1
EXHIBIT 1.1
A&K Draft 10/23/98
1,000,000 TRUST PREFERRED SECURITIES(1)
KBK CAPITAL TRUST I
(LIQUIDATION AMOUNT $25 PER TRUST PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
KBK CAPITAL CORPORATION
UNDERWRITING AGREEMENT
November ___, 1998
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
J.J.B. ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, INC.
as Representatives of the several Underwriters named in Schedule I hereto
c/o Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
KBK Capital Trust I, a statutory business trust formed under the laws
of the State of Delaware (the "Trust"), and KBK Capital Corporation, a Delaware
corporation (the "Company"), each confirms its agreement with each of the
Underwriters listed on Schedule I hereto (collectively, the "Underwriters"),
for whom Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc. and J.J.B. ▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇, Inc. are acting as representatives (in such capacity, the
"Representatives"), with respect to (i) the sale by the Trust of 1,000,000 of
its % Trust Preferred Securities (liquidation amount $25 per Trust
Preferred Security) (the "Initial Securities"), representing preferred
undivided beneficial interests in the assets of the Trust, guaranteed on a
subordinated basis by the Company as to the payment of distributions, and as to
payments on liquidation and redemption, to the extent set forth in a guarantee
agreement (the "Preferred Guarantee") between the Company and The First
National Bank of Chicago, as guarantee trustee (the "Guarantee Trustee"), and
the purchase by the Underwriters, acting severally and not jointly, of the
respective number of Trust Preferred Securities set forth opposite the names of
the Underwriters in Schedule I hereto, and (ii) the grant of the option
described in Section 1(b) hereof to purchase all or any part of an additional
150,000 Trust Preferred Securities to cover over- allotments (the "Option
Securities"), if any, from the Trust to the Underwriters, acting severally and
not jointly. The 1,000,000 Trust Preferred Securities to be
----------
(1) Plus an option from the Trust and the Company to purchase up to an
additional 150,000 Trust Preferred Securities.
2
purchased by the Underwriters and all or any part of the 150,000 Trust
Preferred Securities subject to the option described in Section l(b) hereof are
hereinafter called, collectively, the "Securities". The Trust will purchase,
with the proceeds of the sale of the Securities and 30,000 (or 34,500 assuming
full exercise by the Underwriters of the over- allotment option described
herein) of its % Trust Common Securities (liquidation amount $25 per
Trust Common Security) (the "Common Securities"), $25,750,000 aggregate
principal amount (or $29,612,500 aggregate principal amount assuming full
exercise by the Underwriters of the over-allotment option described herein) of
% Subordinated Debentures due 2028 (the "Debentures") of the Company, to be
issued pursuant to an Indenture to be dated as of November ___, 1998 (the
"Indenture") between the Company and The First National Bank of Chicago, as
trustee (the "Indenture Trustee").
Immediately after the Closing Time (as defined below), the Company will
be the holder of all of the Common Securities. The Common Securities will
represent subordinated undivided beneficial interests in the assets of the
Trust, guaranteed on a subordinated basis by the Company as to the payment of
distributions, and as to payments on liquidation and redemption, to the extent
set forth in a guarantee agreement (the "Common Guarantee," and together with
the Preferred Guarantee, the "Guarantees") between the Company and The First
National Bank of Chicago. The Trust will be subject to the provisions of an
Amended and Restated Declaration of Trust (the "Declaration") to be dated as of
November ___, 1998 among the Company, as sponsor of the Trust, The First
National Bank of Chicago, as property trustee (the "Property Trustee"),
Wilmington Trust Company, as Delaware trustee (the "Delaware Trustee"), and
three individual trustees who are officers of the Company (the "Administrative
Trustees"). The Property Trustee, the Delaware Trustee and the Administrative
Trustees are collectively referred to herein as the "Trustees."
The Trust and the Company understand that the Underwriters propose to
make a public offering of the Securities as soon as the Underwriters deem
advisable after this Agreement has been executed and delivered.
The Trust and the Company have filed with the Securities and Exchange
Commission (the "Commission"), a registration statement on Form S-2 (Nos.
333-65041 and 333-65041-01), and a related preliminary prospectus for the
registration of the Securities, the Debentures and the Preferred Guarantee under
the Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations thereunder (the "Securities Act Regulations"). The Trust and the
Company have prepared and filed such amendments thereto, if any, and such
amended preliminary prospectuses, if any, as may have been required to the date
hereof, and will file such additional amendments thereto and such amended
prospectuses as may hereafter be required. The registration statement has been
declared effective under the Securities Act by the Commission. The registration
statement as amended at the time it became effective (including all information
deemed (whether by incorporation by reference or otherwise) to be a part of the
registration statement at the time it became effective pursuant to Rule 430A(b)
of the Securities Act Regulations) is hereinafter called the "Registration
Statement," except that, if the Trust and the Company file a post-effective
amendment to such registration statement which becomes effective prior to the
Closing Time, "Registration Statement" shall refer to such registration
statement as so amended. Any registration
2
3
statement filed pursuant to Rule 462(b) of the Securities Act Regulations is
hereinafter called the "Rule 462(b) Registration Statement," and after such
filing the term "Registration Statement" shall include the 462(b) Registration
Statement. Each prospectus included in the Registration Statement, or
amendments thereof or supplements thereto, before it became effective under the
Securities Act and any prospectus filed with the Commission by the Trust and
the Company with the consent of the Underwriters pursuant to Rule 424(a) of the
Securities Act Regulations is hereinafter called the "Preliminary Prospectus."
The term "'Prospectus" means the final prospectus, as first filed with the
Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the Securities
Act Regulations, and any amendments thereof or supplements thereto. The
Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus.
The Trust, the Company and the Underwriters agree as follows:
SECTION 1. Sale and Purchase.
(a) Initial Securities. Upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per Trust Preferred Security of $25.00, the Trust and the Company agree
that the Trust shall sell to each of the Underwriters the Initial Securities and
each of the Underwriters agrees, severally and not jointly, to purchase from the
Trust the number of Initial Securities set forth in Schedule I opposite such
Underwriter's name, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 8 hereof, subject in each case, to such adjustments among the
Underwriters as the Representatives in their sole discretion shall make to
eliminate any sales or purchases of fractional Trust Preferred Securities.
(b) Option Securities. In addition, upon the basis of the warranties
and representations and other terms and conditions herein set forth, at the
purchase price per Trust Preferred Security set forth in paragraph (a), the
Trust hereby grants an option to purchase to the Underwriters, acting severally
and not jointly, up to an additional 150,000 Trust Preferred Securities. The
option hereby granted will expire 30 days after the date hereof and may be
exercised in whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Securities upon notice by the Representatives to the
Trust and the Company setting forth the number of Option Securities as to which
the several Underwriters are then exercising the option and the time and date of
payment and delivery for such Option Securities. Any such time and date of
delivery (a "Date of Delivery") shall be determined by the Representatives, but
shall not be later than three full business days (or earlier, without the
consent of the Company, than two full business days) after the exercise of said
option, nor in any event prior to the Closing Time, as hereinafter defined. If
the option is exercised as to all or any portion of the Option Securities, each
of the Underwriters, acting severally and not jointly, will purchase that
proportion of the total number of Option Securities then being purchased which
the number of Initial Securities set forth in Schedule I opposite the name of
such Underwriter bears to the total number of Initial Securities, subject in
each case to such adjustments among the Underwriters as the Representatives in
their sole discretion shall make to eliminate any sales or purchases of
fractional
3
4
Trust Preferred Securities. The Underwriters may from time to time increase or
decrease the public offering price of the Option Securities after the initial
public offering to such extent as the Underwriters may determine.
(c) Underwriting Compensation. As compensation to the Underwriters for
their commitments hereunder, and in view of the fact that the proceeds of the
sale of the Securities will be used by the Trust to purchase the Debentures of
the Company, the Company at the Closing Time or any Date of Delivery (as
hereinafter defined) shall pay to Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc., for
the respective accounts of the several Underwriters, an amount equal to $_______
per Trust Preferred Security for the Securities delivered by the Trust pursuant
hereto at the Closing Time or any Date of Delivery.
SECTION 2. Payment and Delivery. The Securities shall be represented by
one or more definitive global securities in book-entry form which will be
deposited by or on behalf of the Trust with The Depository Trust Company ("DTC")
or its designated custodian. The Trust shall deliver the Securities, with any
transfer taxes thereon duly paid by the Trust, to Friedman, Billings, ▇▇▇▇▇▇ &
Co., Inc. through the facilities of DTC for the respective accounts of the
several Underwriters, against payment to the Trust of the purchase price
therefor by wire transfer of immediately available funds or certified or
official bank check payable in federal (same-day) funds. Such payment and
delivery with respect to the Initial Securities shall be made at 9:30 a.m., New
York City time, on the third (fourth, if pricing occurs after 4:30 p.m., New
York City time) business day after the date hereof (unless another time, not
later than ten business days after such date, shall be agreed to by the
Representatives and the Company). The time at which such payment and delivery
are actually made is hereinafter sometimes called the "Closing Time." In
addition, in the event that the Underwriters have exercised their option, if
any, to purchase any or all of the Option Securities, payment of the purchase
price for, and delivery of such Option Securities, shall be made at the place as
shall be agreed upon by the Representatives and the Company, on the relevant
Date of Delivery determined pursuant to Section 1(b) and as specified in the
notice from the Representatives to the Company. The global certificates
representing the Securities shall be made available to the Representatives for
examination at least one full business day preceding the Closing Time or Date of
Delivery, as the case may be, at the office of DTC or its designated custodian
(the "Designated Office").
The documents to be delivered at Closing Time or any Date of Delivery
on behalf of the parties hereto pursuant to Section 6 of this Agreement, shall
be delivered at the offices of [▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇.,
▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇], and the Securities will be delivered at the
Designated Office, all at Closing Time or such Date of Delivery, as the case may
be.
SECTION 3. Representations and Warranties of the Trust and the Company.
(a) The Trust and the Company, jointly and severally, represent and
warrant to the Underwriters that:
4
5
(i) The Trust and the Company meet the requirements for use of Form S-2
under the Securities Act. Each of the Registration Statement and any Rule 462(b)
Registration Statement has become effective under the Securities Act and no stop
order suspending the effectiveness of the Registration Statement or any Rule
462(b) Registration Statement has been issued under the Securities Act and no
proceedings for that purpose have been instituted or are pending or, to the
knowledge of the Trust or the Company, are threatened by the Commission, and any
request on the part of the Commission for additional information has been
complied with.
(ii) The Preliminary Prospectus and the Registration Statement comply
and the Prospectus and any further amendments or supplements thereto will, when
they have become effective or are filed with the Commission, as the case may be,
comply in all material respects with the requirements of the Securities Act and
the Securities Act Regulations; the Registration Statement did not, and any
amendment thereto will not, in each case as of the applicable effective date,
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. At the date of the Prospectus, at the Closing Time and at each Date
of Delivery, if any, the Prospectus and any amendments and supplements thereto
did not and will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(iii) The Preliminary Prospectus was and the Prospectus delivered to
the Underwriters for use in connection with the offering of the Securities will,
at the time of such delivery, be identical to the electronically transmitted
copies thereof filed with the Commission pursuant to the Electronic Data
Gathering Analysis and Retrieval System ("▇▇▇▇▇"), except to the extent
permitted by Regulation S-T.
(iv) The documents incorporated or deemed to be incorporated by
reference in the Registration Statement and the Prospectus, at the time they
were filed with the Commission complied in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the Commission thereunder (the "Exchange
Act Regulations") and, when read together with the other information in the
Prospectus, at the date of the Prospectus, at the Closing Time and at each Date
of Delivery, if any, did not include an untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in the
light of the circumstances in which they were made, not misleading.
(v) KPMG Peat Marwick LLP, who certified the consolidated financial
statements of the Company and its subsidiaries included or incorporated by
reference in the Registration Statement and Prospectus, are independent public
accountants as required by the Securities Act and the Securities Act
Regulations.
(vi) The financial statements, including the related schedules and
notes, included or incorporated by reference in the Registration Statement and
the Prospectus present fairly the consolidated financial position of Company and
its subsidiaries as of the dates indicated and the
5
6
consolidated results of operations and stockholders' equity and cash flows of
the Company and its subsidiaries for the periods specified. Such financial
statements have been prepared in conformity with generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved.
The supporting schedules included or incorporated by reference in the
Registration Statement and the Prospectus present fairly in accordance with
GAAP the information required to be stated therein. The selected financial
data and the summary financial information included in the Prospectus fairly
present the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in the
Registration Statement and the Prospectus.
(vii) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as may be
otherwise stated therein, there has not been (A) any material adverse change in
the assets, business, operations, earnings, prospects, properties or condition
(financial or otherwise), of the Company and its subsidiaries taken as a whole,
whether or not arising in the ordinary course of business, (B) any transaction,
not in the ordinary course of business, which is material to the Company and
its subsidiaries taken as a whole, entered into by the Company or any of its
subsidiaries, (C) any obligation, contingent or otherwise, directly or
indirectly incurred by the Company or any of its subsidiaries, which is
material to the Company and its subsidiaries taken as a whole or (D) any
dividend or distribution of any kind declared, paid or made by the Company on
any class of its capital stock.
(viii) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware with
full corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement and
Prospectus and to execute and deliver this Agreement, the Guarantees, the
Declaration and the Indenture and to consummate the transactions contemplated
hereby and thereby.
(ix) KBK Financial Corporation, Inc., a Delaware corporation, and KBK
Receivables Corporation, a Delaware corporation (together, the "Subsidiaries"),
are the only subsidiaries of the Company and each such Subsidiary has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the State of Delaware with full corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Registration Statement and Prospectus.
(x) The Company and the Subsidiaries are duly qualified or licensed by
each jurisdiction in which they conduct their respective businesses and in which
the failure, individually or in the aggregate, to be so qualified or licensed
could have a material adverse effect on the assets, business, operations,
earnings, prospects, properties or condition (financial or otherwise) of the
Company and the Subsidiaries taken as a whole, and the Company and the
Subsidiaries are duly qualified, and are in good standing, in each jurisdiction
in which they own or lease real property or maintain an office and in which such
qualification is necessary, except where the failure to be so qualified and in
good standing would not have a material adverse effect on the assets, business,
operations, earnings, prospects, properties or condition (financial or
otherwise) of the Company and the Subsidiaries
6
7
taken as a whole. Except as disclosed in the Prospectus, neither Subsidiary is
prohibited or restricted, directly or indirectly, from paying dividends to the
Company, or from making any other distribution with respect to such
Subsidiary's capital stock or from repaying to the Company or any other
Subsidiary any amounts which may from time to time become due under any loans
or advances to such Subsidiary from the Company or such other Subsidiary, or
from transferring any such Subsidiary's property or assets to the Company or to
the other Subsidiary. Other than as disclosed in the Prospectus, the Company
does not own, directly or indirectly, any capital stock or other equity
securities of any other corporation or any ownership interest in any
partnership, joint venture or other association which would constitute a
"significant subsidiary" as defined by Rule 102 of Regulation S-X.
(xi) The Trust has been duly created and is validly existing as a
statutory business trust in good standing under the Business Trust Act of the
State of Delaware (the "Delaware Business Trust Act") with the trust power and
authority to own property and conduct its business as described in the
Registration Statement and Prospectus, and has conducted and will conduct no
business other than the transactions contemplated by this Agreement and
described in the Registration Statement and the Prospectus. The Trust is not a
party to or bound by any agreement or instrument other than this Agreement, the
Declaration and the agreements and instruments contemplated by the Declaration
and described in the Prospectus. Based on expected operations and current law,
the Trust will be classified for United States federal income tax purposes as a
grantor trust and will not be taxable as a corporation. The Trust is not a party
to or subject to any action, suit or proceeding of any nature.
(xii) The authorized, issued and outstanding shares of capital stock of
the Company is as set forth in the Prospectus under the caption "Capitalization"
under the column entitled "Actual." Such shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable, and none of such shares of capital stock was issued in violation
of preemptive or other similar rights of any securityholder of the Company.
Except as disclosed in the Prospectus, there are no outstanding (i) securities
or obligations of the Company convertible into or exchangeable for any capital
stock of the Company, (ii) warrants, rights or options to subscribe for or
purchase from the Company any such capital stock or any such convertible or
exchangeable securities or obligations, or (iii) obligations of the Company to
issue any shares of capital stock, any such convertible or exchangeable
securities or obligations, or any such warrants, rights or options.
(xiii) The outstanding shares of capital stock of the Subsidiaries have
been duly authorized and validly issued and are fully paid and non-assessable,
and none of such shares of capital stock was issued in violation of preemptive
or other similar rights of any security holder of any Subsidiary. There are no
(i) securities or obligations of any of the Subsidiaries convertible into or
exchangeable for any capital stock of any Subsidiary, (ii) warrants, rights or
options to subscribe for or purchase from any of the Subsidiaries any such
capital stock or any such convertible or exchangeable securities or obligations,
or (iii) obligations of any of the Subsidiaries to issue any shares of capital
stock, any such obligations, or any warrants, rights or options. All of the
issued and outstanding
7
8
capital stock of each Subsidiary is owned by the Company, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity.
(xiv) This Agreement has been duly authorized, executed and delivered
by the Trust and the Company and is a legal, valid and binding agreement of the
Trust and the Company enforceable in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, and by general principles of equity, and
except to the extent that the indemnification and contribution provisions of
Section 9 hereof may be limited by federal or state securities laws and public
policy considerations in respect thereof.
(xv) The Securities have been duly and validly authorized by the Trust,
and, when issued and delivered to the Underwriters against payment therefor as
provided herein, will be duly and validly issued and fully paid and
non-assessable undivided preferred beneficial interests in the assets of the
Trust and will conform in all material respects to the description thereof
contained in the Prospectus. The issuance of the Securities is not subject to
preemptive or other similar rights. The Securities will have the rights set
forth in the Declaration, and the terms of the Securities are valid and binding
on the Trust. The holders of the Securities will be entitled to the same
limitation of personal liability extended to the stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware.
(xvi) The Common Securities have been duly and validly authorized by
the Trust and upon delivery by the Trust to the Company against payment therefor
as described in the Prospectus, will be duly and validly issued undivided
subordinated beneficial interests in the assets of the Trust and will conform in
all material respects to the description thereof contained in the Prospectus;
the issuance of the Common Securities is not subject to preemptive or other
similar rights; and at the Closing Time and each Date of Delivery, if any, 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, claim, lien,
encumbrance or adverse interest of any nature, other than rights of the Company
arising under the Declaration to redeem the Common Securities; and the Common
Securities and the Securities are the only interests authorized to be issued by
the Trust.
(xvii) Each of the Guarantees, the Declaration and the Indenture
(collectively, the "Guarantor Agreements") has been duly authorized and when
validly executed and delivered by the Company and, in the case of the Guarantee,
by the Guarantee Trustee and, in the case of the Debentures, when validly
authenticated and delivered by the Debenture Trustee and, in the case of the
Guarantee, upon due execution, authentication and delivery of the Debentures and
upon payment therefor, will constitute valid and legally binding obligations of
the Company, enforceable in accordance with their respective terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and general principles of equity. Each of the Preferred Guarantee, the
Declaration and the Indenture has been duly qualified under the Trust Indenture
Act of 1939, as amended.
8
9
(xviii) The Debentures have been duly authorized and at Closing Time
and on each Date of Delivery, if any, will have been validly executed and
delivered by the Company. When the Debentures have been executed and
authenticated in accordance with the provisions of the Indenture and delivered
to and paid for by the Trust in accordance with the terms of this Agreement and
as described in the Prospectus, the Debentures will be entitled to the benefits
of the Indenture and will be valid and binding obligations of the Company,
enforceable in accordance with the their terms except as the enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium, or similar
laws affecting creditors' rights generally and general principles of equity.
(xix) Neither the Company nor either of the Subsidiaries is (A) in
violation of the Declaration or its charter or bylaws or (B) in breach or
default (nor has any event occurred which with notice, lapse of time, or both
would constitute a breach of, or default), in the performance or observance of
any obligation, agreement, covenant or condition contained in any contract,
license, indenture, mortgage, deed of trust, note, loan or credit agreement or
other agreement or instrument to which the Company or either of the Subsidiaries
is a party or by which any of them is bound or to which any of the property or
assets of the Trust, the Company or the Subsidiaries is subject, except for such
breaches or defaults which would not have a material adverse effect on the
assets, business, operations, earnings, prospects, properties or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole.
(xx) The execution, delivery and performance of this Agreement by the
Trust, the compliance by the Trust with all the provisions hereof and the
consummation of the transactions contemplated hereby and by the Declaration,
including the issuance and sale of the Securities and the Common Securities by
the Trust, the purchase of the Debentures by the Trust and the distribution of
the Debentures by the Trust in the circumstances contemplated by the Declaration
will not (A) require any consent, approval, authorization or other order of, or
qualification with, any court or governmental body or agency (except such as may
be required under the securities or Blue Sky laws of the various states), (B)
constitute a breach of any of the terms or provisions of, or a default under,
the charter or by-laws of the Company or either Subsidiary or any indenture,
loan agreement, mortgage, lease or other agreement or instrument that is
material to the Company and the Subsidiaries taken as a whole to which the
Company or either Subsidiary is a party or by which the Company or either
Subsidiary or their respective property is bound, (C) violate any applicable law
or any rule, regulation, judgment, order or decree of any court or any
governmental body or agency having jurisdiction over the Company, any Subsidiary
or their respective property, or (D) result in the imposition or creation of (or
the obligation to create or impose) a security interest, claim, lien,
encumbrance or adverse interest of any nature (each a "Lien"), under any
agreement or instrument to which the Company or either Subsidiary is a party or
by which the Company or either Subsidiary or their respective property is bound.
(xxi) The execution, delivery and performance of this Agreement, the
Debentures and the Guarantor Agreements by the Company, the compliance by the
Company with all the provisions hereof and thereof and the consummation of the
transactions contemplated hereby and thereby
9
10
including the issuance and sale of the Securities and the Common Securities by
the Trust, the sale of the Debentures by the Company to the Trust, the
distribution of the Debentures by the Trust in the circumstance contemplated by
the Declaration and the issuance by the Company of the Guarantees will not (A)
require any consent, approval, authorization or other order of, or
qualification with, any court or governmental body or agency (except such as
have been made or received and except such as may be required under the
securities or Blue Sky laws of the various states), (B) constitute a breach of
any of the terms or provisions of, or a default under, the charter or by-laws
of the Company or either Subsidiary or any indenture, loan agreement, mortgage,
lease or other agreement or instrument that is material to the Company and the
Subsidiaries taken as a whole to which the Company or either Subsidiary is a
party or by which the Company or either Subsidiary or their respective property
is bound, (C) violate any applicable law or any rule, regulation, judgment,
order or decree of any court or any governmental body or agency having
jurisdiction over the Company, either Subsidiary or their respective property
or (D) result in the imposition or creation of (or the obligation to create or
impose) a Lien (excluding any right of redemption of the Company arising under
the Declaration, the Indenture or the Debentures) under any agreement or
instrument to which the Company or either Subsidiary is a party or by which the
Company or either Subsidiary or their respective property is bound.
(xxii) There are no existing or, to the knowledge of the Company,
threatened labor disputes with the employees of the Company or either of the
Subsidiaries which are likely to have individually or in the aggregate a
material adverse effect on assets, business, operations, earnings, prospects,
properties or condition (financial or otherwise) of the Company and the
Subsidiaries taken as a whole.
(xxiii) There are no actions, suits, proceedings, inquiries or
investigations pending or, to the knowledge of the Company, threatened against
the Company or either of the Subsidiaries or any of their respective officers
and directors or to which the properties, assets or rights of any such entity
are subject, at law or in equity, before or by any federal, state, local or
foreign governmental or regulatory commission, board, body, authority, arbitral
panel or agency which are required to be disclosed in the Registration Statement
and the Prospectus, or which might be reasonably expected to result in a
judgment, decree, award or order having a material adverse effect on the assets,
business, operations, earnings, prospects, properties or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole.
(xxiv) The descriptions in the Registration Statement and the
Prospectus of the contracts and other legal documents therein described present
fairly the information required to be shown, and there are no contracts or
documents which are required to be described in the Registration Statement, the
Prospectus or the documents incorporated by reference therein or to be filed as
exhibits to the Registration Statement which have not been so described and
filed as required.
(xxv) No filing with, or authorization, approval, consent, license,
order registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign, is necessary or required for the
performance by the Trust or the Company of their respective
10
11
obligations under this Agreement, the Guarantee, the Declaration or the
Indenture or in connection with the transactions contemplated under this
Agreement, the Guarantee, the Declaration and the Indenture, except such as
have been already obtained or as may be required under state securities laws.
(xxvi) The Company and the Subsidiaries own or possess adequate
patents, licenses or other rights to use all patents, trademarks, service marks,
trade names, copyrights, software and design licenses, trade secrets,
manufacturing processes, other intangible property rights and know-how
(collectively "Intangibles") necessary to entitle the Company and each
Subsidiary to conduct its business as described in the Prospectus, and neither
the Company, nor either Subsidiary, has received notice of infringement of or
conflict with (and the Company knows of no such infringement of or conflict
with) asserted rights of others with respect to any Intangibles which could
materially and adversely affect the business, prospects, properties, assets,
results of operations or condition (financial or otherwise) of the Company and
the Subsidiaries, taken as a whole.
(xxvii) Each of the Company and the Subsidiaries possesses such
permits, licenses, accreditations, certifications, authorizations, consents and
approvals and has made all necessary filings required under any federal, state
or local law, regulation or rule, and has obtained all such permits,
authorizations, consents and approvals from other persons, necessary to conduct
their respective businesses as described in the Prospectus, except to the extent
that any failure to have any such permits, licenses, authorizations, consents or
approvals, to make any such filings or to obtain any such authorizations,
consents or approvals would not, individually or in the aggregate, have a
material adverse effect on the assets, business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the Company and
the Subsidiaries taken as a whole. Neither the Company nor either of the
Subsidiaries is in violation of, in default under, or has received any notice
regarding a possible violation, default or revocation of any such permit,
license, authorization, consent or approval or any federal, state, local or
foreign law, regulation or rule or any decree, order or judgment applicable to
the Company or either of the Subsidiaries the effect of which could be material
and adverse to the assets, business, operations, earnings, prospects, properties
or condition (financial or otherwise) of the Company and the Subsidiaries taken
as a whole; and no such permit, license, authorization, consent or approval
contains a materially burdensome restriction that is not adequately disclosed in
the Registration Statement and the Prospectus.
(xxviii) The Company and the Subsidiaries have good and marketable
title in fee simple to all real property and good title to all other property
owned by them, in each case free and clear of all liens, security interests,
pledges, claims, charges, restrictions, encumbrances, mortgages and defects of
any kind, except such as are disclosed in the Prospectus or such as do not
materially and adversely affect the value of such property and do not interfere
with the use made or proposed to be made of such property by the Company or
either of the Subsidiaries. All of the leases and subleases material to the
business of the Company and the Subsidiaries are in full force and effect, and
neither the Company nor either of the Subsidiaries has received any notice of
any material claim of any sort that has been asserted by anyone adverse to the
rights of the Company or either of the Subsidiaries under any of the leases or
subleases mentioned above, or affecting or questioning the
11
12
rights of the Company or such Subsidiary of the continued possession of the
leased or subleased premises.
(xxix) The Company and each of the Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (A)
transactions are executed in accordance with management's general or specific
authorizations; (B) transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP and to maintain asset
accountability; (C) access to assets is permitted only in accordance with
management's general or specific authorization; and (D) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(xxx) Each of the Company and the Subsidiaries has filed on a timely
basis all necessary federal, state, local and foreign income and franchise tax
returns required to be filed through the date hereof and has paid all taxes
shown as due thereon; and no tax deficiency has been asserted against the
Company or either of the Subsidiaries, nor does the Company or either of the
Subsidiaries know of any tax deficiency which is likely to be asserted against
it which if determined adversely, could materially adversely affect the
business, prospects, properties, assets, results of operations or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole.
All tax liabilities are adequately provided for on the respective books of the
Company and its Subsidiaries.
(xxxi) Each of the Company and the Subsidiaries maintain insurance
(issued by insurers of recognized financial responsibility) of the types and in
the amounts generally deemed adequate for their respective businesses and
consistent with insurance coverage maintained by similar companies in similar
businesses, all of which insurance is in full force and effect.
(xxxii) The Company is not, and after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof 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 (the "Investment Company Act").
(xxxiii) Except as otherwise stated in the Registration Statement and
the Prospectus and except as would not, singly or in the aggregate, materially
adversely affect the business prospects, properties, assets, results of
operations or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole (A) neither the Company nor either of the
Subsidiaries is in violation of any federal, state, local or foreign statute,
law, rule, regulation, ordinance, code, policy or rule of common law or any
judicial or administrative interpretation thereof including any judicial or
administrative order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating to the
release or threatened release of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively,
12
13
"Environmental Laws"), (B) the Company and the Subsidiaries have all permits,
authorizations and approvals required under any applicable Environmental Laws
and are each in compliance with their requirements, (C) there are no pending or
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or either of the Subsidiaries and (D) there are no events or
circumstances that might reasonably be expected to form the basis of an order
for clean-up or remediation, or an action, suit or proceeding by any private
party or governmental body or agency, against or affecting the Company or
either of its Subsidiaries relating to Hazardous Materials or any Environmental
Laws.
(xxxiv) The Securities, the Debentures and the Indenture conform in all
material respects to the statements relating thereto contained in the Prospectus
and are in substantially the form filed as an exhibit to the Registration
Statement.
(xxxv) Neither the Trust, the Company nor any of their affiliates (i)
is required to register as a "broker" or "dealer" in accordance with the
provisions of the Exchange Act or the Exchange Act Rules and Regulations, or
(ii) directly, or indirectly through one or more intermediaries, controls or has
any other association with (within the meaning of Article I of the By-laws of
the NASD) any member firm of the NASD.
(xxxvi) Neither the Company nor either of the Subsidiaries nor any
officer or director purporting to act on behalf of the Company or either of the
Subsidiaries has at any time; (A) made any contributions to any candidate for
political office, or failed to disclose fully any such contributions, in
violation of law, (B) made any payment to any state, federal or foreign
governmental officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or allowed by applicable law,
(C) made any payment outside the ordinary course of business to any investment
officer or loan broker or person charged with similar duties of any entity to
which the Company or either of the Subsidiaries sells or from which the Company
or either of the Subsidiaries buys loans or servicing arrangements for the
purpose of influencing such agent, officer, broker or person to buy loans or
servicing arrangements from or sell loans to the Company or either of the
Subsidiaries, or (D) engaged in any transactions, maintained any bank account or
used any corporate funds except for transactions, bank accounts and funds which
have been and are reflected in the normally maintained books and records of the
Company and the Subsidiaries.
(xxxvii) Except as otherwise disclosed in the Prospectus, there are no
material outstanding loans or advances or material guarantees of indebtedness by
the Company or either of the Subsidiaries to or for the benefit of any of the
officers or directors of the Company or either of the Subsidiaries or any of the
members of the families of any of them.
(xxxviii) Neither the Company nor either of the Subsidiaries nor, to
the knowledge of the Company, any employee or agent of the Company or either of
the Subsidiaries, has made any
13
14
payment of funds of the Company or of any Subsidiary or received or retained
any funds in violation of any law, rule or regulation or of a character
required to be disclosed in the Prospectus.
(xxxix) All securities issued by the Company, either of the
Subsidiaries or any trusts established by the Company or any Subsidiary, have
been issued and sold in compliance with (A) all applicable federal and state
securities laws, (B) the laws of the applicable jurisdiction of incorporation of
the issuing entity and, (C) to the extent applicable to the issuing entity, the
requirements of the American Stock Exchange and the Pacific Stock Exchange.
(xl) Neither the Company nor either of the Subsidiaries or affiliates
does business with the government of Cuba or with any person or affiliate
located in Cuba.
(xli) The Company has not incurred any liability for any finder's fees
or similar payments in connection with the transactions herein contemplated.
(b) Any certificate signed by any officer of the Trust or the Company
or either Subsidiary delivered to the Representatives or to counsel for the
Underwriters pursuant to or in connection with this Agreement shall be deemed a
representation and warranty by the Trust or the Company, as the case may be, to
each Underwriter as to the matters covered thereby.
SECTION 4. Certain Covenants.
The Company and the Trust covenant with each Underwriter as follows:
(a) To furnish such information as may be required and otherwise to
cooperate in qualifying the Securities for offering and sale under the
securities or blue sky laws of such states as the Representatives may designate
and to maintain such qualifications in effect as long as required for the
distribution of the Securities, provided that, Company shall not be required in
connection therewith to qualify as a foreign corporation or to consent to the
service of process under the laws of any such state (except service of process
with respect to the offering and sale of the Securities).
(b) To prepare the Prospectus in a form approved by the Underwriters
and file such Prospectus with the Commission pursuant to Rule 424(b) not later
than the day following the execution and delivery of this Agreement and to
furnish promptly (and with respect to the initial delivery of such Prospectus,
not later than 10:00 a.m. (New York City time) on the day following the
execution and delivery of this Agreement) to the Underwriters as many copies of
the Prospectus (or of the Prospectus as amended or supplemented if the Trust and
the Company shall have made any amendments or supplements thereto after the
effective date of the Registration Statement) and any documents incorporated
therein by reference as the Underwriters may reasonably request for the purposes
contemplated by the Securities Act Regulations, which Prospectus and any
amendments or supplements thereto and any documents incorporated therein by
reference furnished to the Underwriters will be identical to any electronically
transmitted copies thereof filed with the Commission pursuant to ▇▇▇▇▇, except
to the extent permitted by Regulation S-T.
14
15
(c) To comply with the requirements of Rule 430A of the 1933 Act
Regulations, if and as applicable, and to advise the Representatives promptly
and (if requested by the Representatives) to confirm such advice in writing,
when the Registration Statement has become effective and when any post-effective
amendment thereto becomes effective under the Securities Act Regulations.
(d) To advise the Representatives immediately, confirming such advice
in writing, of (i) the receipt of any comments from, or any request by, the
Commission for amendments or supplements to the Registration Statement or
Prospectus or for additional information with respect thereto, or (ii) 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 the 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,
if the Commission or any other government agency or authority should issue any
such order, to make every reasonable effort to obtain the lifting or removal of
such order as soon as possible; to advise the Representatives promptly of any
proposal to amend or supplement the Registration Statement or Prospectus and to
file no such amendment or supplement to which the Representatives shall
reasonably object in writing.
(e) To furnish to the Underwriters for a period of five years from the
date of this Agreement (i) as soon as available, copies of all annual, quarterly
and current reports or other communications supplied to holders of the
Securities, (ii) as soon as practicable after the filing thereof, copies of all
reports filed by the Trust or the Company with the Commission, the NASD or any
securities exchange and (iii) such other information as the Underwriters may
reasonably request regarding the Trust, the Company and the Subsidiaries.
(f) To advise the Underwriters promptly of the happening of any event
known to the Trust or the Company within the time during which a Prospectus
relating to the Securities is required to be delivered under the Securities Act
Regulations which, in the judgment of the Company, would require the making of
any change in the Prospectus then being used so that the Prospectus would not
include 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
the light of the circumstances under which they were made, not misleading, and,
during such time, to prepare and furnish, at the Company's expense, to the
Underwriters promptly such amendments or supplements to such Prospectus as may
be necessary to reflect any such change and to furnish to the Underwriters a
copy of such proposed amendment or supplement before filing any such amendment
or supplement with the Commission.
(g) To furnish promptly to each Representative and counsel for the
Underwriters, without charge, a signed copy of the Registration Statement, as
originally filed with the Commission, and of each amendment or supplement
thereto (including all exhibits filed therewith or incorporated by reference
therein and documents incorporated or deemed to be incorporated by reference
therein) and such number of conformed copies of the foregoing as the
Representatives may reasonably request.
15
16
(h) To furnish to each Representative, not less than one business day
before filing with the Commission subsequent to the effective date of the
Prospectus and during the period referred to in paragraph (f) above, a copy of
any document proposed to be filed with the Commission pursuant to Section 13,
14, or 15(d) of the Exchange Act.
(i) To apply the net proceeds of the sale of the Securities in the
manner specified in the Prospectus under "Use of Proceeds".
(j) To make generally available to their security holders as soon as
practicable, but in any event not later than the end of the fiscal quarter first
occurring after the first anniversary of the effective date of the Registration
Statement an earnings statement complying with the provisions of Section 11(a)
of the Securities Act (in form complying with the provisions of Rule 158 of the
Securities Act Regulations,) covering a period of 12 months beginning after the
effective date of the Registration Statement.
(k) To use its best efforts to effect and maintain the quotation of the
Securities on the American Stock Exchange or another national securities
exchange or automatic quotation system and to maintain the listing of the
Securities on the American Stock Exchange or such other national securities
exchange or automatic quotation system so long as the Securities are
outstanding.
(l) To not and to use its best efforts to cause their respective
Trustees, officers, directors and affiliates not to, (i) take, directly or
indirectly prior to termination of the underwriting syndicate contemplated by
this Agreement, any action designed to stabilize or manipulate the price of any
security of the Trust or the Company, or action which may cause or result in, or
which might in the future reasonably be expected to cause or result in, the
stabilization or manipulation of the price of any security of the Company, to
facilitate the sale or resale of any of the Securities, (ii) sell, bid for,
purchase or pay anyone any compensation for soliciting purchases of the
Securities or (iii) pay or agree to pay to any person any compensation for
soliciting any order to purchase any other securities of the Trust or the
Company.
(m) Not to voluntarily claim and to actively resist any attempts to
claim the benefit of any usury laws against the holders of the Securities.
(n) If at any time during the 30-day period after the Registration
Statement becomes effective, any rumor, publication or event relating to or
affecting the Trust or the Company or the Subsidiaries shall occur as a result
of which in the reasonable opinion of the Representatives the market price of
the Securities has been or is likely to be materially affected (regardless of
whether such rumor, publication or event necessitates a supplement to or
amendment of the Prospectus) and after written notice from the Representatives
advising the Trust and the Company to the effect set forth above, to consult
with the Representatives concerning the substance of such rumor, publication or
event.
16
17
SECTION 5. Payment of Expenses.
(a) The Company agrees to pay all costs and expenses incident to the
performance of obligations of the Company and the Trust under this Agreement,
whether or not the transactions contemplated hereunder are consummated or this
Agreement is terminated, including expenses, fees and taxes in connection with
(i) the preparation and filing of the Registration Statement, each Preliminary
Prospectus, the Prospectus, and any amendments or supplements thereto, and the
printing and furnishing of copies of each thereof to the Underwriters and to
dealers (including costs of mailing and shipment), (ii) the preparation,
issuance and delivery of the certificates for the Securities to the
Underwriters, including any transfer taxes or duties payable upon the sale of
the Securities to the Underwriters, (iii) the printing of this Agreement and any
dealer agreements and furnishing of copies of each to the Underwriters and to
dealers (including costs of mailing and shipment), (iv) the registration or
qualification of the Securities for offering and sale under state laws that the
Company and the Representatives have mutually agreed are appropriate and the
determination of their eligibility for investment under state law as aforesaid
(including the legal fees and filing fees and other disbursements of counsel for
the Underwriters), and the printing and furnishing of copies of any blue sky
surveys or legal investment surveys to the Underwriters and to dealers, (v)
filing for review of the public offering of the Securities by the NASD
(including the filing fees and other disbursements of counsel for the
Underwriters relating thereto), (vi) the fees and expenses of any transfer
agent, registrar and/or depository (including DTC) for the Securities and
miscellaneous expenses referred to in the Registration Statement, (vii) all fees
and expenses in connection with preparation and filing of the Registration
Statement on Form 8-A relating to the Securities and all the fees and expenses
incurred in connection with the inclusion of the Securities in the American
Stock Exchange, (viii) the fees and expenses of the Trustees, the Guarantee
Trustee and the Indenture Trustee and their counsel in connection with the
Declaration, the Guarantee, the Indenture and the Securities, (ix) making road
show presentations with respect to the offering of the Securities, (x) preparing
and distributing copies of transaction documents for the Representatives and
their legal counsel and (xi) the performance of the Trust and the Company's
other obligations hereunder. Upon the request of the Representatives, the
Company will provide funds in advance for filing fees.
(b) The Company agrees to reimburse the Representatives for the
out-of-pocket expenses incurred by the Representatives in connection with the
performance of their activities under this Agreement, including, but not limited
to, costs such as printing, facsimile, courier service, direct computer
expenses, accommodations and travel. In addition, the Company agrees to
reimburse the Representatives for $30,000 of the fees and expenses of the
Underwriters' outside legal counsel (other than the fees and expenses of such
counsel with respect to state securities or blue sky laws, which shall be
reimbursed by the Company pursuant to the provisions of subsection (a) above) if
the transactions contemplated by this Agreement are consummated, or in the
alternative, all fees and disbursements of the Underwriters' legal counsel if
the transactions contemplated by this Agreement are not consummated.
17
18
SECTION 6. Conditions of the Underwriters' Obligations. The obligations
of the Underwriters to purchase and pay for the Securities at the Closing Time
or on the Date of Delivery, if any, as applicable, are subject to the accuracy
of the representations and warranties of the Trust and the Company in all
material respects on the date hereof and at the Closing Time and on each Date of
Delivery, as applicable, the performance by the Trust and the Company of their
respective obligations hereunder in all material respects and to the
satisfaction of the following further conditions at the Closing Time or on each
Date of Delivery, if any, as applicable.
(a) At the Closing Time and on each Date of Delivery, the Underwriters
shall have received an opinion of Liddell, Sapp, Zivley, Hill & ▇▇▇▇▇▇, L.L.P.,
counsel for the Company, addressed to the Underwriters and dated the Closing
Time and each Date of Delivery and in form and substance satisfactory to ▇▇▇▇▇▇▇
& ▇▇▇▇▇ L.L.P., counsel for the Underwriters, as to the matters set forth in
Exhibit A.
(b) At the Closing time and on each Date of Delivery, the Underwriters
shall have received an opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, General Counsel for the
Company, addressed to the Underwriters and dated the Closing Time and each Date
of Delivery, in form and substance satisfactory to ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.,
counsel for the Underwriters, as to the matters set forth in Exhibit B.
(c) At the Closing Time and on each Date of Delivery, the Underwriters
shall have received an opinion of Potter ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, special
Delaware counsel for the Trust, addressed to the Underwriters and dated the
Closing Time and each Date of Delivery and in form and substance satisfactory to
▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., as to the matters set forth in Exhibit C.
(d) The Representatives shall have received from KPMG Peat Marwick LLP
a letter, dated as of the date of this Agreement in form and substance
satisfactory to the Representatives, relating to the consolidated financial
statements of the Company and the Subsidiaries, and such other matters
customarily covered by comfort letters issued in connection with registered
public offerings.
(e) At the Closing Time and at each Date of Delivery, if any, the
Representatives shall have received from KPMG Peat Marwick LLP a letter, dated
as of the Closing Time or Date of Delivery, as applicable, to the effect that
they reaffirm the statements made in the letter furnished pursuant to subsection
(c) of this Section 6.
(f) The Representatives shall have received at the Closing Time and on
each Date of Delivery, if any, the favorable opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.,
dated the Closing Time or such Date of Delivery, addressed to the
Representatives and in form and substance satisfactory to the Representatives.
(g) No amendment or supplement to the Registration Statement or
Prospectus shall have been filed to which the Underwriters shall have objected
in writing.
18
19
(h) The Registration Statement, including any Rule 462(b) Registration
Statement, shall have become effective under the Securities Act and no stop
order suspending the effectiveness of the Registration Statement shall have been
issued under the Securities Act and no proceedings for that purpose shall have
been initiated or be pending 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 information relating to the description of the Securities, the
specific method of distribution and similar matters shall have been filed with
the Commission in accordance with Rule 424(b) (or any required post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A).
(i) Between the time of execution of this Agreement and the Closing
Time or the relevant Date of Delivery no material and unfavorable change in the
assets, business, operations, earnings, prospects, properties or condition
(financial or otherwise) of the Company and the Subsidiaries, taken as a whole,
shall occur or become known (whether or not arising in the ordinary course of
business) and no transaction which is material and unfavorable to the Company
and the Subsidiaries, taken as a whole, shall have been entered into by the
Company or either of the Subsidiaries, and the Representatives shall have
received a certificate of the Chairman of the Board and Chief Executive Officer
of the Company and the Executive Vice President and Chief Financial Officer of
the Company, in such capacities, dated as of the Closing Time or the Date of
Delivery, as the case may be, to the effect that (i) there has been no such
material adverse change and no such transactions entered into, (ii) the
representations and warranties of the Company and the Trust set forth in
Section 3 of this Agreement are true and correct (iii) the Company and the
Trust have complied with all agreements and satisfied all conditions on their
part to be performed or satisfied at or prior to the Closing Time, and (iv) no
stop order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been initiated or threatened by
the Commission.
(j) The Securities shall have been approved for listing on the American
Stock Exchange.
(k) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
(l) The Underwriters shall have received executed copies of each of the
Guarantor Documents which shall have been entered into by the Company and the
other parties thereto.
(m) The Trust and the Company shall have furnished to the Underwriters
such other documents and certificates as to the accuracy and completeness of any
statement in the Registration Statement and the Prospectus, the representations,
warranties and statements of the Company and the Trust contained herein, the
performance by the Trust and the Company of their respective covenants contained
herein, and the fulfillment of any conditions contained herein, as of the
Closing Time or any Date of Delivery, as the Underwriters may reasonably
request.
19
20
(n) The Trust and the Company shall have performed such of their
respective obligations under this Agreement as are to be performed by the terms
hereof at or before the Closing Time or the relevant Date of Delivery.
SECTION 7. Termination. The obligations of the several Underwriters
hereunder shall be subject to termination in the absolute discretion of the
Representatives, at any time prior to the Closing Time or any Date of Delivery,
(i) if any of the conditions specified in Section 6 shall not have been
fulfilled when and as required by this Agreement to be fulfilled, or (ii) if
there has been since the respective dates as of which information is given in
the Registration Statement, any material adverse change, or any development
involving a prospective material adverse change, in or affecting the assets,
business, operations, earnings, prospects, properties, condition (financial or
otherwise) or management of the Company and the Subsidiaries, taken as a whole,
whether or not arising in the ordinary course of business, or (iii) if there has
occurred any outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic, political or other
conditions the effect of which on the financial markets of the United States is
such as to make it, in the judgment of the Representatives, impracticable to
market the Securities or enforce contracts for the sale of the Securities, or
(iv) if trading in any securities of the Company has been suspended by the
Commission or by the American Stock Exchange or the Pacific Stock Exchange, or
if trading generally on the American Stock Exchange, Pacific Stock Exchange, New
York Stock Exchange or in the Nasdaq over-the-counter market has been suspended
(including automatic halt in trading pursuant to market-decline triggers other
than those in which solely program trading is temporarily halted), or
limitations on prices for trading (other than limitations on hours or numbers of
days of trading) have been fixed, or maximum ranges for prices for securities
have been required, by such exchanges or the NASD or Nasdaq or by order of the
Commission or any other governmental authority, or (v) any federal or state
statute, regulation, rule or order of any court or other governmental authority
has been enacted, published, decreed or otherwise promulgated which in the
reasonable opinion of the Representatives materially adversely affects or will
materially adversely affect the business or operations of the Company and the
Subsidiaries, taken as a whole, or (vi) any action has been taken by any
federal, state or local government or agency in respect of its monetary or
fiscal affairs which in the reasonable opinion of the Representatives has a
material adverse effect on the securities markets in the United States.
If the Representatives elect to terminate this Agreement as provided in
this Section 7, the Trust, the Company and the Underwriters shall be notified
promptly by telephone, promptly confirmed by facsimile.
If the sale to the Underwriters of the Securities, as contemplated by
this Agreement, is not carried out by the Underwriters for any reason permitted
under this Agreement or if such sale is not carried out because the Company and
the Trust shall be unable to comply in all material respects with any of the
terms of this Agreement, the Company shall not be under any obligation or
liability under this Agreement (except to the extent provided in Sections 5 and
9 hereof) and the Underwriters shall be under no obligation or liability to the
Company under this Agreement (except to the extent provided in Section 9 hereof)
or to one another hereunder.
20
21
SECTION 8. Increase in Underwriters' Commitments. If any Underwriter
shall default at the Closing Time or on a Date of Delivery in its obligation to
take up and pay for the Securities to be purchased by it under this Agreement on
such date, the Representatives shall have the right, within 36 hours after such
default, 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 Securities which such Underwriter shall have agreed but failed to take up
and pay for (the "Defaulted Securities"). Absent the completion of such
arrangements within such 36-hour period, (i) if the total number of Defaulted
Securities does not exceed 10% of the total number of Securities to be purchased
on such date, each non-defaulting Underwriter shall take up and pay for (in
addition to the number of Securities which it is otherwise obligated to purchase
on such date pursuant to this Agreement) the portion of the total number of
Securities agreed to be purchased by the defaulting Underwriter on such date in
the proportion that its underwriting obligation hereunder bears to the
underwriting obligations of all non-defaulting Underwriters; and (ii) if the
total number of Defaulted Securities exceeds 10% of such total, the
Representatives may terminate this Agreement by notice to the Company, without
liability to any non- defaulting Underwriter.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Trust and the Company agree with the non-defaulting Underwriters
that the Trust will not sell any Securities hereunder on such date unless all of
the Securities to be purchased on such date are purchased on such date by the
Underwriters (or by substituted Underwriters selected by the Representatives
with the approval of the Company or selected by the Company with the approval of
the Representatives).
If a new Underwriter or Underwriters are substituted for a defaulting
Underwriter in accordance with the foregoing provision, the Company or the
non-defaulting Underwriters shall have the right to postpone the Closing Time or
the relevant Date of Delivery for a period not exceeding five business days in
order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
The term Underwriter as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 8 with the like effect as
if such substituted Underwriter had originally been named in this Agreement.
SECTION 9. Indemnity and Contribution by the Trust, the Company and the
Underwriters.
(a) The Trust and the Company, jointly and severally, agree to
indemnify, defend and hold harmless each Underwriter and any person who controls
any Underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any loss, expense, liability,
damage or claim (including the reasonable cost of investigation) which, jointly
or severally, any such Underwriter or controlling person may incur under the
Securities Act, the Exchange Act or otherwise, insofar as such loss, expense,
liability, damage or claim arises out of or is based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof by the Trust and the Company) or in a Prospectus (the term
Prospectus for the
21
22
purpose of this Section 9 being deemed to include any Preliminary Prospectus,
the Prospectus and the Prospectus as amended or supplemented by the Trust and
the Company), or arises out of or is based upon any omission or alleged
omission to state a material fact required to be stated in either such
Registration Statement or Prospectus or necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading, except insofar as any such loss, expense, liability, damage or
claim arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in and
in conformity with information furnished in writing by the Underwriters through
the Representatives to the Trust and the Company expressly for use in such
Registration Statement or such Prospectus, provided, however, that the
indemnity agreement contained in this subsection (9)(a) with respect to the
Preliminary Prospectus or the Prospectus shall not inure to the benefit of an
Underwriter (or to the benefit of any person controlling such Underwriter) with
respect to any person asserting any such loss, expense, liability, damage or
claim which is the subject thereof if the Prospectus or any supplement thereto
prepared with the consent of the Representatives and furnished to the
Underwriters prior to the Closing Time corrected any such alleged untrue
statement or omission and if such Underwriter failed to send or give a copy of
the Prospectus or supplement thereto to such person at or prior to the written
confirmation of the sale of Securities to such person.
If any action is brought against an Underwriter or controlling person
in respect of which indemnity may be sought against the Trust or the Company
pursuant to subsection (a) above, such Underwriter shall promptly notify the
Company in writing of the institution of such action, and the Company shall
assume the defense of such action, including the employment of counsel and
payment of expenses, provided, however, that any failure or delay to so notify
the Company will not relieve the Trust or the Company of any obligation
hereunder, except to the extent that its ability to defend is actually impaired
by such failure or delay. Such Underwriter or controlling person shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such Underwriter or such
controlling person unless the employment of such counsel shall have been
authorized in writing by the Company in connection with the defense of such
action, or the Company shall not have employed counsel to have charge of the
defense of such action within a reasonable time or such indemnified party or
parties shall have reasonably concluded (based on the advice of counsel) that
there may be defenses available to it or them which are different from or
additional to those available to the Company (in which case the Company shall
not have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events such fees and expenses
shall be borne by the Company and paid as incurred (it being understood,
however, that the Company shall not be liable for the expenses of more than one
separate firm of attorneys for the Underwriters or controlling persons in any
one action or series of related actions in the same jurisdiction (other than
local counsel in any such jurisdiction) representing the indemnified parties who
are parties to such action). Anything in this paragraph to the contrary
notwithstanding, neither the Trust nor the Company shall be liable for any
settlement of any such claim or action effected without the written consent of
the Company.
(b) Each Underwriter agrees, severally and not jointly, to indemnify,
defend and hold harmless the Trust, the Trustees, the Company, the Company's
directors, the Company's officers that
22
23
signed the Registration Statement, and any person who controls the Trust, the
Trustees or the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, from and against any loss, expense,
liability, damage or claim (including the reasonable cost of investigation)
which, jointly or severally, the Trust, the Company, or any such person may
incur under the Securities Act, the Exchange Act or otherwise, but only insofar
as such loss, expense, liability, damage or claim arises out of or is based
upon any untrue statement or alleged untrue statement of a material fact
contained in and in conformity with information furnished in writing by such
Underwriter through the Representatives to the Company expressly for use in the
Registration Statement (or in the Registration Statement as amended by any
post-effective amendment thereof by the Trust and the Company) or in a
Prospectus, or arises out of or is based upon any omission or alleged omission
to state a material fact in connection with such information required to be
stated either in such Registration Statement or Prospectus or necessary to make
such information, in the light of the circumstances under which they were made,
not misleading. The statements set forth (i) in the last paragraph on the
cover page and (ii) the third paragraph under the caption "Underwriting" in the
Preliminary Prospectus and the Prospectus (to the extent such statements relate
to the Underwriters) constitute the only information furnished by or on behalf
of any Underwriter through the Representatives to the Company for purposes of
this Section 9.
If any action is brought against the Trust, the Company or any such
person in respect of which indemnity may be sought against any Underwriter
pursuant to the foregoing paragraph, the Trust, the Company or such person shall
promptly notify the Representatives in writing of the institution of such action
and the Representatives, on behalf of the Underwriters, shall assume the defense
of such action, including the employment of counsel and payment of expenses. The
Trust, the Company or such person shall have the right to employ its own counsel
in any such case, but the fees and expenses of such counsel shall be at the
expense of the Trust, the Company, or such person unless the employment of such
counsel shall have been authorized in writing by the Representatives in
connection with the defense of such action or the Representatives shall not have
employed counsel to have charge of the defense of such action within a
reasonable time or such indemnified party or parties shall have reasonably
concluded (based on the advice of counsel) that there may be defenses available
to it or them which are different from or additional to those available to the
Underwriters (in which case the Representatives shall not have the right to
direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses shall be borne by such
Underwriter and paid as incurred (it being understood, however, that the
Underwriters shall not be liable for the expenses of more than one separate firm
of attorneys in any one action or series of related actions in the same
jurisdiction (other than local counsel in any such jurisdiction) representing
the indemnified parties who are parties to such action). Anything in this
paragraph to the contrary notwithstanding, no Underwriter shall be liable for
any settlement of any such claim or action effected without the written consent
of the Representatives.
(c) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subsections (a) and (b) of this
Section 9 in respect of any losses, expenses, liabilities, damages or claims
referred to therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such
23
24
indemnified party as a result of such losses, expenses, liabilities, damages or
claims (i) in such proportion as is appropriate to reflect the relative
benefits received by the Trust and the Company, on the one hand, and the
Underwriters, on the other hand, from the offering of the Securities or (ii) if
(but only if) the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Trust and 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, expenses, liabilities, damages or claims, as well as any other
relevant equitable considerations. The relative benefits received by the Trust
and the Company, on the one hand, and the Underwriters, on the other hand, in
connection with the offering of the Securities shall be deemed to be in the
same proportion as, the total proceeds from the offering (net of Underwriters'
compensation but before deducting expenses) received by the Trust and the
Company bear to the Underwriters' compensation received by the Underwriters.
The relative fault of the Trust or the Company, on the one hand, and of the
Underwriters, on the other hand, shall be determined by reference to, among
other things, whether the untrue statement or alleged untrue statement of a
material fact or omission or alleged omission relates to information supplied
by the Trust and 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. The amount paid or payable by a party as a result
of the losses, claims, damages and liabilities referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any claim or action.
(d) The Trust, the Company and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 9 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 in subsection (c)(i) and, if
applicable, (ii), above. Notwithstanding the provisions of this Section 9, no
Underwriter shall be required to contribute any amount in excess of the
Underwriters' compensation, applicable to the Securities purchased by such
Underwriter. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 9 are several in proportion to their respective underwriting commitments
and not joint.
SECTION 10. Survival. The indemnity and contribution agreements
contained in Section 9 and the covenants, warranties and representations of the
Trust and the Company contained in Sections 3, 4 and 5 of this Agreement shall
remain in full force and effect regardless of any investigation made by or on
behalf of any Underwriter, or any person who controls any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
or by or on behalf of the Trust, the Trustees, the Company, its directors and
officers or any person who controls the Trust, the Trustees or the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, and shall survive any termination of this Agreement or the sale
and delivery of the Securities. Each of the Trust and the Company, and each
Underwriter agree
24
25
promptly to notify the others of the commencement of any litigation or
proceeding against it and, in the case of the Trust and the Company, against
any of the Trustees or the Company's officers and directors, in connection with
the sale and delivery of the Securities, or in connection with the Registration
Statement or Prospectus.
SECTION 11. Notices. Except as otherwise herein provided, all
statements, requests, notices and agreements shall be in writing or by telegram
and, if to the Underwriters, shall be sufficient in all respects if delivered to
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Syndicate Department; if to the Company or the Trust,
shall be sufficient in all respects if delivered to the Company or the Trust at
the offices of the Company at 2200 City Center II, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
SECTION 12. Governing Law; Headings. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF VIRGINIA,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. The section headings in this
Agreement have been inserted as a matter of convenience of reference and are not
a part of this Agreement.
SECTION 13. Parties at Interest. The Agreement herein set forth has
been and is made solely for the benefit of the Underwriters, the Trust, the
Company, and the controlling persons, the Trustees, directors and officers
referred to in Sections 9 and 10 hereof, and their respective successors,
assigns, executors and administrators. No other person, partnership, association
or corporation (including a purchaser, as such purchaser, from any of the
Underwriters) shall acquire or have any right under or by virtue of this
Agreement.
SECTION 14. Counterparts and Facsimile Signatures. This Agreement may
be signed by the parties in counterparts which together shall constitute one and
the same agreement among the parties. A facsimile signature shall constitute an
original signature for all purposes.
25
26
If the foregoing correctly sets forth the understanding among the
Trust, the Company and the Underwriters, please so indicate in the space
provided below for the purpose, whereupon this Agreement shall constitute a
binding agreement among the Trust, the Company and the Underwriters.
Very truly yours,
KBK CAPITAL CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
KBK CAPITAL TRUST I
By:
----------------------------------
Name:
--------------------------------
Administrative Trustee
By:
----------------------------------
Name:
--------------------------------
Administrative Trustee
Accepted and agreed to as
of the date first above written:
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
By:
---------------------------------------------
Title:
------------------------------------------
J.J.B. ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, INC.
By:
---------------------------------------------
Title:
------------------------------------------
For themselves and as Representatives of the other
Underwriters named on Schedule I hereto.
26
27
SCHEDULE I
Number of Initial
Securities
Underwriter to be Purchased
----------- -----------------
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc. . . . . . . . . . . . . . . . . . . .
J.J.B. ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, Inc. . . . . . . . . . . . . . . . . . . . . . .
---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000
=========
S-1
28
EXHIBIT A
OPINION OF LIDDELL, SAPP, ZIVLEY, HILL & ▇▇▇▇▇▇, L.L.P.
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
(ii) The Company has full corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Registration Statement and Prospectus and to execute and deliver the
Underwriting Agreement, the Guarantees, the Declaration and the Indenture and to
consummate the transactions contemplated thereby.
(iii) Each Subsidiary has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware with full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and Prospectus.
(iv) This Agreement has been duly authorized, executed and delivered by
the Trust and the Company.
(v) Each of the Guarantees, the Declaration and the Indenture
(collectively, the "Guarantor Agreements") has been duly authorized, executed
and delivered by the Company and constitutes a valid and legally binding
obligation of the Company, enforceable in accordance with their respective
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and general principles of equity. Each of the
Preferred Guarantee, the Declaration and the Indenture has been duly qualified
under the Trust Indenture Act of 1939, as amended.
(vi) The Debentures have been duly authorized and when executed and
authenticated in accordance with the provisions of the Indenture will be
entitled to the benefits of the Indenture and will be valid and binding
obligations of the Company, enforceable in accordance with their terms, except
as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and general principles of equity.
(vii) The Securities, the Debentures and the Indenture conform in all
material respects as to legal matters to the description thereof contained in
the Prospectus.
(viii) To the best of our knowledge, there are no actions, suits,
proceedings, inquiries or investigations pending or threatened against the
Company or either of the Subsidiaries or any of their respective officers and
directors or to which the properties, assets or rights of any such entity are
subject, at law or in equity, before or by any federal, state, local or foreign
A-1
29
governmental or regulatory commission, board, body, authority, arbitral panel
or agency which are required to be disclosed in the Registration Statement and
the Prospectus, or which might be reasonably expected to result in a judgment,
decree, award or order having a material adverse effect on the assets,
business, operations, earnings, prospects, properties or condition (financial
or otherwise) of the Company and the Subsidiaries, taken as a whole.
(ix) No filing with, or authorization, approval, consent, license,
order registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign, is necessary or required for the
performance by the Trust or the Company of their respective obligations under
this Agreement, the Guarantees, the Declaration or the Indenture or in
connection with the transactions contemplated under this Agreement, the
Guarantee, the Declaration and the Indenture, except such as have been already
obtained or as may be required under state securities laws.
(x) The Registration Statement has been declared effective under the
Securities Act. Any required filing of the Prospectus pursuant to Rule 424(b)
has been made in the manner and within the time period required by Rule 424(b).
To the best of our knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued under the Securities Act and no
proceedings for that purpose have been initiated or are pending or threatened by
the Commission.
(xi) The Registration Statement and the Prospectus, excluding the
documents incorporated by reference therein, as of their respective effective or
issue dates (other than the financial statements and supporting schedules
included therein or omitted therefrom and the Trustee's Statement of Eligibility
on Form T-1 as to which we express no opinion) complied as to form in all
material respects with the requirements of the Securities Act and the Securities
Act Regulations.
(xii) The Company is not and, after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof 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.
(xiii) The statements (A) in the Prospectus under the captions
"Description of the Trust Preferred Securities," "Description of the Guarantee,"
"Description of the Debentures," "Relationship Among the Trust Preferred
Securities, the Debentures and the Guarantee," "Certain Federal Income Tax
Consequences" and "ERISA Considerations" and (B) in the Registration Statement
under Item 15, and (C) in the Company's most recent Annual Report in Form 10-KSB
under the caption "Item 3-Legal Proceedings," insofar as such statements
constitute a summary of the legal matters or documents referred to therein,
constitute accurate summaries thereof in all material respects.
A-2
30
(xiv) In addition, such counsel shall state that they have participated
in conferences with officers and other representatives of the Company,
independent public accountants of the Company and the Representatives, at which
the contents of the Registration Statement and Prospectus were discussed and,
although such counsel is not passing upon and does not assume responsibility for
the accuracy, completeness or fairness of the statements contained in the
Registration Statement or Prospectus (except as and to the extent stated in
subparagraphs (vii) and (xiii) above), they have no reason to believe that the
Registration Statement at the time it became effective, contained or contains an
untrue statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus at the time the Registration Statement was
declared effective and at the date hereof, contained or contains any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being understood
that, in each case, such counsel need express no view with respect to the
financial statements and other financial and statistical data included or
incorporated by reference in the Registration Statement, or the Prospectus).
A-3
31
EXHIBIT B
OPINION OF ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
(ii) The Company has full corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Registration Statement and Prospectus and to execute and deliver the
Underwriting Agreement, the Guarantees, the Declaration and the Indenture and to
consummate the transactions contemplated thereby.
(iii) Each Subsidiary has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware with full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and Prospectus.
(iv) The Company and the Subsidiaries are duly qualified or licensed by
each jurisdiction in which they conduct their respective businesses and in which
the failure, individually or in the aggregate, to be so qualified or licensed
could have a material adverse effect on the assets, business, operations,
earnings, prospects, properties or condition (financial or otherwise) of the
Company and the Subsidiaries taken as a whole, and the Company and the
Subsidiaries are duly qualified, and are in good standing, in each jurisdiction
in which they own or lease real property or maintain an office and in which such
qualification is necessary, except where the failure to be so qualified and in
good standing would not have a material adverse effect on the assets, business,
operations, earnings, prospects, properties or condition (financial or
otherwise) of the Company and the Subsidiaries taken as a whole.
(v) The authorized, issued and outstanding shares of capital stock of
the Company is as set forth in the Prospectus under the caption "Capitalization"
under the column entitled "Actual." Such shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable, and none of such shares of capital stock was issued in violation
of preemptive or other similar rights of any security holder of the Company.
Except as disclosed in the Prospectus, there are no outstanding (i) securities
or obligations of the Company convertible into or exchangeable for any capital
stock of the Company, (ii) warrants, rights or options to subscribe for or
purchase from the Company any such capital stock or any such convertible or
exchangeable securities or obligations, or (iii) obligations of the Company to
issue any shares of capital stock, any such convertible or exchangeable
securities or obligations, or any such warrants, rights or options.
(vi) The outstanding shares of capital stock of the Subsidiaries have
been duly authorized and validly issued and are fully paid and non-assessable,
and none of such shares of capital stock was issued in violation of preemptive
or other similar rights of any security holder of any Subsidiary. There are no
(i) securities or obligations of any of the Subsidiaries
B-1
32
convertible into or exchangeable for any capital stock of any Subsidiary, (ii)
warrants, rights or options to subscribe for or purchase from any of the
Subsidiaries any such capital stock or any such convertible or exchangeable
securities or obligations, or (iii) obligations of any of the Subsidiaries to
issue any shares of capital stock, any such obligations, or any warrants,
rights or options. All of the issued and outstanding capital stock of each
Subsidiary is owned by the Company, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity.
(vii) Neither the Company nor either of the Subsidiaries is (A) in
violation of the Declaration or its charter or bylaws or (B) in breach or
default (nor has any event occurred which with notice, lapse of time, or both
would constitute a breach of, or default), in the performance or observance of
any obligation, agreement, covenant or condition contained in any contract,
license, indenture, mortgage, deed of trust, note, loan or credit agreement or
other agreement or instrument to which the Company or either of the Subsidiaries
is a party or by which any of them properties is bound or to which any of the
property or assets of the Trust, the Company or the Subsidiaries is subject,
except for such breaches or defaults which would not have a material adverse
effect on the assets, business, operations, earnings, prospects, properties or
condition (financial or otherwise) of the Company and its Subsidiaries taken as
a whole.
(viii) The execution, delivery and performance of the Agreement by the
Trust , the compliance by the Trust with all the provisions thereof and the
consummation of the transactions contemplated thereby and by the Declaration,
including the issuance and sale of the Securities and the Common Securities by
the Trust, the purchase of the Debentures by the Trust and the distribution of
the Debentures by the Trust in the circumstances contemplated by the Declaration
will not (A) require any consent, approval, authorization or other order of, or
qualification with, any court or governmental body or agency (except such as may
be required under the securities or Blue Sky laws of the various states), (B)
constitute a breach of any of the terms or provisions of, or a default under,
the charter or by- laws of the Company or either Subsidiary or any indenture,
loan agreement, mortgage, lease or other agreement or instrument that is
material to the Company and the Subsidiaries taken as a whole to which the
Company or either Subsidiary is a party or by which the Company or either
Subsidiary or their respective property is bound, (C) violate any applicable law
or any rule, regulation, judgment, order or decree of any court or any
governmental body or agency having jurisdiction over the Company, either
Subsidiary or their respective property, or (D) result in the imposition or
creation of (or the obligation to create or impose) a security interest, claim,
lien, encumbrance or adverse interest of any nature (each a "Lien"), under any
agreement or instrument to which the Company or either Subsidiary is a party or
by which the Company or either Subsidiary or their respective property is bound.
(ix) The execution, delivery and performance of the Agreement, the
Debentures and the Guarantor Agreements by the Company, the compliance by the
Company with all the provisions thereof and the consummation of the transactions
contemplated thereby including the issuance and sale of the Securities and the
Common Securities by the Trust, the sale of the Debentures by the Company to the
Trust, the distribution of the Debentures by the Trust in the
B-2
33
circumstance contemplated by the Declaration and the issuance by the Company of
the Guarantees will not (A) require any consent, approval, authorization or
other order of, or qualification with, any court or governmental body or agency
(except such as have been made or received and except such as may be required
under the securities or Blue Sky laws of the various states), (B) constitute a
breach of any of the terms or provisions of, or a default under, the charter or
by-laws of the Company or either Subsidiary or any indenture, loan agreement,
mortgage, lease or other agreement or instrument that is material to the
Company and the Subsidiaries taken as a whole to which the Company or either
Subsidiary is a party or by which the Company or either Subsidiary or their
respective property is bound, (C) violate any applicable law or any rule,
regulation, judgment, order or decree of any court or any governmental body or
agency having jurisdiction over the Company, either Subsidiary or their
respective property or (D) result in the imposition or creation of (or the
obligation to create or impose) a Lien (excluding any right of redemption of
the Company arising under the Declaration, the Indenture or the Debentures)
under any agreement or instrument to which the Company or either Subsidiary is
a party or by which the Company or either Subsidiary or their respective
property is bound.
(x) To the best of our knowledge, there are no actions, suits,
proceedings, inquiries or investigations pending or threatened against the
Company or either of the Subsidiaries or any of their respective officers and
directors or to which the properties, assets or rights of any such entity are
subject, at law or in equity, before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority, arbitral panel or
agency which are required to be disclosed in the Registration Statement and the
Prospectus, or which might be reasonably expected to result in a judgment,
decree, award or order having a material adverse effect on the assets, business,
operations, earnings, prospects, properties or condition (financial or
otherwise) of the Company and the Subsidiaries taken as a whole.
(xi) The descriptions in the Registration Statement and the Prospectus
of the contracts and other documents therein described present fairly the
information required to be shown, and there are no contracts or documents which
are required to be described in the Registration Statement, the Prospectus or
the documents incorporated by reference therein or to be filed as exhibits
thereto which have not been so described and filed as required.
(xii) The documents incorporated by reference in the Registration
Statement and the Prospectus, at the time they were filed with the Commission,
complied in all material respects with the requirements of the Exchange Act and
the Exchange Act Regulations.
(xiii) The Company and the Subsidiaries own or possess adequate
patents, license or other rights to use all patents, trademarks, service marks,
trade names, copyrights, software and design licenses, trade secrets,
manufacturing processes, other intangible property rights and know-how
(collectively "Intangibles") necessary to entitle the Company and each
Subsidiary to conduct its business as described in the Prospectus, and neither
the Company, nor any Subsidiary, has received notice of infringement of or
conflict with (and the Company knows of no such infringement of or conflict
with) asserted rights of others with respect to any Intangibles
B-3
34
which could materially and adversely affect the business, prospects,
properties, assets, results of operations or condition (financial or otherwise)
of the Company and the Subsidiaries, taken as a whole.
(xiv) In addition, such counsel shall state that they have participated
in conferences with officers and other representatives of the Company,
independent public accountants of the Company, representatives of the
Representatives, at which the contents of the Registration Statement and
Prospectus were discussed and, although such counsel is not passing upon and
does not assume responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or Prospectus (except as and
to the extent stated in subparagraph (xi) above), they have no reason to believe
that the Registration Statement at the time it became effective, contained or
contains an untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus at the time the Registration
Statement was declared effective and at the date hereof, contained or contains
any untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being understood
that, in each case, such counsel need express no view with respect to the
financial statements and other financial and statistical data included or
incorporated by reference in the Registration Statement, or the Prospectus).
B-4
35
EXHIBIT C
OPINION OF POTTER ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
SPECIAL DELAWARE COUNSEL FOR THE TRUST
(i) The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act.
(ii) Under the Delaware Business Trust Act and the Declaration, the
Trust has the power and authority (a) to own its properties (including, without
limitation, the Debentures) and conduct its business, (b) to execute and
deliver, and to perform its obligations under and to consummate the transactions
contemplated by, the agreements to which it is a party and (c) to issue and
sell, and to perform its obligations under Trust Preferred Securities and the
Trust Common Securities, all as described in the Registration Statement and the
Prospectus.
(iii) The Declaration constitutes a valid and binding obligation of the
Sponsor and the Trustees, enforceable against the Sponsor and the Trustees,
respectively, in accordance with its terms.
(iv) The execution and delivery by the Trust of the Underwriting
Agreement has been duly authorized by all necessary trust action on the part of
the Trust.
(v) The Trust Preferred Securities have been duly authorized by
the Declaration, and are validly issued, and subject to the qualifications set
forth in Paragraph (viii) below, fully paid and nonassessable undivided
beneficial interests in the assets of the Trust.
(vi) Once duly and validly issued in accordance with the Declaration,
the Trust Preferred Securities will entitle the holders of the Trust Preferred
Securities to the benefits of the Declaration.
(vii) The Trust Common Securities have been duly authorized by the
Declaration, and are validly issued.
(viii) The holders of the Trust Preferred Securities, as beneficial
owners of Trust Preferred Securities 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 except that the holders of Trust Preferred Securities may be
obligated to provide (a) indemnity or security in connection with, and pay taxes
or governmental charges arising from, transfers or exchanges of Trust Preferred
Securities certificates and the issuance of replacement Trust Preferred
Securities certificates and (b) security and indemnity in connection with
requests of or directions to the Property Trustee to exercise its rights and
powers under the Declaration.
C-1
36
(ix) Under the Delaware Business Trust Act and the Declaration, the
issuance of the Trust Preferred Securities is not subject to preemptive rights.
(x) No authorization, approval or consent of any governmental authority
or regulatory body of the State of Delaware is required for the consummation by
the Trust of the transactions contemplated by the agreements to which it is a
party and performance by the Trust of its obligations thereunder or under the
Trust Securities, except such as may be required by the securities or Blue Sky
laws of the State of Delaware in connection with the offer and sale of the Trust
Securities.
(xi) The (a) issuance and sale by the Trust of the Trust Securities and
(b) the execution, delivery and performance by the Trust of the Agreements to
which it is a party and the consummation by the Trust of the transactions
contemplated thereunder and the compliance by the Trust with its obligations
thereunder, will not contravene or result in a breach or violation of any of the
terms or provisions of the Certificate of Trust, the Declaration or any statute,
rule or regulation of the State of Delaware known by us to be applicable to the
Trust.
C-2