ContiFinancial Corporation
Common Stock
Preferred Stock
Debt Securities
UNIVERSAL FORM OF UNDERWRITING AGREEMENT
----------------------------------------
1. Introductory. ContiFinancial Corporation, a Delaware corporation
("Company"), proposes to issue and sell from time to time certain of its
unsecured debt securities, which may be either senior or subordinated ("Debt
Securities"), preferred stock ("Preferred Stock") and Common Stock $.01 par
value ("Common Stock") registered under the registration statement referred to
in Section 2(a) ("Registered Securities"). The Registered Securities
constituting Debt Securities will be issued under an indenture, dated as of
, 1998 ("Indenture"), between the Company and The Bank of New York ,
as Trustee, in one or more series, which series may vary as to interest rates,
maturities, redemption provisions, selling prices and other terms. The
Registered Securities constituting Preferred Stock may be issued in one or more
series, which series may vary as to dividend rates, redemption provisions,
selling prices and other terms. Particular series or offerings of Registered
Securities will be sold pursuant to a Terms Agreement referred to in Section 3,
for resale in accordance with terms of offering determined at the time of sale.
The Registered Securities involved in any such offering are hereinafter
referred to as the "Offered Securities". The firm or firms which agree to
purchase the Offered Securities are hereinafter referred to as the
"Underwriters" of such securities, and the representative or representatives of
the Underwriters, if any, specified in a Terms Agreement referred to in Section
3 are hereinafter referred to as the "Representatives"; provided, however, that
if the Terms Agreement does not specify any representative of the Underwriters,
the term "Representatives", as used in this Agreement (other than in Sections
2(b), 5(c) and 6 and the second sentence of Section 3) shall mean the
Underwriters.
2. Representations and Warranties of the Company. The Company, as of the
date of each Terms Agreement referred to in Section 3, represents and warrants
to, and agrees with, each Underwriter that:
(a) The Company meets the requirements for use of Form S-3 under the
Act and a registration statement (No. 333-33783), including a prospectus,
relating to the Registered Securities has been filed with the Securities
and Exchange Commission ("Commission") and has become effective. Such
registration statement, as amended at the time of any Terms Agreement
referred to in Section 3, is hereinafter referred to as the "Registration
Statement", and the prospectus included in such Registration Statement, as
supplemented as contemplated by Section 3 to reflect the terms of the
Offered Securities (if they are Debt Securities or Preferred Stock) and the
terms of the offering of the Offered Securities, as first filed with the
Commission pursuant to and in accordance with Rule 424(b) ("Rule 424(b)")
under the Securities Act of 1933 (the "Act"), including all materials
incorporated by reference therein, is hereinafter referred to as the
"Prospectus". No document has been or will be prepared or distributed in
reliance on Rule 434 under the Act.
(b) On the effective date of the registration statement relating to
the Registered Securities, such registration statement conformed in all
respects to the requirements of the Act, the Trust Indenture Act of 1939,
as amended ("Trust Indenture Act"), and the rules and regulations of the
Commission ("Rules and Regulations") and did not include any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading, and on the date of each Terms Agreement referred to in Section
3, the Registration Statement and the Prospectus will conform in all
respects to the requirements of the Act, the Trust Indenture Act and the
Rules and Regulations, and neither of such documents will include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, except that the foregoing does not apply to statements in
or omissions from any of such documents based upon written information
furnished to the Company by any Underwriter through the Representatives, if
any, specifically for use therein.
(c) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectus; and the Company is duly
qualified to do business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification,
except where the failure to so qualify would not result in a material
adverse change in the condition, financial or otherwise, or in the
properties, operations or business of the Company and its subsidiaries
considered as one enterprise (a "Material Adverse Effect").
(d) Each subsidiary of the Company has been duly incorporated and is
an existing corporation or limited liability company in good standing under
the laws of the jurisdiction of its incorporation, with power and authority
(corporate and other) to own its properties and conduct its business as
described in the Prospectus; and each subsidiary of the Company is duly
qualified to do business as a foreign corporation or limited liability
company in good standing in all other jurisdictions in which its ownership
or lease of property or the conduct of its business requires such
qualification except where the failure to so qualify would not result in a
Material Adverse Effect; all of the issued and outstanding capital stock or
membership interests of each subsidiary of the Company has been duly
authorized and validly issued and is fully paid and nonassessable; and the
capital stock or membership interests of each subsidiary owned by the
Company, directly or through subsidiaries, is owned free from liens,
encumbrances and defects.
(e) If the Offered Securities are Debt Securities: the Indenture has
been duly authorized and has been duly qualified under the Trust Indenture
Act; the Offered Securities have been duly authorized; and when the Offered
Securities are delivered and paid for pursuant to the Terms Agreement on
the Closing Date (as defined below) or pursuant to Delayed Delivery
Contracts (as defined below), the Indenture will have been duly executed
and delivered, such Offered Securities will have been duly executed,
authenticated, issued and delivered, will be entitled to the benefits of
the Indenture and will conform to the description thereof contained in the
Prospectus and the Indenture and such Offered Securities will constitute
valid and legally binding obligations of the Company, enforceable in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
(f) If the Offered Securities are Preferred Stock: the Offered
Securities have been duly authorized and, when the Offered Securities have
been delivered and paid for in accordance with the Terms Agreement on the
Closing Date or pursuant to Delayed Delivery Contracts, such Offered
Securities will have been validly issued, fully paid and nonassessable and
will conform to the description thereof contained in the Prospectus; and
the stockholders of the Company have no preemptive rights with respect to
the Offered Securities.
(g) If the Offered Securities are Common Stock: the Offered Securities
and all other outstanding shares of capital stock of the Company have been
duly authorized; all outstanding shares of capital stock of the Company
are, and, when the Offered Securities have been delivered and paid for in
accordance with the Terms Agreement on the Closing Date, such Offered
Securities will have been validly issued, fully paid and nonassessable and
will conform to the description thereof contained in the Prospectus; and
the stockholders of the Company have no preemptive rights with respect to
the Offered Securities.
(h) If the Offered Securities are convertible: when the Offered
Securities are delivered and paid for pursuant to the Terms Agreement on
the Closing Date, such Offered Securities will be convertible into Common
Stock of the Company in accordance with their terms (if the Offered
Securities are Preferred Stock) or the Indenture (if the Offered Securities
are Debt Securities); the shares of Common Stock initially issuable upon
conversion of such Offered Securities have been duly authorized and
reserved for issuance upon such conversion and, when issued upon such
conversion, will be validly issued, fully paid and nonassessable; the
outstanding shares of Common Stock have been duly authorized and validly
issued, are fully paid and nonassessable and conform to the description
thereof contained in the Prospectus; and the stockholders of the Company
have no preemptive rights with respect to the Common Stock.
(i) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person that would
give rise to a valid claim against the Company or any Underwriter for a
brokerage commission, finder's fee or other like payment.
(j) No consent, approval, authorization, or order of, or filing with,
any governmental agency or body or any court is required for the
consummation of the transactions contemplated by the Terms Agreement
(including the provisions of this Agreement) in connection with the
issuance and sale of the Offered Securities by the Company, except such as
have been obtained and made under the Act and, if the Offered Securities
are Debt Securities, the Trust Indenture Act and such as may be required
under state securities laws.
2
(k) The execution, delivery and performance of the Indenture (if the
Offered Securities are Debt Securities), the Terms Agreement (including the
provisions of this Agreement) and any Delayed Delivery Contracts, and the
issuance and sale of the Offered Securities and, if the Offered Securities
are Debt Securities or Preferred Stock, compliance with the terms and
provisions thereof will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any statute, any
rule, regulation or order of any governmental agency or body or any court,
domestic or foreign, having jurisdiction over the Company or any subsidiary
of the Company or any of their properties, or any agreement or instrument
to which the Company or any such subsidiary is a party or by which the
Company or any such subsidiary is bound or to which any of the properties
of the Company or any such subsidiary is subject, or the charter or by-laws
of the Company or any such subsidiary, except for such breach, violation or
default that would not result in a Material Adverse Effect, and the Company
has full power and authority to authorize, issue and sell the Offered
Securities as contemplated by the Terms Agreement (including the provisions
of this Agreement).
(l) The Terms Agreement (including the provisions of this Agreement)
and, if the Offered Securities are Debt Securities or Preferred Stock, any
Delayed Delivery Contracts have been duly authorized, executed and
delivered by the Company.
(m) Except as disclosed in the Prospectus, each of the Company and its
subsidiaries has good and marketable title to all real properties and all
other properties and assets owned by it, in each case free from liens,
encumbrances and defects that would have a Material Adverse Effect or
materially interfere with the use made or to be made thereof by it; and
except as disclosed in the Prospectus, the Company and its subsidiaries
hold any leased real or personal property under valid and enforceable
leases with no exceptions that would have a Material Adverse Effect.
(n) The Company and its subsidiaries possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or
bodies necessary to conduct the business now operated by them and have not
received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit that, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect.
(o) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that
might have a Material Adverse Effect.
(p) Except as disclosed in the Prospectus, neither the Company nor any
of its subsidiaries is in violation of any statute, any rule, regulation,
decision or order of any governmental agency or body or any court, domestic
or foreign, relating to the use, disposal or release of hazardous or toxic
substances or relating to the protection or restoration of the environment
or human exposure to hazardous or toxic substances (collectively,
"environmental laws"), owns or operates any real property contaminated with
any substance that is subject to any environmental laws, is liable for any
off-site disposal or contamination pursuant to any environmental laws, or
is subject to any claim relating to any environmental laws, which
violation, contamination, liability or claim would individually or in the
aggregate have a Material Adverse Effect; and the Company is not aware of
any pending investigation which might lead to such a claim.
(q) Except as disclosed in the Prospectus, to the knowledge of the
Company, there are no pending actions, suits or proceedings against or
affecting the Company, any of its subsidiaries or any of their respective
properties that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a Material
Adverse Effect or would materially and adversely affect the ability of the
Company to perform its obligations under the Indenture (if the Offered
Securities are Debt Securities), the terms of the Offered Securities (if
the Offered Securities are Preferred Stock or Common Stock), the Terms
Agreement (including the provisions of this Agreement) or any Delayed
Delivery Contracts, or which are otherwise material in the context of the
sale of the Offered Securities; and to the Company's knowledge, no such
actions, suits or proceedings are threatened.
(r) The financial statements incorporated by reference in the
Registration Statement and Prospectus present fairly in all material
respects the financial position of the Company and its consolidated
subsidiaries as of the dates shown and their results of operations and cash
flows for the periods shown, and such financial statements have been
prepared in conformity with the generally accepted accounting principles in
the United States applied on a consistent basis.
3
(s) Except as disclosed in the Prospectus, since the date of the
latest audited financial statements included in the Prospectus there has
been no material adverse change, nor, to the knowledge of the Company, any
development or event involving a prospective material adverse change, in
the condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole, and,
except as disclosed in or contemplated by the Prospectus, there has been no
dividend or distribution of any kind declared, paid or made by the Company
on any class of its capital stock other than in the ordinary course of
business.
(t) The Company is not and, after giving effect to the offering and
sale of the Offered Securities and the application of the proceeds thereof
as described in the Prospectus, will not be an "investment company" as
defined in the Investment Company Act of 1940.
(u) The Company and its subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and
other intellectual property (collectively, "intellectual property rights")
necessary to conduct the business now operated by them, or presently
employed by them, the failure of which to own or possess would not result
in a Material Adverse Effect, and have not received any notice of
infringement of or conflict with asserted rights of others with respect to
any intellectual property rights that, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a Material Adverse Effect.
(v) The Company and each of its subsidiaries maintains reasonably
adequate insurance.
(w) No relationship, direct or indirect, exists between or among any
of the Company or any affiliate of the Company, on the one hand, and any
director, officer, stockholder, customer or supplier of any of them, on the
other hand, which is required by the Act or by the Rules and Regulations
thereunder to be described in the Registration Statement or the Prospectus
which is not so described or is not described in all material respects as
required.
(x) The information provided separately to the Underwriters and
disclosed in the Prospectus regarding delinquencies and foreclosures, loan
losses, the value of the servicing portfolios and Excess Spread Receivables
(as such term is defined in the Registration Statement) and the sale of
Excess Spread Receivables is accurate and complete in all material
respects.
3. Purchase and Offering of Offered Securities. The obligation of the
Underwriters to purchase the Offered Securities will be evidenced by an
agreement or exchange of other written communications ("Terms Agreement") at the
time the Company determines to sell the Offered Securities. The Terms Agreement
will incorporate by reference the provisions of this Agreement, except as
otherwise provided therein, and will specify the firm or firms which will be
Underwriters, the names of any Representatives, the principal amount or number
of shares to be purchased by each Underwriter, the purchase price to be paid by
the Underwriters and (if the Offered Securities are Debt Securities or Preferred
Stock) the terms of the Offered Securities not already specified (in the
Indenture, in the case of Offered Securities that are Debt Securities),
including, but not limited to, interest rate (if Debt Securities), dividend rate
(if Preferred Stock), maturity (if Debt Securities), any redemption provisions
and any sinking fund requirements and whether any of the Offered Securities may
be sold to institutional investors pursuant to Delayed Delivery Contracts. The
Terms Agreement will also specify the time and date of delivery and payment
(such time and date, or such other time not later than seven full business days
thereafter as the Underwriter first named in the Terms Agreement (the "Lead
Underwriter") and the Company agree as the time for payment and delivery, being
herein and in the Terms Agreement referred to as the "Closing Date"), the place
of delivery and payment and any details of the terms of offering that should be
reflected in the prospectus supplement relating to the offering of the Offered
Securities. For purposes of Rule 15c6-1 under the Securities Exchange Act of
1934, the Closing Date (if later than the otherwise applicable settlement date)
shall be the date for payment of funds and delivery of securities for all the
Offered Securities sold pursuant to the offering other than Contract Securities
(as defined below) for which payment of funds and delivery of securities shall
be as hereinafter provided. The obligations of the Underwriters to purchase the
Offered Securities will be several and not joint. It is understood that the
Underwriters propose to offer the Offered Securities for sale as set forth in
the Prospectus.
If the Terms Agreement provides for sales of Offered Securities pursuant to
delayed delivery contracts, the Company authorizes the Underwriters to solicit
offers to purchase Offered Securities pursuant to delayed delivery contracts
substantially in the form of Annex I attached hereto ("Delayed Delivery
Contracts") with such changes therein as the Company may authorize or approve.
Delayed Delivery Contracts are to be with institutional investors, including
commercial and savings banks, insurance companies, pension funds, investment
companies and educational and charitable institutions. On the Closing Date the
Company will pay, as compensation, to the Representatives for the accounts of
the
4
Underwriters, the fee set forth in such Terms Agreement in respect of the
principal amount or number of shares of Offered Securities to be sold pursuant
to Delayed Delivery Contracts ("Contract Securities"). The Underwriters will not
have any responsibility in respect of the validity or the performance of Delayed
Delivery Contracts. If the Company executes and delivers Delayed Delivery
Contracts, the Contract Securities will be deducted from the Offered Securities
to be purchased by the several Underwriters and the aggregate principal amount
or number of shares of Offered Securities to be purchased by each Underwriter
will be reduced pro rata in proportion to the principal amount or number of
shares of Offered Securities set forth opposite each Underwriter's name in such
Terms Agreement, except to the extent that the Lead Underwriter determines that
such reduction shall be otherwise than pro rata and so advises the Company. The
Company will advise the Lead Underwriter not later than the business day prior
to the Closing Date of the principal amount or number of shares of Contract
Securities.
If the Offered Securities are Debt Securities and the Terms Agreement
specifies "Book-Entry Only" settlement or otherwise states that the provisions
of this paragraph shall apply, the Company will deliver against payment of the
purchase price the Offered Securities in the form of one or more permanent
global securities in definitive form (the "Global Securities") deposited with
the Trustee as custodian for The Depository Trust Company ("DTC") and registered
in the name of Cede & Co., as nominee for DTC. Interests in any permanent global
securities will be held only in book-entry form through DTC, except in the
limited circumstances described in the Prospectus. Payment for the Offered
Securities shall be made by the Underwriters (if the Terms Agreement specifies
that the Offered Securities will not trade in DTC's Same Day Funds Settlement
System) by certified or official bank check or checks in New York Clearing House
(next day) funds or (if the Terms Agreement specifies that the Offered
Securities will trade in DTC's Same Day Funds Settlement System) in Federal
(same day) funds by official check or checks or wire transfer to an account in
New York previously designated to the Lead Underwriter by the Company at a bank
acceptable to the Lead Underwriter, in each case drawn to the order of the
Company at the place of payment specified in the Terms Agreement on the Closing
Date, against delivery to the Trustee as custodian for DTC of the Global
Securities representing all of the Offered Securities.
4. Certain Agreements of the Company. The Company agrees with the several
Underwriters that it will furnish to counsel for the Underwriters, one signed
copy of the registration statement relating to the Registered Securities,
including all exhibits, in the form it became effective and of all amendments
thereto and that, in connection with each offering of Offered Securities:
(a) The Company will file the Prospectus with the Commission pursuant
to and in accordance with Rule 424(b)(2) (or, if applicable and if
consented to by the Lead Underwriter, subparagraph (5)) not later than the
second business day following the execution and delivery of the Terms
Agreement.
(b) The Company will advise the Lead Underwriter promptly of any
proposal to amend or supplement the Registration Statement or the
Prospectus and will afford the Lead Underwriter a reasonable opportunity to
comment on any such proposed amendment or supplement; and the Company will
also advise the Lead Underwriter promptly of the filing of any such
amendment or supplement and of the institution by the Commission of any
stop order proceedings in respect of the Registration Statement or of any
part thereof and will use its best efforts to prevent the issuance of any
such stop order and to obtain as soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any Underwriter or dealer, any event occurs as a result of which
the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary at any time to
amend the Prospectus to comply with the Act, the Company promptly will
notify the Lead Underwriter of such event and will promptly prepare and
file with the Commission, at its own expense, an amendment or supplement
which will correct such statement or omission or an amendment which will
effect such compliance. Neither the Lead Underwriter's consent to, nor the
Underwriters' delivery of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 5.
(d) (i) As soon as practicable, but not later than 16 months, after
the date of each Terms Agreement, the Company will make generally available
to its securityholders an earnings statement covering a period of at least
12 months beginning after the later of (1) the effective date of the
registration statement relating to the Registered Securities, (2) the
effective date of the most recent post-effective amendment to the
Registration Statement to become effective prior to the date of such Terms
Agreement and (3) the date of the Company's most recent Annual Report on
Form 10-K filed with the Commission prior to the date of such Terms
Agreement, which will
5
satisfy the provisions of Section 11(a) of the Act and (ii) the Company
will comply in all respects with Section 10(a) of the Act.
(e) The Company will furnish to the Representatives copies of the
Registration Statement, including all exhibits, any related preliminary
prospectus, any related preliminary prospectus supplement, the Prospectus
and all amendments and supplements to such documents, in each case as soon
as available and in such quantities as the Lead Underwriter reasonably
requests. The Company will pay the expenses of printing and distributing to
the Underwriters all such documents.
(f) The Company will use its best efforts to arrange for the
qualification of the Offered Securities for sale and (if the Offered
Securities are Debt Securities or Preferred Stock) the determination of
their eligibility for investment under the laws of such jurisdictions as
the Lead Underwriter designates and will continue such qualifications in
effect so long as required for the distribution; provided, however, that
the Company shall not be obligated to file any general consent to service
of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any jurisdiction
in which it is not otherwise so subject.
(g) During the period of two years after the date of any Terms
Agreement, the Company will furnish to the Representatives and, upon
request, to each of the other Underwriters, if any, as soon as practicable
after the end of each fiscal year, a copy of its annual report to
stockholders for such year; and the Company will furnish to the
Representatives, as soon as available, a copy of each report and any
definitive proxy statement of the Company filed with the Commission under
the Securities Exchange Act of 1934 or mailed to stockholders.
(h) The Company will pay all expenses incident to the performance of
its obligations under the Terms Agreement (including the provisions of this
Agreement), for any filing fees or other reasonable expenses (including
reasonable fees and disbursements of counsel) in connection with
qualification of the Registered Securities for sale (if the Offered
Securities are Debt Securities or Preferred Stock), any determination of
their eligibility for investment under the laws of such jurisdictions as
the Lead Underwriter may designate and the printing of memoranda relating
thereto, for any fees charged by investment rating agencies for the rating
of the Offered Securities (if they are Debt Securities or Preferred Stock),
for any applicable filing fee incident to, and the reasonable fees and
disbursements of counsel for the Underwriters in connection with, the
review by the National Association of Securities Dealers, Inc. of the
Registered Securities, for any travel expenses of the Company's officers
and employees and any other expenses of the Company in connection with
attending or hosting meetings with prospective purchasers of Registered
Securities and for reasonable expenses incurred in distributing the
Prospectus, any preliminary prospectuses, any preliminary prospectus
supplements or any other amendments or supplements to the Prospectus to the
Underwriters.
(i) If the Offered Securities are Debt Securities or Preferred Stock,
the Company will not offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, or file with the Commission a
registration statement under the Act relating to United States dollar-
denominated debt securities issued or guaranteed by the Company and having
a maturity of more than one year from the date of issue (if the Offered
Securities are Debt Securities) or any series of preferred stock issued or
guaranteed by the Company (if the Offered Securities are Preferred Stock),
or publicly disclose the intention to make any such offer, sale, pledge,
disposition or filing, without the prior written consent of the Lead
Underwriter for a period beginning at the time of execution of the Terms
Agreement and ending the number of days after the Closing Date specified
under "Blackout" in the Terms Agreement.
(j) If the Offered Securities are Common Stock or are convertible into
Common Stock, the Company will not offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, or file with the Commission a
registration statement under the Act relating to, any additional shares of
its Common Stock or securities convertible into or exchangeable or
exercisable for any shares of its Common Stock, or publicly disclose the
intention to make any such offer, sale, pledge, disposition or filing,
without the prior written consent of the Lead Underwriter for a period
beginning at the time of execution of the Terms Agreement and ending the
number of days after the Closing Date specified under "Blackout" in the
Terms Agreement.
6
5. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Offered Securities will be
subject to the accuracy of the representations and warranties on the part of the
Company herein, to the accuracy of the statements of Company officers made
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional conditions precedent:
(a) On or prior to the date of the Terms Agreement, the
Representatives shall have received a letter, dated the date of delivery
thereof, of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP confirming that they are independent public
accountants within the meaning of the Act and the applicable published
Rules and Regulations thereunder and stating to the effect that:
(i) in their opinion the financial statements and any schedules
and any summary of earnings examined by them and included in the
Prospectus comply as to form in all material respects with the
applicable accounting requirements of the Act and the related
published Rules and Regulations;
(ii) they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in Statement of Auditing Standards
No. 71, Interim Financial Information, on any unaudited financial
statements included in the Registration Statement;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial statements
of the Company, inquiries of officials of the Company who have
responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that caused them
to believe that:
(A) the unaudited financial statements, if any, and any
summary of earnings included in the Prospectus do not comply as
to form in all material respects with the applicable accounting
requirements of the Act and the related published Rules and
Regulations or any material modifications should be made to such
unaudited financial statements and summary of earnings for them
to be in conformity with generally accepted accounting
principles;
(B) if any unaudited "capsule" information is contained in
the Prospectus, the unaudited consolidated net sales, net
operating income, net income and net income per share amounts or
other amounts constituting such "capsule" information and
described in such letter do not agree with the corresponding
amounts set forth in the unaudited consolidated financial
statements or were not determined on a basis substantially
consistent with that of the corresponding amounts in the audited
statements of income;
(C) at the date of the latest available balance sheet read
by such accountants, or at a subsequent specified date not more
than three business days prior to the date of the Terms
Agreement, there was any change in the capital stock or any
increase in short-term indebtedness or long-term debt of the
Company and its consolidated subsidiaries or, at the date of the
latest available balance sheet read by such accountants, there
was any decrease in consolidated net assets or consolidated net
worth, as compared with amounts shown on the latest balance sheet
included in the Prospectus; or
(D) for the period from the closing date of the latest
income statement included in the Prospectus to the closing date
of the latest available income statement read by such accountants
there were any decreases, as compared with the corresponding
period of the previous year, in consolidated net sales, net
operating income in the total or (if the Offered Securities are
Common Stock or are convertible into Common Stock) per share
amounts of consolidated income before extraordinary items or net
income or (if the Offered Securities are Debt Securities) in the
ratio of earnings to fixed charges or (if the Offered Securities
are Preferred Stock) in the ratio of earnings to fixed charges
and preferred stock dividends combined;
(iv) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information
contained in the Prospectus (in each case to the extent that such
dollar amounts, percentages and other financial information are
derived from the general accounting records of the Company and its
subsidiaries
7
subject to the internal controls of the Company's accounting system or
are derived directly from such records by analysis or computation)
with the results obtained from inquiries, a reading of such general
accounting records and other procedures specified in such letter and
have found such dollar amounts, percentages and other financial
information to be in agreement with such results, except as otherwise
specified in such letter; and
(v) if unaudited pro forma financial statements are included or
incorporated by reference in the Registration Statement or the
Prospectus, on the basis of a reading of the unaudited pro forma
financial statements, carrying out certain specified procedures,
inquiries of certain officials of the Company who have responsibility
for financial and accounting matters, and proving the arithmetic
accuracy of the application of the pro forma adjustments to the
historical amounts in the pro forma financial statements, nothing came
to their attention which caused them to believe that the pro forma
financial statements do not comply in form in all material respects
with the applicable accounting requirements of Rule 11-02 of
Regulation S-X or that the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of such
statements.
All financial statements and schedules included in material incorporated by
reference into the Prospectus shall be deemed included in the Prospectus
for purposes of this subsection.
(b) The Prospectus shall have been filed with the Commission in
accordance with the Rules and Regulations and Section 4(a) of this
Agreement. No stop order suspending the effectiveness of the Registration
Statement or of any part thereof shall have been issued and no proceedings
for that purpose shall have been instituted or, to the knowledge of the
Company or any Underwriter, shall be contemplated by the Commission.
(c) Subsequent to the execution of the Terms Agreement, there shall
not have occurred (i) any change, or any development or event involving a
prospective change, in the condition (financial or other), business,
properties or results of operations of the Company or its subsidiaries
which, in the judgment of a majority in interest of the Underwriters
including any Representatives, is material and adverse and makes it
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Offered Securities; (ii) any
downgrading in the rating of any debt securities or preferred stock of the
Company by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Act), or any public
announcement that any such organization has under surveillance or review
its rating of any debt securities or preferred stock of the Company (other
than an announcement with positive implications of a possible upgrading,
and no implication of a possible downgrading, of such rating); (iii) any
suspension or limitation of trading in securities generally on the New York
Stock Exchange, or any setting of minimum prices for trading on such
exchange, or any suspension of trading of any securities of the Company on
any exchange or in the over-the-counter market; (iv) any banking moratorium
declared by U.S. Federal or, New York authorities; (v) any outbreak or
escalation of major hostilities in which the United States is involved, any
declaration of war by Congress or any other substantial national or
international calamity or emergency if, in the judgment of a majority in
interest of the Underwriters including any Representatives, the effect of
any such outbreak, escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Offered Securities; (vi) the
enactment, publication, decree or other promulgation of any federal or
state statute, regulation, rule or order of any court or other governmental
authority which in the opinion of a majority in interest of the
Underwriters materially and adversely affects, or will materially and
adversely affect, the business or operations of the Company or its
Subsidiaries; or (vii) the taking of any action by any federal, state or
local government or agency in respect of its monetary or fiscal affairs
which in the opinion of a majority in interest of the Underwriters has a
material adverse effect on the financial markets in the United States.
(d) The Representatives shall have received an opinion, dated the
Closing Date, of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, counsel for the Company, to the
effect that:
(i) Each of the Company and its subsidiaries has been duly
incorporated and is an existing corporation or limited liability
company in good standing under the laws of the jurisdiction of
incorporation or organization, with corporate power and authority to
own its properties and conduct its business as described in the
Prospectus; and all the issued and outstanding capital stock of each
subsidiary of the Company has been duly authorized and validly issued
and is fully paid and nonassessable;
8
(ii) If the Offered Securities are Debt Securities: the Indenture
has been duly authorized, executed and delivered by the Company and
has been duly qualified under the Trust Indenture Act; the Offered
Securities have been duly authorized; the Offered Securities other
than any Contract Securities have been duly executed, authenticated,
issued and delivered and are entitled to the benefits of the
Indenture; the Indenture and the Offered Securities other than any
Contract Securities constitute, and any Contract Securities, when
executed, authenticated, issued and delivered in the manner provided
in the Indenture and sold pursuant to Delayed Delivery Contracts, will
constitute, valid and legally binding obligations of the Company
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and the Offered
Securities other than any Contract Securities conform, and any
Contract Securities, when so issued and delivered and sold will
conform in all material respects, to the description thereof contained
in the Prospectus;
(iii) If the Offered Securities are Preferred Stock: the Offered
Securities have been duly authorized; the Offered Securities other
than any Contract Securities have been validly issued and are fully
paid and nonassessable; any Contract Securities, when issued,
delivered and sold pursuant to Delayed Delivery Contracts, will be
validly issued, fully paid and nonassessable; and the Offered
Securities other than any Contract Securities conform, and any
Contract Securities, when so issued, delivered and sold, will conform
in all material respects, to the description thereof contained in the
Prospectus; and, except as disclosed in the Prospectus, the
stockholders of the Company have no preemptive rights with respect to
the Offered Securities;
(iv) If the Offered Securities are Common Stock: the Offered
Securities and all other outstanding shares of the Common Stock of the
Company have been duly authorized and validly issued, are fully paid
and nonassessable and conform to the description thereof contained in
the Prospectus; and, except as disclosed in the Prospectus, the
stockholders of the Company have no preemptive rights with respect to
the Offered Securities;
(iv) If the Offered Securities are convertible: the Offered
Securities other than any Contract Securities are, and any Contract
Securities, when (if the Offered Securities are Debt Securities)
executed, authenticated, issued and delivered in the manner provided
in the Indenture and sold pursuant to Delayed Delivery Contracts or
(if the Offered Securities are Preferred Stock) when issued, delivered
and sold pursuant to Delayed Delivery Contracts, will be convertible
into Common Stock of the Company in accordance with (if they are Debt
Securities) the Indenture or (if they are Preferred Stock) their
terms; the shares of Common Stock initially issuable upon conversion
of the Offered Securities have been duly authorized and reserved for
issuance upon such conversion and, when issued upon such conversion,
will be validly issued, fully paid and nonassessable; the outstanding
shares of Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable and conform in all material respects
to the description thereof contained in the Prospectus; and, except as
disclosed in the Prospectus, the stockholders of the Company have no
preemptive rights with respect to the Common Stock;
(v) If the Offered Securities are Common Stock or are convertible
into Common Stock: Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings known to such counsel between
the Company and any person granting such person the right to require
the Company to file a registration statement under the Act with
respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration
statement filed by the Company under the Act;
(vi) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated by the Terms Agreement
(including the provisions of this Agreement) in connection with the
issuance or sale of the Offered Securities by the Company, except such
as have been obtained and made under the Act and, if the Offered
Securities are Debt Securities, the Trust Indenture Act and such as
may be required under state securities laws;
9
(vii) The execution, delivery and performance of the Indenture
(if the Offered Securities are Debt Securities), the Terms Agreement
(including the provisions of this Agreement) and, if the Offered
Securities are Debt Securities or Preferred Stock, any Delayed
Delivery Contracts and the issuance and sale of the Offered Securities
and, if the Offered Securities are Debt Securities or Preferred Stock,
compliance with the terms and provisions thereof will not result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, any statute, any rule, regulation or, to
such counsel's knowledge, order of any governmental agency or body or
any court having jurisdiction over the Company or any subsidiary of
the Company or any of their properties, or any agreement or instrument
to which the Company or any such subsidiary is a party or by which the
Company or any such subsidiary is bound or to which any of the
properties of the Company or any such subsidiary is subject, or the
charter or by-laws of the Company or any such subsidiary except for
such breach, violation or default which would not result in a Material
Adverse Effect, and the Company has full power and authority to
authorize, issue and sell the Offered Securities as contemplated by
the Terms Agreement (including the provisions of this Agreement);
(viii) The statements under the captions "Description of the
Notes" and "Underwriting" in the Prospectus, as amended or
supplemented, and Items 14 and 15 of Part II of the Registration
Statement, insofar as such statements constitute a summary of legal
matters or documents referred to therein, fairly present the
information called for with respect to such legal matters or documents
in all material respects;
(ix) The Company is not and, after giving effect to the offering
and sale of the Offered Securities and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as defined in the Investment Company Act of 1940;
(x) The Terms Agreement (including the provisions of this
Agreement) and, if the Offered Securities are Debt Securities or
Preferred Stock, any Delayed Delivery Contracts have been duly
authorized, executed and delivered by the Company; and
(xi) The Company meets the requirements for use of Form S-3 under
the Act and the Registration Statement has become effective under the
Act, the Prospectus was filed with the Commission pursuant to the
subparagraph of Rule 424(b) specified in such opinion on the date
specified therein, and, to the best of the knowledge of such counsel,
no stop order suspending the effectiveness of the Registration
Statement or any part thereof has been issued and no proceedings for
that purpose have been instituted or are pending or contemplated under
the Act, and the registration statement relating to the Registered
Securities, as of its effective date, the Registration Statement and
the Prospectus, as of the date of the Terms Agreement, and any
amendment or supplement thereto, as of its date, complied as to form
in all material respects with the requirements of the Act, the Trust
Indenture Act and the Rules and Regulations.
In addition, such counsel shall state that such counsel has
participated in conferences with representatives of the Initial Purchasers,
officers and other representatives of the Company and representatives of
the independent certified public accountants of the Company, at which
conferences the contents of the Registration Statement, the Prospectus and
related matters were discussed, and such counsel has assisted the Company
in the preparation of the Registration Statement and the Prospectus, and
although such counsel does not pass upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus (except and only
to the extent as set forth in clause (viii) above), on the basis of the
foregoing, such counsel has no reason to believe that such registration
statement, as of its effective date, the Registration Statement or the
Prospectus, as of the date of the Terms Agreement or as of the Closing
Date, or any amendment or supplement thereto, as of its date or as of the
Closing Date, contained any untrue statement of a material fact or omitted
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided that such counsel does not express any comment with
respect to the financial statements including the notes thereto and
supporting schedules, or any other financial data set forth or referred to
in or incorporated by reference in the Registration Statement or the
Prospectus.
In rendering such opinions, such counsel (A) need not express any
opinion with regard to the application of laws of any jurisdiction other
than the federal law of the United States, the laws
10
of the State of New York and the General Corporation Law of the State of
Delaware and (B) may rely, as to matters of fact, to the extent they deem
proper, on representations or certificates of responsible officers of the
Company and certificates of public officials.
(e) The Representatives shall have received from Cravath, Swaine &
▇▇▇▇▇, counsel for the Underwriters, such opinion or opinions, dated the
Closing Date, with respect to the incorporation of the Company, the
validity of the Offered Securities, the Registration Statement, the
Prospectus and other related matters as the Representatives may require,
and the Company shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters. In
rendering such opinion, Cravath, Swaine & ▇▇▇▇▇ may rely as to the
incorporation of the Company and all other matters governed by New York law
upon the opinion of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP referred to above.
(f) The Representatives shall have received a certificate, dated the
Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Company in which such officers, to
the best of their knowledge after reasonable investigation, shall state
that the representations and warranties of the Company in this Agreement
are true and correct in all material respects, that the Company has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date, that no
stop order suspending the effectiveness of the Registration Statement or of
any part thereof has been issued and no proceedings for that purpose have
been instituted or are contemplated by the Commission and that, subsequent
to the date of the most recent financial statements in the Prospectus,
there has been no material adverse change, nor any development or event
involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of the
Company and its subsidiaries taken as a whole except as set forth in or
contemplated by the Prospectus or as described in such certificate.
(g) The Underwriters shall have received on opinion, dated on Closing
Date, of ▇▇▇▇ ▇▇▇▇▇▇, Chief Counsel of the Company, to the effect that:
(i) Each of the Company and its subsidiaries is duly qualified to
do business as a foreign corporation or limited liability company in
good standing in all jurisdictions in which its ownership or lease of
property or the conduct of its business requires such qualification
except where failure to be so qualified would not result in a Material
Adverse Effect; all of the issued and outstanding capital stock or
membership interests of each subsidiary owned by the Company has been
duly authorized and validly issued and is fully paid and
nonassessable; and, to the knowledge of such counsel, the capital
stock or membership interests of each subsidiary owned by the Company,
directly or through subsidiaries, is owned free from liens,
encumbrances and defects;
(ii) The statements under the captions "Business-Legal
Proceedings", "Regulation-Truth in Lending", "Regulation-Other Lending
Laws", "Regulation-Broker/Dealer", "Certain Transactions-Current
Relationships with Continental Grain" and "Description of Certain
Indebtedness and Financing Arrangements" in the Prospectus, as amended
or supplemented, insofar as such statements constitute a summary of
legal matters, documents or proceedings referred to therein, fairly
present the information called for with respect to such legal matters,
documents and proceedings in all material respects;
(iii) The Company and each of its subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("Permits"), as are necessary to own, lease and operate
its respective properties and to conduct its business in the manner
described in the Prospectus except those Permits, the failure to so
own would not have a Material Adverse Effect; to the best of such
counsel's knowledge, after due inquiry, the Company and each of its
subsidiaries has fulfilled and performed all of its material
obligations with respect to such Permits and no event has occurred
which allows, or after notice or lapse of time would allow, revocation
or termination thereof or results in any other material impairment of
the rights of the holder of any such Permit, subject in each case to
such qualification as may be set forth in the Prospectus, such Permits
contain no restrictions that are materially burdensome to the Company
or any of its subsidiaries except those Permits, the failure to so own
would not have a Material Adverse Effect; and
(iv) This Agreement has been duly authorized, executed and
delivered by the Company.
11
(h) The Representatives shall have received a letter, dated the
Closing Date, of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred to
in such subsection will be a date not more than three business days prior
to the Closing Date for the purposes of this subsection.
The Company will furnish the Representatives with such conformed
copies of such opinions, certificates, letters and documents as the
Representatives reasonably request. The Lead Underwriter may in its sole
discretion waive on behalf of the Underwriters compliance with any conditions to
the obligations of the Underwriters under this Agreement and the Terms
Agreement.
6. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus or preliminary prospectus
supplement, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse each Underwriter
for any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with written information furnished
to the Company by any Underwriter through the Lead Underwriter, if any,
specifically for use therein, it being understood and agreed that the only such
information furnished by any Underwriter consists of the information described
as such in the Terms Agreement provided, however, that the foregoing indemnity
agreement with respect to any preliminary prospectus shall not enure to the
benefit of any Underwriter from whom the person asserting any such losses,
claims, damages and liabilities and judgments purchased Securities, or any
person controlling such Underwriter, if a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Securities to such person, and if the
Prospectus (as so amended and supplemented) would have cured the defect giving
rise to such loss, claim, damage, liability or judgment.
(b) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company against any losses, claims, damages or liabilities to which
the Company may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus or
preliminary prospectus supplement, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by such
Underwriter through the Representatives, if any, specifically for use therein,
and will reimburse any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred, it being understood
and agreed that the only such information furnished by any Underwriter consists
of the information described as such in the Terms Agreement.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation.
12
No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action in
respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party unless such
settlement includes an unconditional release of such indemnified party from all
liability on any claims that are the subject matter of such action.
(d) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering of the Offered
Securities or (ii) 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 Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company bear to the total underwriting discounts and commissions received
by the Underwriters. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid by an indemnified
party as a result of the losses, claims, damages or liabilities referred to in
the first sentence of this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Offered Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company under this Section shall be in addition
to any liability which the Company may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each director of the Company, to each officer of the Company who
has signed the Registration Statement and to each person, if any, who controls
the Company within the meaning of the Act.
7. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase Offered Securities under the Terms Agreement and
the aggregate principal amount (if Debt Securities) or number of shares (if
Preferred Stock or Common Stock) of Offered Securities that such defaulting
Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of
the total principal amount (if Debt Securities) or number of shares (if
Preferred Stock or Common Stock) of Offered Securities, the Lead Underwriter may
make arrangements satisfactory to the Company for the purchase of such Offered
Securities by other persons, including any of the Underwriters, but if no such
arrangements are made by the Closing Date, the non-defaulting Underwriters shall
be obligated severally, in proportion to their respective commitments under the
Terms Agreement (including the provisions of this Agreement), to purchase the
Offered Securities that such defaulting Underwriters agreed but failed to
purchase. If any Underwriter or Underwriters so default and the aggregate
principal amount (if Debt Securities) or number of shares (if Preferred Stock or
Common Stock) of Offered Securities with respect to which such default or
defaults occur exceeds 10% of the total principal amount (if Debt Securities) or
number of shares (if Preferred Stock or Common Stock) of Offered Securities and
arrangements satisfactory to the Lead Underwriter and the Company for the
purchase of such Offered Securities by other persons are not made within 36
hours after such default, the Terms Agreement will terminate without liability
on the part of any non-defaulting Underwriter or the Company, except as provided
in Section 8. As used in this Agreement, the term "Underwriter" includes any
person substituted for an Underwriter under this Section. Nothing herein will
relieve a defaulting Underwriter from liability for its default. If the Offered
Securities are Debt Securities or Preferred Stock, the respective commitments of
the several Underwriters for the purposes of this Section shall be determined
without regard to reduction in the respective Underwriters' obligations to
purchase the principal amounts (if Debt Securities) or numbers of shares (if
Preferred Stock) of the Offered
13
Securities set forth opposite their names in the Terms Agreement as a result of
Delayed Delivery Contracts entered into by the Company.
8. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the several Underwriters set forth in or made
pursuant to the Terms Agreement (including the provisions of this Agreement)
will remain in full force and effect, regardless of any investigation, or
statement as to the results thereof, made by or on behalf of any Underwriter,
the Company or any of their respective representatives, officers or directors or
any controlling person, and will survive delivery of and payment for the Offered
Securities. If the Terms Agreement is terminated pursuant to Section 7 or if for
any reason the purchase of the Offered Securities by the Underwriters is not
consummated, the Company shall remain responsible for the expenses to be paid or
reimbursed by it pursuant to Section 4 and the respective obligations of the
Company and the Underwriters pursuant to Section 6 shall remain in effect. If
the purchase of the Offered Securities by the Underwriters is not consummated
for any reason other than solely because of the termination of the Terms
Agreement pursuant to Section 7 or the occurrence of any event specified in
clause (iii), (iv) or (v) of Section 5(c), the Company will reimburse the
Underwriters for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) reasonably incurred by them in connection with the
offering of the Offered Securities.
9. Notices. All communications hereunder will be in writing and, if sent to
the Underwriters, will be mailed, delivered or telegraphed and confirmed to them
at their address furnished to the Company in writing for the purpose of
communications hereunder or, if sent to the Company, will be mailed, delivered
or telegraphed and confirmed to it at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: Chief Counsel.
10. Successors. The Terms Agreement (including the provisions of this
Agreement) will inure to the benefit of and be binding upon the Company and such
Underwriters as are identified in the Terms Agreement and their respective
successors and the officers and directors and controlling persons referred to in
Section 6, and no other person will have any right or obligation hereunder.
11. Representation of Underwriters. Any Representatives will act for the
several Underwriters in connection with the financing described in the Terms
Agreement, and any action under such Terms Agreement (including the provisions
of this Agreement) taken by the Representatives jointly or by the Lead
Underwriter will be binding upon all the Underwriters.
12. Counterparts. The Terms Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
13. Applicable Law. This Agreement and the Terms Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York, without regard to principles of conflicts of laws.
The Company and the Underwriters hereby submit to the non-exclusive
jurisdiction of the Federal and state courts in the Borough of Manhattan in The
City of New York in any suit or proceeding arising out of or relating to the
Terms Agreement (including the provisions of this Agreement) or the transactions
contemplated thereby.
14
ANNEX I
(Three copies of this Delayed Delivery Contract should be signed and returned
to the address shown below so as to arrive not later than 9:00 A.M. New
York time, on , 1998
DELAYED DELIVERY CONTRACT
-------------------------
Contifinancial corporation
c/o [Name and Address of Lead Underwriter]
Gentlemen:
The undersigned will purchase from the Company as of the date hereof, for
delivery on the dates set forth below, Securities in the principal amounts set
forth below:
Principal Amount
----------------
Number
Delivery Date of Shares
------------- ---------
Each of such delivery dates is hereinafter referred to as a Delivery Date.
Payment for the Securities that the undersigned has agreed to purchase for
delivery on each Delivery Date shall be made to the Company or its order by
certified or official bank check in New York Clearing House (next day) funds at
the office of at .M. on such Delivery Date upon
delivery to the undersigned of the Securities to be purchased by the undersigned
for delivery on such Delivery Date in definitive form and in such denominations
and registered in such names as the undersigned may designate by written or
telegraphic communication addressed to the Company not less than five full
business days prior to such Delivery Date.
It is expressly agreed that the provisions for delayed delivery and payment
are for the sole convenience of the undersigned; that the purchase hereunder of
Securities is to be regarded in all respects as a purchase as of the date of
this Contract; that the obligation of the Company to make delivery of and accept
payment for, and the obligation of the undersigned to take delivery of and make
payment for, Securities on each Delivery Date shall be subject only to the
conditions that (1) investment in the Securities shall not at such Delivery Date
be prohibited under the laws of any jurisdiction in the United States to which
the undersigned is subject and (2) the Company shall have sold to the
Underwriters the total [principal amount] [number of shares] of the Securities
less the [principal amount] [number of shares] thereof covered by this and other
similar Contracts. The undersigned represents that its investment in the
Securities is not, as of the date hereof, prohibited under the laws of any
jurisdiction to which the undersigned is subject and which governs such
investment.
Promptly after completion of the sale to the Underwriters the Company will
mail or deliver to the undersigned at its address set forth below notice to such
effect, accompanied by a copy of the opinion of counsel for the Company
delivered to the Underwriters in connection therewith.
This Contract will inure to the benefit of and be binding upon the parties
hereto and their respective successors, but will not be assignable by either
party hereto without the written consent of the other.
15
It is understood that the acceptance of any such Contract is in the
Company's sole discretion and, without limiting the foregoing, need not be on a
first-come, first-served basis. If this Contract is acceptable to the Company,
it is requested that the Company sign the form of acceptance below and mail or
deliver one of the counterparts hereof to the undersigned at its address set
forth below. This will become a binding contract between the Company and the
undersigned when such counterpart is so mailed or delivered.
Yours very truly,
-----------------------------------------
(Name of Purchaser)
by
--------------------------------------
--------------------------------------
(Title of Signatory)
--------------------------------------
--------------------------------------
(Address of Purchaser)
Accepted, as of the above date.
CONTIFINANCIAL CORPORATION
by
--------------------------
[Insert title]
by
--------------------------
[Insert title]
16
[The following form of Terms Agreement will not be an annex to the related
Underwriting Agreement and should normally be typed separately. In order to
inform the issuer of all the standard underwriting terms, a draft of the Terms
Agreement should be circulated together with the first draft of the Underwriting
Agreement.]
ContiFinancial Corporation
("Company")
Debt Securities
TERMS AGREEMENT
---------------
, 19
To: The Representative of the Underwriters identified herein
Dear Sirs:
The undersigned agrees to sell to the several Underwriters named [in
Schedule A hereto] [below] for their respective accounts, on and subject to the
terms and conditions of the Underwriting Agreement filed as an exhibit to the
Company's registration statement on Form S-3 (No. 333-33783) ("Underwriting
Agreement"), the following securities ("Offered Securities") on the following
terms:
Title: [ %] [Floating Rate] [Notes] [Debentures] [Bonds] Due .
Principal Amount: $ .
Interest: [ % per annum, from , 19 , payable semiannually
on and , commencing , 19 , to holders of record on the
preceding or , as the case may be.] [Zero coupon.]
Maturity: , 19 .
Optional Redemption:
Sinking Fund:
Listing: [None.] [ Stock Exchange.] [The Nasdaq Stock
Market Inc.'s National Market.]
Delayed Delivery Contracts: [None.] [Delivery Date[s] shall be
. 19 . Underwriters' fee is % of the principal amount of
the Contract Securities.]
Purchase Price: % of principal amount, plus accrued interest[, if
any,] from , 19 .
Expected Reoffering Price: % of principal amount, subject to change
by the Underwriters.
Closing: A.M. on , 19 , at , in Federal
(same day) funds.
Settlement and Trading: [Physical certificated form.] [Book-Entry Only
via DTC. The Offered Securities will trade in DTC's Same Day Funds
Settlement System.]
Blackout: Until days after the Closing Date.
Name and Address of Lead Underwriter:
The respective principal amounts of the Offered Securities to be purchased
by each of the Underwriters are set forth opposite their names in Schedule A
hereto.
The provisions of the Underwriting Agreement are incorporated herein by
reference.
The Offered Securities will be made available for checking and packaging at
the office of at least 24 hours prior to the Closing Date.
17
For purposes of Section 6 of the Underwriting Agreement, the only
information furnished to the Company by any Underwriter for use in the
Prospectus consists of [(i)] the following information in the Prospectus
furnished on behalf of each Underwriter: the last paragraph at the bottom of the
prospectus supplement cover page concerning the terms of the offering by the
Underwriters, the legend concerning over-allotments and [,] stabilizing [and
passive market making] on the inside front cover page of the prospectus
supplement and [,] the concession and reallowance figures appearing in the
paragraph under the caption "Underwriting" in the prospectus supplement [If
paragraph regarding passive market making is included, insert and the
information contained in the paragraph under the caption
"Underwriting" in the prospectus supplement] [If applicable, insert; and (ii)
the following information in the prospectus supplement furnished on behalf of
[insert name of Underwriter]: [insert description of information, such as
material relationship disclosure under the caption "Underwriting" in the
prospectus supplement]./1/
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to the Company one of the counterparts hereof, whereupon
it will become a binding agreement between the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
CONTIFINANCIAL CORPORATION,
by
------------------------------------
[Insert title]
by
------------------------------------
[Insert title]
The foregoing Terms Agreement is
hereby confirmed and accepted as
of the date first above written.
[NAME OF LEAD UNDERWRITER]
by
---------------------------
[Insert title]
[Acting on behalf of itself and
as the Representative of the
several Underwriters.]
[NAME OF LEAD UNDERWRITER]
---------------------------
---------------------------
[Acting on behalf of themselves
and as the Representatives of
the several Underwriters.]
By [NAME OF LEAD UNDERWRITER]
by
---------------------------
[Insert title]
-----------
/1/Special care should be taken to ensure that the description of the
information, including caption references and any references to particular
paragraphs or sentences, matches the final Prospectus.
18
SCHEDULE A
Principal
Underwriter Amount
----------- ------
................................................... $
---------
Total ............................ $
=========
19
[The following form of Terms Agreement will not be an annex to the related
Underwriting Agreement and should normally be typed separately. In order to
inform the issuer of all the standard underwriting terms, a draft of the Terms
Agreement should be circulated together with the first draft of the Underwriting
Agreement.]
ContiFinancial Corporation
("Company")
Preferred [Common] Stock
TERMS AGREEMENT
---------------
, 19
To: The Representative of the Underwriters identified herein
Dear Sirs:
The undersigned agrees to sell to the several Underwriters named [in
Schedule A hereto] [below] for their respective accounts, on and subject to the
terms and conditions of the Underwriting Agreement filed as an exhibit to the
Company's registration statement on Form S-3 (No. 33-33783) ("Underwriting
Agreement"), the following securities ("Offered Securities") on the following
terms:
Title:
Number of Shares:
Dividend Rate:
Optional Redemption:
Sinking Fund:
Listing: [None.] [ Stock Exchange.] [The Nasdaq Stock Market]
Delayed Delivery Contracts: [None.] [Delivery Date[s] shall be
. 19 . Underwriters' fee is $ per share of the Contract
Securities.]
Purchase Price: $ per share [If preferred stock issue, insert
plus accrued dividends[, if any,] from , 19 ].
Expected Reoffering Price: $ per share, subject to change by the
[Representative[s]] [Underwriters].
Closing: A.M. on , 19 , at , in New York
Clearing House (next day) funds.
Underwriter[s']['s] Compensation: $ payable to the
[Representative [s] for the proportionate accounts of the] Underwriter[s]
on the Closing Date.
Blackout: Until days after the Closing Date.
Name and Address of Lead Underwriter:
The respective numbers of shares of the Offered Securities to be purchased
by each of the Underwriters are set forth opposite their names in Schedule A
hereto.
The provisions of the Underwriting Agreement are incorporated herein by
reference.
The Offered Securities will be made available for checking and packaging at
the office of at least 24 hours prior to the Closing Date.
20
For purposes of Section 6 of the Underwriting Agreement, the only
information furnished to the Company by any Underwriter for use in the
Prospectus consists of [(i)] the following information in the Prospectus
furnished on behalf of each Underwriter: the last paragraph at the bottom of the
prospectus supplement cover page concerning the terms of the offering by the
Underwriters, the legend concerning over-allotments and [,] stabilizing [and
passive market making] on the inside front cover page of the prospectus
supplement and [,] the concession and reallowance figures appearing in the
paragraph under the caption "Underwriting" in the prospectus supplement [If
paragraph regarding passive market making is included, insert and the
information contained in the paragraph under the caption
"Underwriting" in the prospectus supplement] [If applicable, insert; and (ii)
the following information in the prospectus supplement furnished on behalf of
[insert name of Underwriter]: [insert description of information, such as
material relationship disclosure under the caption "Underwriting" in the
prospectus supplement]./1/
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to the Company one of the counterparts hereof, whereupon
it will become a binding agreement between the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
CONTIFINANCIAL CORPORATION,
by
------------------------------------
[Insert title]
by
------------------------------------
[Insert title]
The foregoing Terms Agreement is
hereby confirmed and accepted as
of the date first above written.
[If no co-representative, use first
confirmation form. If co-representative,
use second.]
[NAME OF LEAD UNDERWRITER]
by
---------------------------
[Insert title]
[Acting on behalf of itself and
as the Representative of the
several Underwriters.]
[NAME OF LEAD UNDERWRITER]
---------------------------
---------------------------
[Acting on behalf of themselves
and as the Representatives of
the several Underwriters.]
By [NAME OF LEAD UNDERWRITER]
by
---------------------------
[Insert title]
-----------
/1/Special care should be taken to ensure that the description of the
information, including caption references and any references to particular
paragraphs or sentences, matches the final Prospectus.
21
SCHEDULE A
Number of
Underwriter Shares
----------- ------
................................................... $
---------
Total ............................ $
=========
22