by the State of Washington
Department of Financial Institutions to conduct the business of savings and loan
associations. Sterling Savings is in good standing under the laws of the State
of Washington and currently meets the Qualified Thrift Lender Test of the Home
Owners' Loan Act. Each Subsidiary has been duly incorporated, is validly
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existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation; is, to the Company's knowledge, in compliance with all
applicable federal and state regulatory rules and guidelines; has the corporate
power and authority to own or lease its properties and conduct its business as
described in the Prospectus; and is duly qualified to transact business in all
jurisdictions in which the conduct of its business or its ownership or leasing
of property requires such qualification and the failure so to qualify would have
a material adverse effect on the business or condition, financial or otherwise,
of the Company and the Subsidiaries, taken as a whole. All outstanding shares of
capital stock of each of the Subsidiaries have been duly authorized and validly
issued, are fully paid and non-assessable, and are owned, directly or
indirectly, by the Company free and clear of all liens, encumbrances and
security interests, except as disclosed in the Registration Statement and
Prospectus. No options, warrants or other rights to purchase, agreements or
other obligations to issue, or other rights to convert any obligations into,
shares of capital stock or ownership interests in any of the Subsidiaries are
outstanding.
(vii) All of the issued and outstanding shares of capital
stock of the Company are duly authorized, validly issued, fully paid and
nonassessable, were offered and sold in compliance with all federal and state
securities laws, and were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase securities.
Except as otherwise stated in the Registration Statement and Prospectus, there
are no preemptive rights or other rights to subscribe for or to purchase, or any
restriction upon the voting or transfer of, the Junior Subordinated Debentures,
the common securities of the Trust held by the Company (the "Common Securities")
or the Capital Securities. Neither the filing of the Registration Statement nor
the registration of the Capital Securities, the Guarantee or the Junior
Subordinated Debentures gives rise to any rights for or relating to the
registration of any capital stock or other securities of the Company or the
Trust. The Company has an authorized and outstanding capitalization as set forth
in the Registration Statement and the Prospectus.
(viii) Each of this Agreement, the Indenture, the Trust
Agreement, and the Guarantee Agreement has been duly authorized, executed and
delivered by the Company and/or the Trust, as the case may be, and constitutes a
valid, legal and binding obligation of the Company and/or the Trust, as the case
may be, enforceable in accordance with its terms, except as rights to indemnity
hereunder may be limited by federal or state securities laws and except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the rights of creditors generally and subject to general
principles of equity. The execution, delivery and performance of this Agreement,
the Indenture, the Trust Agreement, and the Guarantee Agreement and the
consummation of the transactions herein or therein contemplated will not result
in a breach or violation of any of the terms and provisions of, or constitute a
default under, any statute, any indenture, mortgage, deed of trust, loan
agreement, lease, franchise, license or other agreement or instrument to which
the Trust, the Company or any of the Subsidiaries is a party or by which the
Trust, the Company or any of the Subsidiaries is bound or to which any property
or assets of the Trust, the Company or any of the Subsidiaries is subject, the
Company's or any Subsidiary's charter or bylaws, the Trust Agreement or the
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Trust's certificate of trust filed with the State of Delaware on May __, 1997
(the "Certificate of Trust") or any order, rule, regulation or decree of any
court or governmental agency or body having jurisdiction over the Company, any
Subsidiary or the Trust or any of the properties of the Company, any Subsidiary
or the Trust. No consent, approval, authorization or order of, or filing with,
any court or governmental agency or body is required for the execution, delivery
and performance of this Agreement, the Indenture, the Trust Agreement, and the
Guarantee Agreement or for the consummation of the transactions contemplated
hereby or thereby, including the issuance or sale of the Junior Subordinated
Debentures by the Company and the Common Securities and the Capital Securities
by the Trust, except such as may be required under the Act, all of which have
been obtained or made, and under state securities or blue sky laws. Each of the
Company and the Trust has full power and authority to enter into this Agreement,
the Indenture, the Trust Agreement, and the Guarantee Agreement, as the case may
be, and to authorize, issue and sell the Junior Subordinated Debentures or the
Common Securities and the Capital Securities, as the case may be, as
contemplated by this Agreement; and each of the Indenture, the Trust Agreement
and the Guarantee Agreement has been duly qualified under the Trust Indenture
Act and will conform in all material respects to the statements relating thereto
in the Registration Statement and the Prospectus.
(ix) The Junior Subordinated Debentures have been duly
authorized by the Company and at the Closing Date will have been duly executed
by the Company and, when authenticated in the manner provided for in the
Indenture and delivered against payment therefor as described in the Prospectus,
will constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the rights of creditors generally and subject to general
principles of equity, will be in the form contemplated by, and entitled to the
benefits of, the Indenture, will conform to the statements relating thereto in
the Prospectus, and will be owned by the Trust free and clear of any security
interest, pledge, lien, encumbrance, claim or equity.
(x) The Common Securities have been duly authorized by the
Trust Agreement and, when issued and delivered by the Trust to the Company
against payment therefor as described in the Prospectus, will be validly issued
and (subject to the terms of the Trust Agreement) fully paid and nonassessable
undivided beneficial interests in the assets of the Trust and will conform to
all statements relating thereto contained in the Prospectus; and at the Closing
Date all of the issued and outstanding Common Securities of the Trust will be
directly owned by the Company free and clear of any security interest, pledge,
lien, encumbrance, claim or equity.
(xi) The Capital Securities have been duly authorized by the
Trust Agreement and, when issued and delivered pursuant to this Agreement
against payment of the consideration set forth herein, will be validly issued
and fully paid and non-assessable undivided beneficial interests in the Trust,
will be entitled to the benefits of the Trust Agreement and will conform to the
statements relating thereto contained in the Prospectus; and holders of Capital
Securities will
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be entitled to the same limitation of personal liability under Delaware law as
extended to stockholders of private corporations for profit.
(xii) The Indenture, the Trust Agreement, and the Guarantee
Agreement are in substantially the respective forms filed as exhibits to the
Registration Statement.
(xiii) The Company's obligations under the Guarantee are
subordinated and junior in right of payment to all Senior Indebtedness (as
defined in the Indenture) of the Company.
(xiv) The Junior Subordinated Debentures are subordinate and
junior in right of payment to all Senior Indebtedness of the Company.
(xv) The financial statements, together with the related
notes and schedules, contained or incorporated by reference in the Registration
Statement and Prospectus present fairly the consolidated financial position,
results of operations, shareholders' equity and cash flows of the Company and
its consolidated Subsidiaries on the basis stated therein at the indicated dates
and for the indicated periods. Such financial statements have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, and all adjustments necessary for a fair
presentation of results for such periods have been made, except as otherwise
stated therein. The summary financial data included in the Registration
Statement present fairly the information shown therein on the basis stated in
the Registration Statement and have been compiled on a basis consistent with the
financial statements presented therein.
(xvi) There is no action or proceeding pending or, to the
knowledge of the Trust or the Company, threatened or contemplated against any of
the Trust, the Company or any Subsidiary before any court or administrative or
regulatory agency which, if determined adversely to the Trust, the Company or
such Subsidiary would, individually or in the aggregate, result in a material
adverse change in the business or condition (financial or otherwise), results of
operations, shareholders' equity or prospects of the Trust, the Company or such
Subsidiary, taken as a whole, except as set forth in the Registration Statement.
(xvii) There are no contracts or documents of the Trust or
the Company or any Subsidiary that are required by the Act or by the rules and
regulations thereunder to be filed as exhibits to the Registration Statement or
any document incorporated by reference therein which contracts or documents have
not been so filed.
(xviii) The Company and the Subsidiaries have good and
marketable title to all properties and assets reflected as owned in the
financial statements hereinabove described (or as described as owned in the
Prospectus), in each case free and clear of all liens, encumbrances and defects,
except such as are described in the Prospectus or do not substantially affect
the value of such properties and assets and do not materially interfere with the
use made and proposed to be made of such properties and assets by the Company
and the Subsidiaries; and any real property and buildings held under lease by
the
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Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and the Subsidiaries.
(xix) Since the respective dates as of which information is
given in the Registration Statement, as it may be amended or supplemented, (A)
there has not been any material adverse change, or any development involving a
prospective material adverse change, in or affecting the condition, financial or
otherwise, of the Trust, the Company and the Subsidiaries taken as a whole, or
the business affairs, management, financial position, shareholders' equity or
results of operations of the Trust, the Company and the Subsidiaries, taken as a
whole, whether or not occurring in the ordinary course of business, including,
without limitation, any material increase in the amount or number of classified
assets of Sterling Savings, any decrease in net interest margin for any month to
a level below 2.5%, or any material decrease in the volume of loan originations,
the amount of deposits or the amount of loans, (B) there has not been any
transaction not in the ordinary course of business entered into by the Trust,
the Company or any of the Subsidiaries which is material to the Trust, the
Company and the Subsidiaries, taken as a whole, other than transactions
described or contemplated in the Registration Statement, (C) the Trust, the
Company and the Subsidiaries have not incurred any material liabilities or
obligations, which are not in the ordinary course of business or which could
result in a material reduction in the future earnings of the Trust, the Company
and the Subsidiaries, (D) the Trust, the Company and the Subsidiaries have not
sustained any material loss or interference with their respective businesses or
properties from fire, flood, windstorm, accident or other calamity, whether or
not covered by insurance, (E) there has not been any change in the capital stock
of the Company or the Subsidiaries (other than upon the exercise of options and
warrants described in the Registration Statement), or any material increase in
the short-term or long-term debt (including capitalized lease obligations) of
the Company, and (F) there has not been any declaration or payment of any
dividends or any distributions of any kind with respect to the capital stock of
the Company or the Subsidiaries other than any dividends or distributions
described or contemplated in the Registration Statement.
(xx) Neither the Company nor any of the Subsidiaries is in
violation of its respective charter or Bylaws; the Trust is not in violation of
the Trust Agreement or its Certificate of Trust; and none of the Trust, the
Company, or the Subsidiaries is in violation of or otherwise in default under
any statute, or any rule, regulation, order, judgment, decree or authorization
of any court or governmental or administrative agency or body having
jurisdiction over the Trust, the Company or any of the Subsidiaries or any of
their properties, or any indenture, mortgage, deed of trust, loan agreement,
lease, franchise, license or other agreement or instrument to which the Trust,
the Company or any of the Subsidiaries is a party or by which any of them are
bound or to which any property or assets of the Trust, the Company or any of the
Subsidiaries is subject, which violation or default would have a material
adverse effect on the business, condition (financial or otherwise), results of
operations, shareholders' equity or prospects of the Trust, the Company and the
Subsidiaries, taken as a whole.
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(xxi) The Trust, the Company and each of the Subsidiaries
holds and is operating in compliance with all licenses, approvals, certificates
and permits from governmental and regulatory authorities which are necessary to
the conduct of its business as described in the Prospectus. Without limiting the
generality of the foregoing, the Company has all necessary federal and state
approvals necessary to own the stock of the Subsidiaries. None of the Trust, the
Company or any Subsidiary has received notice of or has knowledge of any basis
for any proceeding or action relating specifically to the Trust, the Company or
the Subsidiaries for the revocation or suspension of any such consent,
authorization, approval, order, license, certificate or permit or any other
action or proposed action by any regulatory authority having jurisdiction over
the Trust, the Company or the Subsidiaries that would have a material adverse
effect on the Trust, the Company or any Subsidiary.
(xxii) Coopers & ▇▇▇▇▇▇▇ L.L.P., which has certified certain
of the financial statements filed with the Commission as part of the
Registration Statement, are independent public accountants as required by the
Act and the rules and regulations thereunder.
(xxiii) The Offerors have not taken and will not take,
directly or indirectly, any action designed to, or which has constituted, or
which might reasonably be expected to cause or result in, stabilization or
manipulation of the price of the Capital Securities.
(xxiv) The Offerors' registration statement pursuant to
Section 12(g) of the Exchange Act with respect to the Capital Securities, has
been declared effective by the Commission; and the Capital Securities have been
approved for designation upon notice of issuance on the Nasdaq National Market
under the symbol "STSAO."
(xxv) The Offerors have not distributed and will not
distribute any prospectus or other offering material in connection with the
offering and sale of the Capital Securities other than any Preliminary
Prospectus or the Prospectus or other materials permitted by the Act to be
distributed by the Company.
(xxvi) The deposit accounts of Sterling Savings are insured
by the Federal Deposit Insurance Corporation (the "FDIC") to the fullest extent
provided by law. No proceeding for the termination of such insurance is pending
or is threatened. Except for the Supervisory Directive from the Washington
Department of Financial Institutions, dated January 3, 1997, neither the Company
nor any Subsidiary has received or is subject to any directive or order from the
OTS, the FDIC, the Washington Department of Financial Institutions, or any other
regulatory authority to make any material change in the method of conducting
their respective businesses that has not been complied with in all material
respects.
(xxvii) The Trust, the Company and the Subsidiaries have
filed all federal, state, local and foreign tax returns or reports required to
be filed, and have paid in full all taxes indicated by said returns or reports
and all assessments received by it or any of them to the extent that such taxes
have
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become due and payable, except where the Trust, the Company and the Subsidiaries
are contesting in good faith such taxes and assessments. The Company and the
Subsidiaries have also filed all required applications, reports, returns and
other documents and information with all state and federal savings and loan
association authorities and agencies.
(xxviii) The Trust, the Company and each of the Subsidiaries
owns or licenses all patents, patent applications, trademarks, service marks,
tradenames, trademark registrations, service ▇▇▇▇ registrations, copyrights,
licenses, inventions, trade secrets and other similar rights necessary for the
conduct of their businesses as described in the Prospectus. Neither the Trust
nor the Company has any knowledge of any infringement by them or the
Subsidiaries of any patents, patent applications, trademarks, service marks,
tradenames, trademark registrations, service ▇▇▇▇ registrations, copyrights,
licenses, inventions, trade secrets or other similar rights of others, and none
of the Trust, the Company or any of the Subsidiaries has received any notice or
claim of conflict with the asserted rights of others with respect to any of the
foregoing.
(xxix) None of the Trust, the Company or any of the
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or an "investment adviser" within the meaning of the Investment
Advisers Act of 1940, as amended.
(xxx) The Company and its Subsidiaries maintain, and the
Trust will maintain, a system of internal accounting controls sufficient to
provide reasonable assurances that (A) transactions are executed in accordance
with management's general or specific authorization; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (C) access to records is permitted only in accordance
with management's general or specific authorization; and (D) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(xxxi) Other than as contemplated by this Agreement and as
disclosed in the Registration Statement, the Company has not incurred any
liability for any finder's or broker's fee or agent's commission in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
(xxxii) No report or application filed by the Company or any
of its Subsidiaries with the OTS, the FDIC or the Washington Department of
Financial Institutions, as of the date it was filed, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading when
made or failed to comply with the applicable requirements of the OTS, the FDIC
or the Washington Department of Financial Institutions, as the case may be.
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(xxxiii) The Offerors meet all of the requirements for the
use of Form S-3 to register the Capital Securities, the Guarantee and the Junior
Subordinated Debentures under the Act.
(xxxiv) Any certificate signed by or on behalf of the Trust
or the Company and delivered to the Underwriters or counsel to the Underwriters
shall be deemed to be a representation and warranty of the Trust or the Company
to each Underwriter as to the matters covered thereby, provided that such
certificate expressly states that it is given as a representation and warranty
pursuant to this Agreement.
2. Purchase, Sale and Delivery of Capital Securities; Advisory Fee. On
the basis of the representations, warranties and agreements herein contained,
but subject to the terms and conditions herein set forth, the Trust agrees to
issue and sell to each Underwriter, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Trust, at a purchase price per
Capital Security of $25.00, the number of Capital Securities set forth opposite
the name of such Underwriter in Schedule A hereto. As compensation to the
Underwriters for their commitments hereunder and in view of the fact that the
proceeds of the sale of the Capital Securities (together with the entire
proceeds from the sale by the Trust to the Company of the Common Securities)
will be used to purchase the Junior Subordinated Debentures, the Company hereby
agrees to pay at the Closing Date to the Underwriters a commission of $____ per
Capital Security sold by the Trust hereunder.
The Capital Securities will be delivered by the Company to the
Underwriters against payment of the purchase price therefor at the offices of
Witherspoon, Kelley, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇.▇., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other location as may be mutually acceptable, at 8:00
a.m. Pacific Daylight Time on May __, 1997, or such other time and date as the
Underwriters and the Company may agree upon in writing, such time and date of
delivery being herein referred to as the "Closing Date." The purchase price
shall be payable by wire transfer of immediately available funds to an account
designated by the Trust at least two business days preceding the Closing Date.
The Underwriters' commission shall be payable by wire transfer of immediately
available funds to an account designated by the Underwriters at least two
business days preceding the Closing Date. Delivery of the Capital Securities may
be made by credit through full fast transfer to the accounts at The Depository
Trust Company designated by the Underwriters. Certificates representing the
Capital Securities, in definitive form and in such denominations and registered
in such names as the Underwriters may request upon at least two business days'
prior notice to the Company, shall be prepared and will be made available for
checking and packaging, not later than 10:30 a.m., Central time, on the business
day next preceding the Closing Date at the offices of ▇▇▇▇ ▇▇▇▇▇▇▇▇
Incorporated, ▇▇▇▇ ▇▇▇▇▇▇▇▇ Plaza, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, or such other location as may be mutually acceptable.
It is understood that either Underwriter may (but shall not be obligated
to) make payment to the Company on behalf of the other Underwriter for the
Securities to be purchased by such Underwriter. Any such payment shall not
relieve such other Underwriter of any of its obligations hereunder. Nothing
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herein contained shall constitute the Underwriters as an unincorporated
association or partner with either or both Offerors.
3. Offering by Underwriters. It is understood that the Underwriters
propose to make a public offering of the Capital Securities as soon as the
Underwriters deem it advisable to do so. The Capital Securities are to be
initially offered to the public at the initial public offering price set forth
in the Prospectus. The Underwriters may from time to time thereafter change the
public offering price and other selling terms. Because the National Association
of Securities Dealers, Inc. ("NASD") is expected to view the Capital Securities
as interests in a direct participation program, the offering of the Capital
Securities is being made in compliance with the applicable provisions of Rule
2810 of the NASD's Conduct Rules.
4. Covenants of the Offerors. The Offerors jointly and severally
covenant and agree with the several Underwriters that:
(a) The Offerors will prepare and timely file with the Commission
under Rule 424(b) under the Act a Prospectus containing information previously
omitted at the time of effectiveness of the Registration Statement in reliance
on Rule 430A under the Act, and will not file any amendment to the Registration
Statement or supplement to the Prospectus of which the Underwriters shall not
previously have been advised and furnished with a copy and as to which the
Underwriters shall have reasonably objected in writing promptly after reasonable
notice thereof or which is not in compliance with the Act or the rules and
regulations thereunder.
(b) The Offerors will advise the Underwriters promptly of any
request of the Commission for amendment of the Registration Statement or for
supplement to the Prospectus or for any additional information, or of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the use of the Prospectus, of the suspension of the
qualification of the Capital Securities for offering or sale in any
jurisdiction, or of the institution or threatening of any proceedings for that
purpose, and the Offerors will use their best efforts to prevent the issuance of
any such stop order preventing or suspending the use of the Prospectus or
suspending such qualification and to obtain as soon as possible the lifting
thereof, if issued.
(c) The Offerors will cooperate with the Underwriters and the
Underwriters' counsel in order to qualify the Capital Securities for sale under
the securities laws of such jurisdictions as the Underwriters may reasonably
have designated in writing and to continue such qualifications in effect for so
long as the Underwriters may reasonably request for distribution of the Capital
Securities (or obtain exemptions from the application of such laws), provided
that neither Offeror shall be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction where it is not
now so qualified or required to file such a consent. The Offerors will, from
time to time, prepare and file such statements, reports and other documents as
may be requested by the Underwriters for that purpose.
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12
(d) The Offerors will furnish the Underwriters with as many copies
of any Preliminary Prospectus as the Underwriters may reasonably request and,
during the period when delivery of a prospectus is required under the Act, the
Offerors will furnish the Underwriters with as many copies of the Prospectus in
final form, or as thereafter amended or supplemented, as the Underwriters may,
from time to time, reasonably request. The Offerors will deliver to the
Underwriters, at or before the Closing Date, two signed copies of the
Registration Statement and all amendments thereto including all exhibits filed
therewith, and will deliver to the Underwriters such number of conformed copies
of the Registration Statement, without exhibits, and of all amendments thereto,
as the Underwriters may reasonably request.
(e) If, during the period in which a prospectus is required by law
to be delivered by an Underwriter or dealer, any event shall occur as a result
of which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances existing at
the time the Prospectus is delivered to a purchaser, not misleading, or if for
any other reason it shall be necessary at any time to amend or supplement the
Prospectus to comply with any law, the Offerors promptly will prepare and file
with the Commission an appropriate amendment to the Registration Statement or
supplement to the Prospectus so that the Prospectus as so amended or
supplemented will not include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein in
light of the circumstances when it is so delivered, not misleading, or so that
the Prospectus will comply with law.
(f) The Offerors will make generally available to their security
holders, as soon as it is practicable to do so, but in any event not later than
18 months after the effective date of the Registration Statement, an earnings
statement (which need not be audited) in reasonable detail, covering a period of
at least 12 consecutive months beginning after the effective date of the
Registration Statement, which earnings statement shall satisfy the requirements
of Section 11(a) of the Act and Rule 158 thereunder and will advise the
Underwriters in writing when such statement has been so made available.
(g) The Company will, for three years from the Closing Date,
deliver to each Underwriter, as soon as they are available, copies of its annual
report and copies of all other documents, reports and information furnished by
the Company to its security holders or filed with any securities exchange
pursuant to the requirements of such exchange or with the Commission pursuant to
the Act or the Exchange Act. The Company will deliver to each Underwriter
similar reports with respect to significant subsidiaries, as that term is
defined in the rules and regulations under the Act, which are not consolidated
in the Company's financial statements.
(h) The Offerors will apply the net proceeds from the sale of the
Junior Subordinated Debentures and the Capital Securities substantially in
accordance with the purposes set forth under "Use of Proceeds" in the
Prospectus.
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13
(i) The Offerors will use their best efforts to maintain the
designation of the Capital Securities on the Nasdaq National Market.
5. Costs and Expenses.
(a) The Offerors will pay (directly or by reimbursement) all
costs, expenses and fees incident to the performance of the obligations of the
Offerors under this Agreement, including, without limiting the generality of the
foregoing, the following: accounting fees of the Offerors; the fees and
disbursements of counsel for the Offerors; the cost of preparing, printing and
filing of the Registration Statement, Preliminary Prospectuses and the
Prospectus and any amendments and supplements thereto and the printing, mailing
and delivery to the Underwriters and dealers of copies thereof and of this
Agreement, the Selected Dealers Agreement, the Blue Sky Memorandum and any
supplements or amendments thereto (excluding, except as provided below, fees and
expenses of counsel to the Underwriters); the filing fees of the Commission; the
filing fees and expenses (including legal fees and disbursements of counsel for
the Underwriters) incident to securing any required review by the NASD of the
terms of the sale of the Capital Securities; the fees and expenses of the
Indenture Trustee, including the fees and disbursements of counsel for the
Indenture Trustee in connection with the Indenture and Junior Subordinated
Debentures; the fees and expenses of the Property Trustee and the Delaware
Trustee, including the fees and disbursements of counsel for the Property
Trustee and the Delaware Trustee in connection with the Trust Agreement and the
Certificate of Trust; the fees and expenses of the Guarantee Trustee, including
the fees and disbursements of counsel for the Guarantee Trustee in connection
with the Guarantee and Guarantee Agreement; listing fees, if any, transfer taxes
and the expenses, including the fees and disbursements of counsel for the
Underwriters, incurred in connection with the qualification of the Capital
Securities under state securities or Blue Sky laws; the fees and expenses
incurred in connection with the designation of the Capital Securities on the
Nasdaq National Market; the costs of preparing certificates representing Junior
Subordinated Debentures or Capital Securities; the costs and fees of any
registrar or transfer agent and all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section 5. The Offerors shall not be required to pay for
any of the Underwriters' expenses, other than those related to qualification of
the Capital Securities under state securities or Blue Sky laws (as to which fees
and expenses shall not exceed $12,000) and those incident to securing any
required review by the NASD of the terms of the sale of the Capital Securities
which shall be paid by the Offerors as provided above, except that, if this
Agreement shall not be consummated because the conditions in Section 6 hereof
are not satisfied, or because this Agreement is terminated by the Underwriters
pursuant to Section 9(b) hereof, or by reason of any failure, refusal or
inability on the part of the Offerors to perform any undertaking or satisfy any
condition of this Agreement or to comply with any of the terms hereof on either
of their parts to be performed, unless such failure to satisfy said condition or
to comply with said terms shall be due to the default or omission of any
Underwriter, then the Offerors promptly upon request by the Underwriters shall
reimburse the Underwriters for all actual, accountable out-of-pocket expenses,
including fees and disbursements of counsel reasonably incurred in connection
with investigating, marketing and proposing to market the Capital Securities or
in
- 13 -
14
contemplation of performing their obligations hereunder; but the Offerors shall
not in any event be liable to the Underwriters for damages on account of loss of
anticipated profits from the sale by them of the Capital Securities.
(b) Upon successful completion of the offering contemplated by
this Agreement, the Offerors will pay all reasonable and customary costs,
expenses and fees incident to tombstone advertisements of the offering and
incurred with the approval of the Company.
6. Conditions of Obligations of the Underwriters.
The several obligations of the Underwriters to purchase the Capital
Securities on the Closing Date are subject to the condition that all
representations and warranties of the Offerors contained herein are true and
correct, at and as of the Closing Date, and the condition that each Offeror
shall have performed all of its covenants and obligations hereunder and to the
following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with Section
4(a) hereof; no stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, or any part thereof shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to the reasonable
satisfaction of the Underwriters.
(b) The Underwriters shall have received on the Closing Date the
opinion of Witherspoon, Kelley, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇.▇., counsel for the
Offerors, dated the Closing Date, addressed to the Underwriters, to the effect
that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, with corporate power and authority to own or lease its
properties and conduct its business as described in the Prospectus. All of the
issued and outstanding shares of the capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. The holders
of the Company's outstanding securities are not entitled to any preemptive or
other rights to subscribe for the Junior Subordinated Debentures or the Capital
Securities under the Company's Articles of Incorporation or Bylaws and, to the
knowledge of such counsel, no such rights exist under any other agreement or
arrangement. The Company has authorized and outstanding capital stock as
described in the Prospectus.
(ii) Each Subsidiary of the Company has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation and is in compliance with all applicable
federal and state regulatory rules and guidelines, with corporate power and
authority to own or lease its properties and conduct its business as described
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15
in the Prospectus. The outstanding capital stock of each such Subsidiary has
been duly authorized and validly issued, is fully paid and nonassessable and is
owned, directly or indirectly, by the Company, free and clear of all liens,
encumbrances and security interests, other than security interests specifically
disclosed in the Prospectus. To the knowledge of such counsel, no options,
warrants or other rights to purchase, agreements or other obligations to issue
or other rights to convert any obligations into capital stock or ownership
interests in any Subsidiary are outstanding.
(iii) Sterling Savings has been duly chartered to conduct the
business of a savings and loan association in the State of Washington and the
Company has all necessary power and authority to own Sterling Savings. The
Company and Sterling Savings have all necessary consents and approvals under
applicable federal and state laws and regulations relating to savings and loan
associations and savings and loan holding companies ("savings and loan laws") to
own their respective assets and carry on their respective businesses as
currently conducted.
(iv) The statements in the Prospectus under the captions "Risk
Factors -- Dividend Payment Sources and Restrictions, -- Status of the Company
as a Savings and Loan Holding Company and -- Certain Regulatory Matters" and in
the Company's Annual Report on Form 10-K for the year ended December 31, 1996
under the caption "Regulation," insofar as such statements constitute a summary
of savings and loan laws, are accurate summaries and fairly present the
information called for with respect to such matters.
(v) The execution and delivery of this Agreement, the
Indenture, the Trust Agreement, and the Guarantee Agreement and the consummation
of the transactions herein and therein contemplated do not and will not conflict
with or result in a violation of or default under any savings and loan
association laws, or any permit, judgment, decree or order known to such
counsel, or any lease, contract, indenture, mortgage, loan agreement or other
agreement or other instrument or obligation known to such counsel to which the
Company or Sterling Savings is a party or by which the Company or Sterling
Savings or any of their respective properties is bound.
(vi) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body under any savings and loan association laws is necessary in
connection with the execution and delivery by the Offerors of this Agreement,
the Indenture, the Trust Agreement, and the Guarantee Agreement and the
consummation of the transactions herein and therein contemplated, except such as
have been obtained or made, specifying the same.
(vii) All of the issued and outstanding Common Securities of
the Trust are owned by the Company free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equitable right.
(viii) The Junior Subordinated Debentures are in the form
contemplated by the Indenture, have been duly authorized, executed and
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16
delivered by the Company and, when authenticated by the Indenture Trustee in the
manner provided for in the Indenture and delivered against payment therefor,
will constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the rights of creditors generally and subject to general
principles of equity.
(ix) The Junior Subordinated Debentures are subordinate and
junior in right of payment to all "Senior Indebtedness" (as defined in the
Indenture) of the Company.
(x) Under current law, the Trust will be classified for United
States federal income tax purposes as a grantor trust and not as an association
taxable as a corporation. Accordingly, for United States federal income tax
purposes, each beneficial owner of Capital Securities will be treated as owning
an undivided beneficial interest in the Junior Subordinated Debentures, and
stated interest on the Junior Subordinated Debentures generally will be included
in income by a holder of Capital Securities at the time such interest income is
paid or accrued in accordance with such holder's regular method of tax
accounting.
(xi) For federal income tax purposes, (a) the Junior
Subordinated Debentures will constitute debt of the Company and (b) the interest
on the Junior Subordinated Debentures will be deductible by the Company on an
economic accrual basis in accordance with Section 163(e) of the Internal Revenue
Code of 1986, as amended, and Treasury Regulation Section 1.163-7.
(xii) To the best of such counsel's knowledge, the Trust is
not required to be authorized to do business in any other jurisdiction and the
Trust is not a party to or otherwise bound by any agreement other than those
described in the Prospectus.
(xiii) To the best of such counsel's knowledge, the Offerors
are not in default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or any other instrument of which either of them is a
party or by which either of them may be bound, or to which any of the property
or assets of the Offerors is subject.
(xiv) The Company has full corporate power and authority and
the Trust has full trust power and authority to enter into this Agreement, the
Indenture, the Trust Agreement, and the Guarantee Agreement, as applicable, and
to issue the Junior Subordinated Debentures or the Common Securities and Capital
Securities, as the case may be, and to effect the transactions contemplated by
this Agreement, the Indenture, the Trust Agreement, and the Guarantee Agreement,
as applicable, and each of this Agreement, the Indenture, the Trust Agreement,
and the Guarantee Agreement have been duly authorized, executed and delivered by
the Company and the Trust, as applicable, and constitutes a valid, legal and
binding obligation of the Company and the Trust, as applicable, enforceable in
accordance with its terms
- 16 -
17
(except as rights to indemnity hereunder may be limited by federal or state
securities laws and except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity). The execution, delivery
and performance of this Agreement, the Indenture, the Trust Agreement, the
Guarantee Agreement, the Capital Securities, the Common Securities, and the
Junior Subordinated Debentures and the consummation of the transactions herein
or therein contemplated will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any statute, rule or
regulation (except that such counsel need express no opinion regarding any Blue
Sky or state securities laws), any lease, contract, indenture, mortgage, loan
agreement or other agreement or instrument known to such counsel to which the
Company, the Trust or any Subsidiary is a party or by which it is bound or to
which any of its property is subject, the Company's or any Subsidiary's charter
or bylaws, or the Trust's Certificate or any permit, judgment, order or decree
known to such counsel of any court or governmental agency or body having
jurisdiction over the Company, the Trust or any Subsidiary or any of their
respective properties, except for any breach, violation or default which would
not have a material adverse effect on the Company or the Trust; and no consent,
approval, authorization, order of, designation, declaration or filing by or
with, any court or any regulatory, administrative or governmental agency or body
is required for the execution, delivery and performance of this Agreement, the
Indenture, the Trust Agreement, the Guarantee Agreement, the Common Securities,
the Capital Securities, or the Junior Subordinated Debentures, or for the
consummation of the transactions contemplated hereby or thereby (other than as
may be required by federal or state laws governing savings and loan associations
or savings and loan association companies or by state securities and blue sky
laws, as to which such counsel need express no opinion), including the issuance
or sale of the Junior Subordinated Debentures by the Company and the Common
Securities and Capital Securities by the Trust, except (a) such as may be
required under the Act, which have been obtained or made, or under state
securities or blue sky laws, (b) such agreements, instruments or obligations
with respect to which valid consents or waivers have been obtained by the Trust,
the Company or any of the Subsidiaries, and (c) the qualification of the Trust
Agreement, the Guarantee Agreement and the Indenture under the Trust Indenture
Act and the regulations thereunder, all of which have been effected. To the best
of such counsel's knowledge, the filing of the Registration Statement and the
registration of the Junior Subordinated Debentures, the Guarantee and the
Capital Securities under the Act does not give rise to any rights for or
relating to the registration of any shares of capital stock or other securities
of the Company.
(xv) The Registration Statement has become effective under the
Act and, to the knowledge of such counsel, no stop order proceedings with
respect thereto have been instituted or are pending or threatened by the
Commission.
(xvi) The Registration Statement, the Prospectus and each
amendment or supplement thereto comply as to form in all material respects with
the requirements of the Act and the rules and regulations thereunder (except
that such counsel need express no opinion as to the financial statements and
related schedules included therein).
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18
(xvii) The statements (A) in the Prospectus under the captions
"Risk Factors -- Ranking of the Subordinated Obligations Under the Guarantee and
the Junior Subordinated Debentures, -- Dividend Payment Sources and
Restrictions, -- Status of the Company as a Savings and Loan Holding Company, --
Certain Regulatory Matters, -- Option to Extend Interest Payment Period; Tax
Consequences, and -- Possible Tax Law Changes Affecting the Capital Securities"
and "Certain Federal Income Tax Consequences" and (B) in the Registration
Statement in Item 15, insofar as such statements constitute a summary of matters
of law, are accurate summaries and fairly present the information called for
with respect to such matters.
(xviii) Such counsel does not know of any contracts,
agreements, documents or instruments required to be filed as exhibits to the
Registration Statement or described in the Registration Statement or the
Prospectus which are not so filed or described as required; and insofar as any
statements in the Registration Statement or the Prospectus constitute summaries
of any contract, agreement, document or instrument to which the Trust, the
Company or any Subsidiary is a party, such statements are accurate summaries and
fairly present the information called for with respect to such matters.
(xix) The reports of the Company incorporated by reference in
the Registration Statement and the Prospectus or any further amendment or
supplement thereto made by the Company (other than the financial statements,
other financial data and related schedules therein, as to which such counsel
need express no opinion), when they were filed with the Commission, complied as
to form in all material respects with the requirements of the Exchange Act and
the rules and regulations of the Commission thereunder. Such counsel does not
know of any contracts, agreements, documents or instruments required to be filed
as exhibits to any such reports or described in any such reports which are not
so filed or described as required; and insofar as any statements in any such
report constitute summaries of any contract, agreement, document or instrument
to which the Company or any Subsidiary is a party, such statements are accurate
summaries and fairly present the information called for with respect to such
matters.
(xx) Such counsel knows of no legal or governmental
proceeding, pending or threatened, before any court or administrative body or
regulatory agency, to which the Trust, the Company or any of the Subsidiaries is
a party or to which any of the properties of the Trust, the Company or any of
the Subsidiaries is subject that are required to be described in the
Registration Statement or Prospectus and are not so described, or statutes or
regulations that are required to be described in the Registration Statement or
the Prospectus that are not so described.
(xxi) Neither the Company nor the Trust is, and immediately
upon completion of the sale of Capital Securities contemplated hereby, neither
the Company nor the Trust will be, an "investment company" or a company
"controlled" by an investment company under the Investment Company Act of 1940,
as amended.
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(xxii) To the best of such counsel's knowledge, neither the
Company nor any of the Subsidiaries is in violation of its respective charter or
bylaws.
Such counsel shall also state that on the basis of such counsel's review
and participation in conferences in connection with the preparation of the
Registration Statement and the Prospectus, such counsel has no reason to believe
that, as of its effective date, the Registration Statement or any further
amendment thereto made by the Offerors prior to the Closing Date, including any
document incorporated by reference in the Registration Statement, as the case
may be, (other than the financial statements and related schedules therein, as
to which such counsel need express no statement or opinion) contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that, as of its date, the Prospectus or any further amendment or supplement
thereto made by the Offerors prior to the Closing Date, including any document
incorporated by reference in the Prospectus (other than the financial statements
and related schedules therein, as to which such counsel need express no
statement or opinion) contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading or that, as
of the Closing Date, either the Registration Statement or the Prospectus or any
further amendment or supplement thereto made by the Offerors prior to the
Closing Date (other than the financial statements and related schedules therein,
as to which such counsel need express no statement or opinion) contains an
untrue statement of a material fact or omits to state a material fact necessary
to make the statements therein, in light of the circumstances in which they were
made, not misleading; and they do not know of any amendment to the Registration
Statement (or any document incorporated therein by reference) required to be
filed.
In rendering the above opinions, counsel may rely (i) as to matters of
law other than Washington and federal law, upon the opinion or opinions of local
counsel provided that the extent of such reliance is specified in such opinion
and that such counsel shall state that such opinion or opinions of local counsel
are satisfactory to them and they believe they and the Underwriters are
justified in relying thereon and (ii) as to matters of fact, upon the
representations of the Trust and the Company contained in this Agreement and
upon certificates of trustees or officers of the Trust, the Company and of
public officials.
(c) The Underwriters shall have received on the Closing Date the
opinion of White & Case, counsel to Bankers Trust Company, as Property Trustee
under the Trust Agreement, Indenture Trustee under the Indenture, and Guarantee
Trustee under the Guarantee Agreement, dated the Closing Date, addressed to the
Underwriters, to the effect that:
(i) Bankers Trust Company is duly incorporated and is validly
existing in good standing as a banking corporation under the laws of the State
of Delaware.
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(ii) Bankers Trust Company has the power and authority to
execute, deliver and perform its obligations under the Trust Agreement, the
Indenture and the Guarantee Agreement.
(iii) Each of the Trust Agreement, the Indenture and the
Guarantee Agreement has been duly authorized, executed and delivered by Bankers
Trust Company and constitutes a legal, valid and binding obligation of Bankers
Trust Company, enforceable against Bankers Trust Company, in accordance with its
terms.
(iv) The execution, delivery and performance by Bankers Trust
Company of the Trust Agreement, the Indenture and the Guarantee Agreement do not
conflict with or constitute a breach of the charter or by-laws of Bankers Trust
Company.
(v) No consent, approval or authorization of, or registration
with or notice to, any governmental authority or agency of the State of Delaware
or the United States of America governing the banking or trust powers of Bankers
Trust Company is required for the execution, delivery or performance by Bankers
Trust Company of the Trust Agreement, the Indenture and the Guarantee Agreement.
(d) The Underwriters shall have received on the Closing Date the
opinion of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger, as special Delaware counsel for the
Offerors, dated the Closing Date, addressed to the Underwriters, to the effect
that:
(i) The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Act, and all filings
required as of the date hereof under the Delaware Act with respect to the
creation and valid existence of the Trust as a business trust have been made.
(ii) Under the Trust Agreement and the Delaware Act, the Trust
has the trust power and authority to own property and to conduct its business,
all as described in the Prospectus.
(iii) The Trust Agreement constitutes a valid and binding
obligation of the Company and the Property Trustee, and is enforceable against
the Company and the Property Trustee in accordance with its terms.
(iv) Under the Trust Agreement and the Delaware Act, the Trust
has the trust power and authority (i) to execute and deliver, and to perform its
obligations under, this Agreement, and (ii) to issue, and to perform its
obligations under, the Capital Securities and the Common Securities.
(v) Under the Trust Agreement and the Delaware Act, the
execution and delivery by the Trust of this Agreement, and the performance by
the Trust of its obligations under this Agreement, have been duly authorized by
all necessary trust action on the part of the Trust.
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21
(vi) Under the Delaware Act, the certificate attached to the
Trust Agreement as Exhibit E is an appropriate form of certificate to evidence
ownership of the Capital Securities. The Capital Securities have been duly
authorized by the Trust Agreement and are duly and validly issued and, subject
to the qualifications hereinafter expressed in this paragraph (vi), fully paid
and non-assessable undivided beneficial interests in the assets of the Trust and
are entitled to the benefits of the Trust Agreement. The Common Securities have
been duly authorized by the Trust Agreement and are duly and validly issued
undivided beneficial interests in the assets of the Trust and are entitled to
the benefits of the Trust Agreement. The respective holders of the Capital
Securities and the Common Securities, as beneficial owners of the Trust, will be
entitled to the same limitation of personal liability extended to stockholders
of private corporations for profit organized under the General Corporation Law
of the State of Delaware. Such counsel may note that the respective holders of
the Capital Securities and the Common Securities may be obligated, pursuant to
the Trust Agreement, to make certain payments under the Trust Agreement.
(vii) Under the Trust Agreement and the Delaware Act, the
issuance of the Capital Securities and the Common Securities is not subject to
preemptive or similar rights.
(viii) The issuance and sale by the Trust of the Capital
Securities and the Common Securities, the purchase by the Trust of the Junior
Subordinated Debentures, the execution, delivery and performance by the Trust of
this Agreement and the Guarantee Agreement, the consummation by the Trust of the
transactions contemplated by this Agreement and compliance by the Trust with its
obligations under this Agreement do not violate (a) any of the provisions of the
Certificate of Trust or the Trust Agreement, or (b) any applicable Delaware law
or Delaware administrative regulation.
(e) The Underwriters shall have received from ▇▇▇▇▇▇ & ▇▇▇▇▇▇,
counsel for the Underwriters, an opinion dated the Closing Date, with respect to
the formation of the Trust, the validity of the Capital Securities, the
Indenture, the Trust Agreement, the Guarantee Agreement, this Agreement, the
Registration Statement, the Prospectus, and other related matters as the
Underwriters may reasonably request, and such counsel shall have received such
papers and information as they may reasonably request to enable them to pass
upon such matters.
(f) The Underwriters shall have received on each of the date
hereof and the Closing Date a signed letter, dated as of the date hereof or the
Closing Date in form and substance satisfactory to the Underwriters, from
Coopers & ▇▇▇▇▇▇▇, L.L.P., to the effect that they are independent public
accountants with respect to the Trust, the Company and the Subsidiaries within
the meaning of the Act and the related rules and regulations and 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.
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(g) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date there shall not have been any change or any
development involving a reasonably foreseeable change, in or affecting the
general affairs, management, financial position, shareholders' equity or results
of operations of the Offerors otherwise than as set forth or contemplated in the
Prospectus, the effect of which, in the Underwriters' reasonable judgment, is
material and adverse to the Offerors and makes it impracticable or inadvisable
to proceed with the public offering or the delivery of the Capital Securities
being delivered at the Closing Date on the terms and in the manner contemplated
in the Prospectus.
(h) The Underwriters shall have received on the Closing Date a
certificate or certificates of the chief executive officer and the chief
financial officer of the Company, to the effect that, as of the Closing Date
each of them severally represents as follows:
(i) The Prospectus was filed with the Commission pursuant to
Rule 424(b) within the applicable period prescribed for such filing by the rules
and regulations under the Act and in accordance with Section 4 of this
Agreement; no stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for such purpose have been
initiated or are, to his knowledge, threatened by the Commission.
(ii) The representations and warranties of the Company set
forth in Section 1 of this Agreement are true and correct at and as of the
Closing Date and the Company has performed all of its obligations under this
Agreement to be performed at or prior to the Closing Date.
(i) The Underwriters shall have received on the Closing Date a
certificate of the Administrators to the effect that, as of the Closing Date
each of them severally represents as follows:
(i) The Prospectus was filed with the Commission pursuant to
Rule 424(b) within the applicable period prescribed for such filing by the rules
and regulations under the Act and in accordance with Section 4 of this
Agreement; no stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for such purpose have been
initiated or are, to his knowledge, threatened by the Commission.
(ii) The representations and warranties of the Trust set forth
in Section 1 of this Agreement are true and correct at and as of the Closing
Date and the Trust has performed all of its obligations under this Agreement to
be performed at or prior to the Closing Date.
(j) The Offerors shall have furnished to the Underwriters such
further certificates and documents as the Underwriters may reasonably have
requested.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
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23
material respects reasonably satisfactory to the Underwriters and to ▇▇▇▇▇▇ &
▇▇▇▇▇▇, counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Underwriters by notifying the Trust of such termination in writing or by
telegram at or prior to the Closing Date. In such event, the Trust and the
Underwriters shall not be under any obligation to each other (except to the
extent provided in Sections 5 and 7 hereof).
7. Indemnification.
(a) The Offerors jointly and severally agree to indemnify and hold
harmless each Underwriter, each officer and director thereof, and each person,
if any, who controls any Underwriter within the meaning of the Act, against any
losses, claims, damages or liabilities to which such Underwriter or such persons
may became subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus or the Prospectus, including any amendments or supplements thereto,
(ii) the omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein not misleading
in light of the circumstances under which they were made, or (iii) any act or
failure to act or any alleged act or failure to act by any Underwriter in
connection with, or relating in any manner to, the Capital Securities or the
offering contemplated hereby, and which is included as part of or referred to in
any losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) arising out of or based upon matters covered by clause (i) or (ii)
above, and will reimburse each Underwriter and each such controlling person for
any legal or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating or defending any such action
or claim as such expenses are incurred; provided, however, that the Offerors
shall not be liable (1) in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement, or omission or alleged omission, made in the
Registration Statement, any Preliminary Prospectus or the Prospectus, including
any amendments or supplements thereto, in reliance upon and in conformity with
written information furnished to the Offerors by any Underwriter specifically
for use therein or (2) in the case of any matter covered by clause (iii) above
to the extent that it is determined in a final judgment by a court of competent
jurisdiction that such losses, claims, damages or liabilities resulted directly
from any such acts or failures to act undertaken or omitted to be taken by such
Underwriter through its gross negligence or willful misconduct.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Offerors and the trustees and directors and officers who have signed the
Registration Statement, and each person, if any, who controls the Offerors
within the meaning of the Act, against any losses, claims, damages or
liabilities to which the Offerors or any such person may become subject under
the Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or
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24
proceedings in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances under which they were made, and will reimburse any legal or
other expenses reasonably incurred by the Offerors or any such person in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that each Underwriter will be liable
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission has been made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Trust or the Company by or through the Underwriters
specifically for use therein. The obligations of the Underwriters under this
Section 7(b) are several in proportion to their respective underwriting
obligations and not joint.
(c) The Company agrees to indemnify the Trust against all loss,
liability, claim damage and expense whatsoever, which may become due from the
Trust under subsection (a).
(d) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity or contribution may be sought pursuant to this Section 7, such person
(the "indemnified party") shall notify the person against whom such indemnity
may be sought (the "indemnifying party") in writing within fifteen (15) days of
the receipt of notice of such proceeding. No indemnification provided for in
Section 7(a) or (b) or contribution provided for in Section 7(e) shall be
available with respect to a proceeding to any party who shall fail to give
notice of such proceeding as provided in this Section 7(d) if the party to whom
notice was not given was unaware of the proceeding to which such notice would
have related and was prejudiced by the failure to give such notice, but the
failure to give such notice shall not relieve the indemnifying party or parties
from any liability which it or they may have to the indemnified party otherwise
than on account of the provisions of Section 7(a) or (b). In case any such
proceeding shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party
and shall pay as incurred the fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel at its own expense. Notwithstanding the
foregoing, the indemnifying party shall pay promptly as incurred the reasonable
fees and expenses of the counsel retained by the indemnified party in the event
(i) the indemnifying party and the indemnified party shall have mutually agreed
to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and the representation of both parties by the same
counsel would, under applicable rules
- 24 -
25
of professional conduct, be inappropriate due to actual or potential conflicts
between them. It is understood that the indemnifying party shall not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm at any time
for all such indemnified parties. Such firm shall be designated in writing by
the Underwriters and shall be reasonably satisfactory to the Offerors in the
case of parties indemnified pursuant to Section 7(a) and shall be designated in
writing by the Offerors and shall be reasonably satisfactory to the Underwriters
in the case of parties indemnified pursuant to Section 7(b). The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
(e) If the indemnification provided for in this Section 7 is
unavailable (other than by reason of the exception set forth in the second
sentence of Section 7(d) hereof) or insufficient to hold harmless an indemnified
party under Section 7(a) or (b) above in respect of any losses, claims, damages
or liabilities (or actions or proceedings in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Offerors on the
one hand and the Underwriters on the other from the offering of the Capital
Securities. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Offerors on the one hand and the Underwriters on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Offerors on the one hand and the Underwriters on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Offerors bears to
the total underwriting discounts and commissions received by the Underwriters,
in each case as set forth on the cover page of the Prospectus. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Offerors on the one hand or the Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Offerors and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this Section
7(e) 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(e). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions or proceedings
in respect thereto) referred to above in this Section 7(e) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action
- 25 -
26
or claim. Notwithstanding the provisions of this Section 7(e), no Underwriter
shall be required to contribute any amount in excess of the underwriting
discounts and commissions applicable to the Capital Securities purchased by such
Underwriter; and no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this Section 7(e) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(f) The obligations of the Offerors under this Section 7 shall be
in addition to any liability which the Offerors may otherwise have, and the
obligations of the Underwriters under this Section 7 shall be in addition to any
liability which the Underwriters may otherwise have.
8. Notices. All communications hereunder shall be in writing and,
except as otherwise provided herein, will be mailed, delivered or telegraphed
and confirmed as follows: if to the Underwriters, to them c/o ▇▇▇▇ ▇▇▇▇▇▇▇▇
Incorporated, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: J.
▇▇▇▇▇ ▇▇▇▇▇, Managing Director, with a copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq., ▇▇▇▇▇▇ &
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇; if to the Company, to
Sterling Financial Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President of Finance, with a copy
to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., Witherspoon, Kelley, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇.▇., ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and if to the Trust, to c/o
Sterling Financial Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President of Finance. All notices
given by telegram shall be promptly confirmed by letter. Any notice to the Trust
shall also be copied to the Company at the address previously stated, Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President-Finance. Any party may change its address
for notice purposes by written notice to the other parties.
9. Termination. (a) This Agreement may be terminated by the
Underwriters by notice to the Offerors or by the Company, by notice to the
Underwriters at any time prior to the earlier of (i) the time the Capital
Securities are released by the Underwriters for sale or (ii) 10:00 A.M., Spokane
time, on the first business day following the later of the date on which the
Registration Statement became effective or the date of this Agreement.
(b) The Underwriters may also terminate this Agreement at any time
prior to the Closing Date if any of the following has occurred: (i) since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, any material adverse change in or affecting the condition,
financial or otherwise, of the Trust, the Company and the Subsidiaries taken as
a whole or the business affairs, management, financial position, shareholders'
equity or results of operations of the Trust, the Company and the Subsidiaries
taken as a whole, whether or not arising in the ordinary course of business,
(ii) any outbreak or escalation of hostilities or declaration of war or national
emergency after the date hereof or other national or international calamity or
crisis or change in economic or political conditions if the effect of such
outbreak, escalation, declaration, emergency, calamity, crisis or change on the
financial markets of the United States would, in the Underwriters' judgment,
make the
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27
offering or delivery of the Capital Securities impracticable or inadvisable,
(iii) suspension of trading in securities on the New York Stock Exchange or the
American Stock Exchange or limitation on prices (other than limitations on hours
or numbers of days of trading) for securities on either such Exchange, or a halt
or suspension of trading in securities generally which are quoted on Nasdaq,
(iv) declaration of a banking moratorium by either federal authorities or New
York or Washington state authorities, or the failure of any of the conditions
provided for in Section 6 of this Agreement.
10. Written Information. For all purposes under this Agreement
(including, without limitation, Section 1, Section 3 and Section 7 hereof), the
Offerors understand and agree with each of the Underwriters that the following
constitutes the only written information furnished to the Offerors by the
Underwriters specifically for use in preparation of the Registration Statement,
any Preliminary Prospectus, the Prospectus, or any amendment or supplement
thereto: (i) the per share "Price to Public" and per share "Underwriting
Discounts and Commissions" set forth on the cover page of the Prospectus, (ii)
the information relating to stabilization set forth on page 4 of the Preliminary
Prospectus and the Prospectus, and (iii) the information set forth in the third
and sixth paragraphs under the caption "Underwriting" in the Preliminary
Prospectus and the Prospectus.
11. Successors. This Agreement has been and is made solely for the
benefit of and shall be binding upon the Underwriters, the Trust and the Company
and their respective successors, executors, administrators, heirs and assigns,
and the trustees and controlling persons and the officers and directors of any
such controlling person referred to herein, and no other person will have any
right or obligation hereunder. The term "successors" shall not include any
purchaser of the Capital Securities merely because of such purchase.
12. Miscellaneous. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or controlling person thereof, or by or on behalf of
the Offerors or controlling persons thereof and (c) delivery of and payment for
the Capital Securities under this Agreement.
Each provision of this Agreement shall be interpreted in such a manner
as to be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable under any applicable
law or rule in any jurisdiction, such provision will be ineffective only to the
extent of such invalidity, illegality or unenforceability in such jurisdiction
or any provision hereof in any other jurisdiction.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Washington.
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28
If the foregoing letter is in accordance with the Underwriters'
understanding of our agreement, please sign and return to us the enclosed
duplicates hereof, whereupon it will become a binding agreement among the
Offerors and the Underwriters in accordance with its terms.
Very truly yours,
STERLING CAPITAL TRUST I,
a Delaware business trust
By:_______________________________
Name:
Title: Administrator
STERLING FINANCIAL CORPORATION
By:_______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Chief Executive Officer
The foregoing Underwriting Agreement
is hereby confirmed and accepted as of
the date first above written.
▇▇▇▇ ▇▇▇▇▇▇▇▇ INCORPORATED
▇▇▇▇▇ ▇▇▇▇▇▇▇ INC.
By: ▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated
By:
_________________________________
J. ▇▇▇▇▇ ▇▇▇▇▇, Managing Director
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29
SCHEDULE A
Schedule of Underwriters
Number of
Capital Securities
Underwriter to be Purchased
----------- ---------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated............ _________
▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc..................... _________
Total 1,600,000
=========
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