EXHIBIT 1.2
WILSHIRE FINANCIAL SERVICES GROUP INC.
__% NOTES DUE 2003
UNDERWRITING AGREEMENT
[__________ __,] 1996
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & CO., INC.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Wilshire Financial Services Group Inc., a Delaware corporation (the
"Company"), confirms its agreement with ▇▇▇▇▇▇▇▇, Billings, ▇▇▇▇▇▇ & Co., Inc.,
as underwriter (the "Underwriter"), with respect to (i) the sale by the Company
and the purchase by the Underwriter of $75,000,000 aggregate principal amount of
the Company's __% Notes due 2003 (the "Notes") and (ii) the grant by the Company
to the Underwriter of the option described in Section 1(b) hereof to purchase
all or any part of an additional $11,250,000 aggregate principal amount of Notes
solely to cover over-allotments, if any. The $75,000,000 aggregate principal
amount of Notes (the "Firm Notes") to be purchased by the Underwriter and all or
any part of the $11,250,000 aggregate principal amount of Notes subject to the
option described in Section 1(b) hereof (the "Option Notes") are hereinafter
called, collectively, the "Notes". The Notes are to be issued pursuant to an
indenture (the "Indenture"), dated December __, 1996, between the Company and
Bankers Trust Company, as trustee (the "Trustee").
The Company has filed with the Securities and Exchange Commission (the
"Commission"), a registration statement on Form S-1 (No. 333-15263) and a
related preliminary prospectus for the registration of the Notes under the
Securities Act of 1933, as amended (the "Securities Act") and the rules and
regulations thereunder (the "Securities Act Regulations"). The Company has
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 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 Company files a post-effective
amendment to such registration statement which becomes effective prior to the
Closing Time (as defined below), "Registration Statement" shall refer to such
registration statement as so amended. Any registration 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 Company with the consent of the
Underwriter 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 Company and the Underwriter agree as follows:
1. Sale and Purchase:
-----------------
(a) Firm Notes. Upon the basis of the warranties and representations and
other terms and conditions herein set forth, the Company agrees to sell to the
Underwriter and the Underwriter agrees to purchase from the Company $75,000,000
aggregate principal amount of Firm Notes at the purchase price of __.0% of the
principal amount thereof, plus accrued interest, if any, from the date of
issuance, December __, 1996 (the "Issue Date") to the Closing Time (as defined
below). The Underwriter may from time to time increase or decrease the public
offering price of the Firm Notes after the initial public offering to such
extent as the Underwriter may determine in accordance with applicable law.
(b) Option Notes. In addition, upon the basis of the warranties and
representations and other terms and conditions herein set forth, the Company
hereby grants an option to the Underwriter to purchase from the Company up to
$11,25,000 aggregate principal amount of Option Notes. The purchase price to be
paid for any Option Notes shall be the same percentage of the principal amount
thereof as the percentage set forth in paragraph (a) above for the Firm Notes,
plus accrued interest, if any, from the Issue Date to the relevant Date of
Delivery (as defined below) 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 Firm Notes upon notice by the Underwriter
to the Company setting forth the aggregate principal amount of Option Notes as
to which the Underwriter are then exercising the option and the time and date of
payment and delivery for the Option Notes. Any such time and date of delivery
(a "Date of Delivery") shall be determined by the Underwriter, but shall not be
later than seven 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. The Underwriter
may from time to time increase or decrease the public offering price of the
Option Notes after the initial public offering to such extent as the Underwriter
may determine in accordance with applicable law.
2. Payment and Delivery:
--------------------
(a) Firm Notes. Payment of the purchase price for the Firm Notes shall be
made to the Company by wire transfer of immediately available funds or certified
or official bank check payable in federal (same-day) funds at the offices of
Proskauer ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP located at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ (unless another place shall be agreed upon by the Underwriter and
the Company) against delivery of the certificates for the Firm Notes
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to the Underwriter for the account of the Underwriter. Such payment and delivery
shall be made at ____ 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 Underwriter and the Company). The time at which such payment
and delivery are actually made is hereinafter sometimes called the "Closing
Time". At least two full business days preceding the Closing Time, the Company
shall authorize and direct the Trustee to prepare and authenticate a global note
certificate representing the Notes (the "Global Note Certificate"). At least one
full business day preceding the Closing Time, the Representative shall advise
the Company and The Depository Trust Corporation ("DTC"), as depository (the
"Depository"), or the Trustee on its behalf, of the names and denominations in
which the Firm Notes are to be registered. At the Closing Time, the Company
shall deliver the "Letter of Representations to DTC" executed by itself, the
Trustee and DTC. The Company shall authorize and direct the Trustee to present
at the Closing Time (i) the Global Note Certificate registered in the name of
the Depository's nominee, as nominee of the Depository, and to retain the Global
Note Certificate pursuant to the DTC Fast System and (ii) the Note Register
evidencing ownership of the Firm Notes.
(b) Option Notes. In addition, payment of the purchase price for the
Option Notes shall be made to the Company by wire transfer of immediately
available funds or certified or official bank check payable in federal (same-
day) funds at the offices of Proskauer ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP located at
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (unless another place shall be agreed
upon by the Underwriter and the Company), against delivery of the certificates
for the Option Notes to the Underwriter for the account of the Underwriter.
Such payment and delivery shall be made at ____ a.m., New York City time, on
each Date of Delivery. At least one full business day preceding the relevant
Date of Delivery, the Representative shall advise the Company and DTC, or the
Trustee on its behalf, of the names and denominations in which the Option Notes
are to be registered. The Company shall authorize and direct the Trustee to
present at the relevant Date of Delivery the Note Register evidencing ownership
of the Option Notes.
3. Representations and Warranties of the Company:
---------------------------------------------
The Company represents and warrants to the Underwriter as of the date hereof
that:
(a) the Company is a multiple savings and loan holding company duly
registered under the Home Owners' Loan Act, as amended ("HOLA"), and its current
business operations constitute permissible services or activities for a multiple
savings and loan holding company under HOLA and 12 C.F.R. Part 584;
(b) the Company has an authorized capitalization as of September 30, 1996
as set forth in the Prospectus under the column entitled "Actual" under the
caption "Capitalization" (and not under the column entitled "Adjusted"); the
outstanding shares of capital stock of the Company and its direct and indirect
subsidiaries (the "Subsidiaries"), Wilshire Funding Corporation, Wilshire
Servicing Corporation, Wilshire Acquisitions Corporation, First Bank of ▇▇▇▇▇▇▇
Hills, F.S. B. ("First Bank") and ▇▇▇▇▇▇ Savings Bank, F.S.B. ("▇▇▇▇▇▇" and
together with First Bank, the "Savings Banks"), have been duly and validly
authorized and issued and are fully paid and non-assessable, and all of the
outstanding shares of capital stock of the Subsidiaries are directly or
indirectly owned of record and beneficially by the Company;
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(c) the Company and each of the Company's Subsidiaries other than the
Savings Banks have been duly incorporated and is validly existing as a
corporation in good standing under the laws of its respective jurisdiction of
incorporation with the corporate power and authority to own its respective
properties and to conduct its respective business and, in the case of the
Company, to execute and deliver this Agreement and the Indenture and to issue
the Notes and (i) the Employment Agreement dated November 15, 1996 between the
Company and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, (ii) the Employment Agreement dated November
15,1996 between the Company and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, (iii) the Servicing
Agreement dated as of November 15, 1996 among Wilshire Credit Corporation, a
Nevada corporation ("WCC"), the Company, Wilshire Funding Corporation, a
Delaware corporation ("WFC"), and Wilshire Servicing Corporation, a Delaware
corporation ("WSC"), (iv) the Loan Purchase Agreement dated ______________
between WCC and WFC, (v) the Administrative Services Agreement dated
____________ among WCC and certain of its affiliates and the Company and (vi)
the credit facilities filed as Exhibits 10.21 and 10.22 to the Registration
Statement (the "Other Transaction Documents");
(d) each Savings Banks has been chartered as a federal savings bank under
the laws of the United States of America, and its charter is in full force and
effect; each Savings Bank has full corporate power and corporate authority to
own its properties and conduct its business as described in the Registration
Statement and the Prospectus; each Savings Bank is a member of the Federal Home
Loan Bank System; and the savings accounts of depositors in the Savings Banks
are insured by the Savings Association Insurance Fund (the "SAIF") of the
Federal Deposit Insurance Corporation (the "FDIC") to the fullest extent
permitted by law and the rules and regulations of the FDIC, and no proceedings
for the termination of such insurance are pending, or to the best of the
Company's knowledge, threatened;
(e) except as set forth in the Prospectus, the Company and all of its
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, operations, business or condition (financial or otherwise)
of the Company and its Subsidiaries taken as a whole, and the Company and its
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,
operations, business or condition (financial or otherwise) of the Company and
its Subsidiaries taken as a whole;
(f) the Company and its Subsidiaries are in compliance in all material
respect with all applicable laws, rules, regulations, orders, decrees and
judgments, including those relating to transactions with affiliates;
(g) neither the Company nor any of its Subsidiaries is party to or
otherwise the subject of any consent decree, memorandum of understanding,
written agreement or similar supervisory or enforcement agreement or
understanding with the OTS, the FDIC or any other government authority or agency
responsible for the supervision, regulation or insurance of depository
institutions or their holding companies, other than the cease and desist orders
issued to the Savings Banks by the Office of Thrift Supervision (the "OTS") on
October 31, 1996 (the "Cease
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and Desist Orders"); the Savings Banks are in compliance with the provisions of
the Cease and Desist Orders in effect as of the date hereof; and, to the best of
the Company's knowledge, no further or additional bank regulatory action against
the Savings Banks and/or their directors is threatened;
(h) neither the Company nor any of its Subsidiaries is in breach of, or in
default under (nor has any event occurred which with notice, lapse of time, or
both would constitute a breach of, or default under), its respective articles of
incorporation or charter or by-laws or in the performance or observance of any
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, loan or credit agreement or other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which any of them is bound, except for such breaches or defaults which would not
have a material adverse effect on the assets, operations, business or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole,
and the execution, delivery and performance of this Agreement, the Indenture and
the Other Transaction Documents, and the issuance of the Notes and consummation
of the transactions contemplated hereby and thereby will not conflict with, or
result in any breach of or constitute a default under (nor constitute any event
which with notice, lapse of time, or both would constitute a breach of, or
default under), (i) any provision of the articles of incorporation or charter or
by-laws of the Company or any of its Subsidiaries, or (ii) any provision of any
indenture, mortgage, deed of trust, loan or credit agreement or other agreement
or instrument to which the Company or any of its Subsidiaries is a party or by
which any of them or their respective properties may be bound or affected, or
under any federal, state, local or foreign law, regulation or rule or any
decree, judgment or order applicable to the Company or any of its Subsidiaries,
except in the case of this clause (ii) for such breaches or defaults which would
not have a material adverse effect on the assets, operations, business or
condition (financial or otherwise) of the Company and its Subsidiaries taken as
a whole;
(i) this Agreement has been duly authorized, executed and delivered by the
Company and is a legal, valid and binding agreement of the Company enforceable
in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance 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 8 hereof may be limited by federal or state securities laws and public
policy considerations in respect thereof;
(j) the Indenture has been duly authorized by the Company and when executed
and delivered by the Company and the Trustee will be a legal, valid and binding
agreement of the Company enforceable in accordance with its terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or similar laws affecting creditors' rights generally, and by general
principles of equity;
(k) the Notes have been duly authorized by the Company and when executed by
the Company, authenticated by the Trustee and delivered against payment therefor
as contemplated by this Agreement, will constitute legal, valid and binding
obligations of the Company enforceable in accordance with their terms and
entitled to the benefits of the Indenture, except as may be
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limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or similar laws affecting creditors' rights generally and by general
principles of equity;
(l) the Other Transaction Documents have been duly authorized and will be,
upon execution and delivery by the Company, legal, valid and binding agreements
of the Company enforceable by it in accordance with their terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or similar laws affecting creditors' rights generally, and by general
principles of equity;
(m) no approval, authorization, consent or order of or filing with any
federal, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the sale and delivery of the
Notes by the Company as contemplated hereby other than (A) such as have been
obtained, or will have been obtained at the Closing Time or the relevant Date of
Delivery, as the case may be, under the Securities Act and (B) any necessary
qualification under the securities or blue sky laws of the various jurisdictions
in which the Notes are being offered by the Underwriter;
(n) each of the Company and its Subsidiaries has all necessary licenses,
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 necessary authorizations, consents and approvals from other
persons, required in order to conduct their respective businesses, except to the
extent that any failure to have any such 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, operations, business or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole;
neither the Company nor any of its Subsidiaries is in violation of, or in
default under, any such 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 any of its Subsidiaries the effect of
which could be material and adverse to the assets, operations, business or
condition (financial or otherwise) of the Company and its Subsidiaries taken as
a whole;
(o) the Registration Statement has become effective under the Securities
Act and 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 instituted or are pending or, to the knowledge of the Company, are
threatened by the Commission, and any request on the part of the Commission for
additional information has been complied with;
(p) the Registration Statement as of its effective date and the Prospectus
at the Closing Time or on any Date of Delivery (if any) complies in all material
respects with the requirements of the Securities Act and the Securities Act
Regulations and the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") and the rules and regulations thereunder (the "Trust Indenture
Act Regulations"); neither the Registration Statement as of its effective date
nor the Prospectus as of the Closing Time or on any Date of Delivery contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no warranty or representation with
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respect to any statement contained in the Registration Statement or the
Prospectus in reliance upon and in conformity with the information concerning
the Underwriter and furnished in writing by or on behalf of the Underwriter to
the Company expressly for use in the Registration Statement or the Prospectus
(that information being limited to that described in the last sentence of the
first paragraph of Section 8(b) hereof);
(q) the Preliminary Prospectus and the Prospectus delivered to the
Underwriter for use in connection with this offering was identical to the
versions of the Preliminary Prospectus and Prospectus created to be transmitted
to the Commission for filing via the Electronic Data Gathering Analysis and
Retrieval System ("▇▇▇▇▇"), except to the extent permitted by Regulation S-T;
(r) except as set forth in the Preliminary Prospectus and the Prospectus,
there are no actions, suits or proceedings pending or, to the Company's
knowledge, threatened against the Company or any of its Subsidiaries or any of
their respective properties, at law or in equity, or before or by any federal,
state, local or foreign governmental or regulatory commission, board, body,
authority or agency which reasonably could be expected to have a material
adverse effect on the assets, operations, business or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole;
(s) the financial statements, including the notes thereto, included in the
Registration Statement and the Prospectus present fairly the consolidated or
combined financial position of the Company and its Subsidiaries, ▇▇▇▇▇▇ and its
subsidiary and WCC and its affiliates as of the dates indicated and the
consolidated results of operations and changes in financial position and cash
flows of the Company and its Subsidiaries, ▇▇▇▇▇▇ and its subsidiary and WCC and
its affiliates for the periods specified; such financial statements have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis during the periods involved (except as indicated in the notes
thereto);
(t) Deloitte & Touche LLP, whose reports on the consolidated or combined
financial statements of the Company and its Subsidiaries, ▇▇▇▇▇▇ and its
subsidiary and WCC and its affiliates are filed with the Commission as part of
the Registration Statement and Prospectus, are independent public accountants as
required by the Securities Act and the Securities Act Regulations;
(u) subsequent to the effective date of the Registration Statement and the
date of the Prospectus up to and including the Closing Time and any Date of
Delivery, and except as may be otherwise stated in the Registration Statement or
Prospectus, there has not been (A) any material and unfavorable change, in the
assets, operations, business or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole, (B) any transaction, which is
material to the Company and its Subsidiaries taken as a whole, contemplated or
entered into by the Company or any of its Subsidiaries or (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;
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(v) the Company is not, and upon the sale of the Notes as herein
contemplated will not be, an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(w) the Indenture and the Notes conform in all material respects to the
description thereof contained in the Registration Statement and the Prospectus;
(x) there are no persons with registration or other similar rights to have
any securities registered pursuant to the Registration Statement or otherwise
registered by the Company under the Securities Act;
(y) the Company has not taken, and will not take, directly or indirectly,
any action which is designed to or which has constituted or which might
reasonably be expected to cause or result in stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Notes;
(z) neither the Company nor any of its affiliates directly, or indirectly
through one or more intermediaries, controls or has any other association with
(within the meaning of Article 1 of the By-laws of the National Association of
Securities Dealers, Inc. (the "NASD")), any member firm of the NASD, other than
Wilshire Securities Corporation; and
(aa) any certificate signed by any officer of the Company or any Subsidiary
delivered to the Underwriter or to counsel for the Underwriter pursuant to or in
connection with this Agreement shall be deemed a representation and warranty by
the Company to the Underwriter as to the matters covered thereby.
4. Certain Covenants of the Company: The Company hereby agrees with
--------------------------------
with the Underwriter:
(a) to furnish such information as may be required and otherwise to
cooperate in qualifying the Notes for offering and sale under the securities or
blue sky laws of such states as the Underwriter may designate and to maintain
such qualifications in effect as long as required for the distribution of the
Notes, but not longer than 60 days following the Closing Time or any Date of
Delivery without the consent of the Company, provided that the Company shall not
be required 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 Notes);
(b) to prepare the Prospectus in a form approved by the Underwriter and
file such Prospectus with the Commission pursuant to Rule 424(b) as soon as
possible, on the day following the execution and delivery of this Agreement and
to furnish promptly (and with respect to the initial delivery of such
Prospectus, as soon as possible on the day following the execution and delivery
of this Agreement) to the Underwriter as many copies of the Prospectus (or of
the Prospectus as amended or supplemented if the Company shall have made any
amendments or supplements thereto after the effective date of the Registration
Statement) as the Underwriter may reasonably request for the purposes
contemplated by the Securities Act Regulations, which Prospectus and any
amendments or supplements thereto furnished to the Underwriter will be
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identical to the version created to be transmitted to the Commission for filing
via ▇▇▇▇▇, except to the extent permitted by Regulation S-T;
(c) to advise the Underwriter promptly and (if requested by the
Underwriter) 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 Underwriter promptly and (if requested by the
Underwriter) to confirm such advice in writing, of (i) 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 Notes 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 Underwriter promptly of any proposal to
amend or supplement the Registration Statement or Prospectus and to file no such
amendment or supplement to which the Underwriter shall reasonably object in
writing;
(e) if requested by the Underwriter, to furnish to the Underwriter for a
period of seven 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 Notes, (ii) as soon as practicable after the filing
thereof, copies of all reports filed by the Company with the Commission, the
NASD or any securities exchange and (iii) such other information as the
Underwriter may reasonably request regarding the Company and its Subsidiaries;
(f) to advise the Underwriter promptly of the happening of any event known
to the Company within the time during which a Prospectus relating to the Notes
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 Underwriter promptly
such amendments or supplements to such Prospectus as may be necessary to reflect
any such change and to furnish to the Underwriter a copy of such proposed
amendment or supplement before filing any such amendment or supplement with the
Commission;
(g) to furnish promptly to the Underwriter a signed copy of the
Registration Statement, as initially filed with the Commission, and of all
amendments thereto (including all exhibits thereto) and such number of conformed
copies of the foregoing as the Underwriter may reasonably request;
(h) to furnish to the Underwriter, not less than two business days before
filing with the Commission subsequent to the effective date of the Prospectus
and during the period referred to
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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 Securities Exchange Act
of 1934, as amended (the "Exchange Act");
(i) to make generally available to its Note holders as soon as
practicable after the effective date of the Registration Statement an
earning statement (in form, at the option of the Company, 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;
(j) to use its best efforts to effect and maintain the quotation of
its common stock, par value $0.01 per share (the "Common Stock"), on the
Nasdaq National Market and to file with the Nasdaq National Market all
documents and notices required by the Nasdaq National Market of companies
that have securities that are traded in the over-the-counter market and
quotations for which are reported by the Nasdaq National Market; and
(k) to refrain during a period of 180 days from the date of the Prospectus,
without the prior written consent of the Underwriter, from offering, selling,
contracting to sell, selling any option or contract to purchase, purchasing any
option or contract to sell, granting any option for the sale of, or otherwise
disposing of or transferring, directly or indirectly, any debt securities of the
Company that are substantially similar to the Notes or any securities
convertible into or exercisable or exchangeable for Notes, or filing any
registration statement under the Securities Act with respect to any of the
foregoing.
5. Payment of Expenses:
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(a) The Company agrees to pay all costs and expenses incident to the
performance of its obligations under this Agreement, whether or not the
transactions contemplated hereunder are consummated or this Agreement is
terminated (except if the Underwriter is unable to complete the offering
contemplated hereby due to the Underwriter's willful misconduct or bad faith),
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 Underwriter and to dealers
(including costs of mailing and shipment), (ii) the preparation, registration
and issuance of the Notes to holders thereof, (iii) reproduction of this
Agreement and any dealer agreements and furnishing of copies of each to the
Underwriter and to dealers (including costs of mailing and shipping), (iv) the
qualification of the Notes for offering and sale under state laws that the
Company and the Underwriter 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 Underwriter in the amount of $15,000 assuming that the Common Stock is
approved for quotation on the Nasdaq National Market; such $15,000 to be the
aggregate amount when taken together with such blue sky legal fees and filing
fees and other disbursements of counsel to ▇▇▇▇▇▇▇▇, Billings, ▇▇▇▇▇▇ & Co.,
Inc., as Representative, in the concurrent offering of Common Stock by the
Company (the "Common Stock Offering")) and the printing and furnishing of copies
of any blue sky surveys or legal investment surveys to the Underwriter and to
dealers, (v) filing for review of the public offering of the Notes by the NASD,
10
(vi) the fees and expenses of DTC (and its nominees), the Trustee and any
transfer agent or registrar for the Notes, and (vii) the performance of the
Company's other obligations hereunder. Upon the Underwriter's request, the
Company will provide funds in advance for filing fees.
(b) The Company agrees to reimburse the Underwriter for its reasonable and
documented out-of-pocket expenses in connection with the performance of its
activities under this Agreement, whether or not the transactions contemplated
hereunder are consummated or this Agreement is terminated, including, but not
limited to, costs such as printing, facsimile, courier service, direct computer
expenses, accommodations, travel and the fees and expenses of the Underwriter's
outside legal counsel and any other advisors, accountants, appraisers, etc., and
costs in connection with making road show presentations with respect to the
offering of the Notes. Such expenses shall not exceed, when aggregated with the
reimbursable expenses of ▇▇▇▇▇▇▇▇, Billings, ▇▇▇▇▇▇ & Co., Inc., as
Representative, pursuant to the Underwriting Agreement dated December __, 1996
for the Common Stock Offering, $300,000 (not including fees and expenses of
counsel with respect to state securities or blue sky laws), without the
Company's permission. Notwithstanding the foregoing, the Company will not be
obligated to reimburse the Underwriter for out-of-pocket expenses if the
Underwriter is unable to complete the offering contemplated hereby due to the
Underwriter's willful misconduct or bad faith.
6. Conditions of the Underwriter's Obligations: The
-------------------------------------------
obligations of the Underwriter hereunder are subject to the accuracy of the
representations and warranties on the part of the Company in all material
respects on the date hereof and at the Closing Time and on each Date of
Delivery, the performance by the Company of its obligations hereunder in all
material respects and to the following conditions:
(a) The Company shall furnish to the Underwriter at the Closing Time and on
each Date of Delivery opinions of counsel for the Company as set forth below,
addressed to the Underwriter and dated the Closing Time and each Date of
Delivery and in form satisfactory to ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for
the Underwriter, stating that:
(i) the Company is a multiple savings and loan holding company duly
registered under HOLA and its business operations, as described in the
Registration Statement and the Prospectus, constitute permissible services
or activities for a multiple savings and loan holding company under HOLA
and 12 C.F.R. Part 584;
(ii) the Company has an authorized capitalization as of September 30,
1996 as set forth in the Prospectus under the column entitled "Actual"
under the caption "Capitalization" (and not under the column entitled
"Adjusted"); the outstanding shares of capital stock of the Company and its
Subsidiaries have been duly and validly authorized and issued and are fully
paid and non-assessable, and all of the outstanding shares of capital stock
of the Subsidiaries are directly or indirectly owned of record and
beneficially by the Company;
(iii) the Company and each of the Company's Subsidiaries
other than the Savings Banks have been duly incorporated and is validly
existing as a corporation in good standing under the laws of its respective
jurisdiction of incorporation with full corporate
11
power and authority to own its respective properties and to conduct its
respective business and, in the case of the Company, to execute and deliver
this Agreement;
(iv) each Savings Banks has been duly chartered as a federal savings
bank under the laws of the United States of America, and its charter is in
full force and effect; each Savings Bank has full corporate power and
corporate authority to own its properties and conduct its businesses as
described in the Registration Statement and the Prospectus; each Savings
Bank is a member of the Federal Home Loan Bank System; and the savings
accounts of depositors in the Savings Banks are insured by the SAIF of the
FDIC to the fullest extent permitted by law and the rules and regulations
of the FDIC, and, to such counsel's knowledge, no proceedings for the
termination of such insurance are pending or threatened;
(v) the Company and all of its Subsidiaries (other than the Savings
Banks) are duly qualified, and are in good standing, in Oregon and
California;
(vi) other than the Cease and Desist Orders, to such counsel's
knowledge, none of the Company and the Savings Banks is a party to or
otherwise the subject of any consent decree, memorandum of understanding,
written agreement or similar supervisory or enforcement agreement or
understanding with the OTS, the FDIC or any other government authority or
agency responsible for the supervision, regulation or insurance of
depository institutions or their holding companies; and, to such counsel's
knowledge, no further or additional bank regulatory action against the
Company, the Savings Banks or their directors is threatened, except actions
that would relate to a failure to comply fully with the Cease and Desist
Orders;
(vii) to such counsel's knowledge, neither the Company
nor any of its Subsidiaries is in breach of, or in default under (nor has
any event occurred which with notice, lapse of time, or both would
constitute a breach of, or default under), any license, indenture,
mortgage, deed of trust, loan or credit agreement or any other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which any of them or their respective properties may be bound or affected
and identified as a material agreement or instrument of the Company or a
Subsidiary in the certificate of the Company attached hereto or under any
law, regulation or rule or any decree, judgment or order applicable to the
Company or any of its Subsidiaries, except such breaches or defaults which
would not have a material adverse effect on the assets, operations,
business or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole.
(viii) the execution, delivery and performance of this
Agreement, the Indenture and the Other Transaction Documents by the Company
and the issuance of the Notes and the consummation by the Company of the
transactions contemplated hereby and thereby do not and will not conflict
with, or result in any breach of, or constitute a default under (nor
constitute any event which with notice, lapse of time, or both would
constitute a breach of or default under), (i) any provisions of the
articles of incorporation, charter or by-laws of the Company or any
Subsidiary, (ii) any provision of any license, indenture, mortgage, deed of
trust, loan or credit agreement or other agreement or instrument known
12
to such counsel to which the Company or any Subsidiary is a party or by
which any of them or their respective properties may be bound or affected
and identified as a material agreement or instrument of the Company or a
Subsidiary in the certificate of the Company attached hereto, or (iii) any
law or regulation or any decree, judgment or order applicable to the
Company or any Subsidiary, except in the case of clause (ii) for such
conflicts, breaches or defaults which individually or in the aggregate
would not have a material adverse effect on the assets, operations,
business or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole;
(ix) this Agreement has been duly authorized, executed and delivered
by the Company;
(x) the Indenture has been duly authorized, executed and delivered by
the Company, and, assuming due authorization, execution and delivery by the
Trustee, is a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or similar laws affecting creditors' rights generally and by
general principles of equity; the Indenture has been duly qualified under
the Trust Indenture Act;
(xi) the Notes have been duly authorized, executed and delivered by
the Company and, assuming due authentication thereof by the Trustee and
upon payment therefor and delivery in accordance with this Agreement, will
be legal, valid and binding obligations of the Company enforceable in
accordance with their terms and entitled to the benefits of the Indenture,
except as may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or similar laws affecting creditors'
rights generally and by general principles of equity;
(xii) the Other Transaction Documents have been duly
authorized and will be, upon execution and delivery by the Company, legal,
valid and binding agreements of the Company enforceable by it in accordance
with their terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws affecting
creditors' rights generally, and by general principles of equity;
(xiii) no approval, authorization, consent or order of or
filing with any federal or state governmental or regulatory commission,
board, body, authority or agency is required in connection with the sale
and delivery of the Notes by the Company as contemplated hereby other than
such as have been obtained or made under the Securities Act and except that
such counsel need express no opinion as to any necessary qualification
under the state securities or blue sky laws of the various jurisdictions in
which the Notes are being offered by the Underwriter or any approval of the
underwriting terms and arrangements by the National Association of
Securities Dealers, Inc.;
(xiv) the Company is not an "investment company" as such
term is defined in the Investment Company Act;
13
(xv) the form of certificate used to evidence the Notes complies in
all material respects with all applicable statutory requirements, with any
applicable requirements of the articles of incorporation and by-laws of the
Company;
(xvi) the Registration Statement has become effective
under the Securities Act and, to such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been issued
and, to such counsel's knowledge, no proceedings with respect thereto have
been commenced or threatened;
(xvii) as of the effective date of the Registration
Statement, the Registration Statement and the Prospectus (except as to the
financial statements and other financial and statistical data contained
therein, as to which such counsel need express no opinion) complied as to
form in all material respects with the requirements of the Securities Act
Regulations and the Trust Indenture Act Regulations;
(xviii) the statements under the captions "Regulation" and
"Description of Capital Stock" in the Registration Statement and the
Prospectus, insofar as such statements constitute a summary of the legal
matters referred to therein, constitute accurate summaries thereof in all
material respects;
(xix) the Notes and the Indenture conform in all
material respects to the descriptions thereof contained in the Registration
Statement and the Prospectus;
(xx) there are no actions, suits or proceedings pending or, to such
counsel's knowledge, threatened against the Company or any of its
Subsidiaries or any of their respective properties, at law or in equity, or
before or by any federal, state or foreign governmental or regulatory
commission, board, body, authority or agency which are required to be
described in the Prospectus but are not so described;
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 Underwriter 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
(xvii), (xviii) and (xix) above), on the basis of the foregoing, nothing has
come to the attention of such counsel that causes them to believe that the
Registration Statement, the Preliminary Prospectus or the Prospectus, as of
their respective effective or issue dates and as of the date of such counsel's
opinion, contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, 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 in the Registration Statement, Preliminary Prospectus
or Prospectus).
For purposes of rendering the foregoing opinions, counsel may as to factual
matters rely upon statements, certificates and other assurances of public
officials and upon certificates of
14
officers of the Company, which certificates of officers of the Company will be
furnished to the Underwriter together with such counsel's opinion.
The Underwriter acknowledges that the opinions set forth above in this
Section 6(a) in paragraphs (i), (iv) and (vi) and with regard to paragraph
(xviii), with respect to the "Regulation" section of the Registration Statement
and Prospectus, will be rendered by ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
("▇▇▇▇▇▇"); that the opinions set forth in paragraphs (vii), (viii) and (xii) of
this Section 6(a) will be rendered by both ▇▇▇▇▇ ▇▇▇▇▇ LLP, local counsel to the
Company in Oregon ("Oregon Counsel"), and Proskauer ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP
("Proskauer"), with such opinion pursuant to paragraph (xii) to be rendered with
respect to Other Transaction Documents governed by Oregon law (except for the
Employment Agreements between the Company and each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ (the "Employment Agreements")) by Oregon Counsel and with
respect to Other Transaction Documents governed by New York law by Proskauer;
and that the opinions set forth in all other paragraphs of this Section 6(a)
(including, with respect to paragraph (xii), the execution and delivery of the
Employment Agreements, and with respect to paragraph (xviii), the "Description
of Capital Stock" section of the Registration Statement and Prospectus) will be
rendered by Proskauer.
(b) The Underwriter shall have received from Deloitte & Touche LLP, letters
dated, respectively, as of the date of this Agreement, the Closing Time and each
Date of Delivery, as the case may be, addressed to the Underwriter and in form
and substance satisfactory to the Underwriter.
(c) The Underwriter shall have received at the Closing Time and on each
Date of Delivery the favorable opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, dated the
Closing Time or such Date of Delivery, addressed to the Underwriter and in form
and substance satisfactory to the Underwriter.
(d) No amendment or supplement to the Registration Statement or Prospectus
shall have been filed to which the Underwriter shall have objected in writing.
(e) Prior to the Closing Time and each Date of Delivery (i) no stop order
suspending the effectiveness of the Registration Statement or any order
preventing or suspending the use of any Preliminary Prospectus or Prospectus has
been issued by the Commission, and no suspension of the qualification of the
Notes for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes, has occurred; and (ii)
the Registration Statement and the Prospectus shall not contain an untrue
statement of 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.
(f) Between the time of execution of this Agreement and the Closing Time or
the relevant Date of Delivery no material and unfavorable change (other than as
disclosed in the Registration Statement and Prospectus), in the assets,
operations, business or condition (financial or otherwise) of the Company and
its Subsidiaries taken as a whole shall occur or become known.
15
(g) At the Closing Time, the closing of the Common Stock Offering shall
have occurred, substantially concurrently with the closing of the offering of
the Notes.
(h) At the Closing Time, the Other Transaction Documents shall have been
entered into by all required parties and the undrawn amounts under the
transferred repurchase facilities, warehouse facilities and term loans shall
have been made available to the Company.
(i) At the Closing Time (upon application of the net proceeds of the
offering of the Notes and Common Stock), the Company shall have Consolidated Net
Worth (as defined in the Indenture) equal to $40,000,000.
(j) At the Closing Time (upon application of the net proceeds of the
offering of the Notes and Common Stock), the Company shall have Liquid Assets
(as defined in the Indenture) with a value equal to at least 100% of the
required interest payments due on the Notes on the next two succeeding semi-
annual Interest Payment Dates (as defined in the Indenture); provided that
Liquid Assets of a Subsidiary (other than the Savings Banks) may be included in
such calculation only to the extent that such Liquid Assets may at such time be
distributed to the Company without restriction or notice to any Person (as
defined in the Indenture).
(k) At the Closing Time, the Common Stock of the Company shall have been
approved for inclusion in the Nasdaq National Market.
(l) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
(m) The Company will, at the Closing Time and on each Date of Delivery,
deliver to the Underwriter a certificate of its two principal executive
officers, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, to the effect that,
to each of such officer's knowledge, the representations and warranties of the
Company set forth in this Agreement and the conditions set forth in paragraphs
(e), (f), (h), (i) and (j) have been met and are true and correct as of such
date.
(n) The Company shall have furnished to the Underwriter such other
documents and certificates as to the accuracy and completeness of any statement
in the Registration Statement and the Prospectus as of the Closing Time or any
Date of Delivery as the Underwriter may reasonably request.
7. Termination: The obligations of the Underwriter hereunder
-----------
shall be subject to termination in the absolute discretion of the
Underwriter, at any time prior to the Closing Time or any Date of Delivery, if
trading in securities on the New York Stock Exchange shall have been suspended
(including automatic halts in trading pursuant to market-decline triggers other
than those in which solely program trading is temporarily halted) or minimum
prices shall have been established on the New York Stock Exchange, or if a
banking moratorium shall have been declared either by the United States or New
York State authorities, or if the United States shall have declared war in
accordance with its constitutional processes or there shall have occurred any
material outbreak or escalation of hostilities or other national or
international calamity or crisis of such magnitude in its effect on the
financial markets of the United States as, in the judgment of the Underwriter,
to make it impracticable to market the Notes.
16
If the Underwriter elects to terminate this Agreement as provided in this
Section 7, the Company shall be notified promptly by telephone, promptly
confirmed by facsimile.
If the sale to the Underwriter of the Notes, as contemplated by this
Agreement, is not carried out by the Underwriter for any reason permitted under
this Agreement or if such sale is not carried out because the Company 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 8 hereof) and the
Underwriter shall be under no obligation or liability to the Company under this
Agreement (except to the extent provided in Section 8 hereof).
8. Indemnity and Contribution by the Company and the
-------------------------------------------------
Underwriter:
-----------
(a) The Company agrees to indemnify, defend and hold harmless the
Underwriter and any person who controls the 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 or claim (including the reasonable cost of
investigation) which, jointly or severally, the Underwriter or controlling
person may incur under the Securities Act, the Exchange Act or otherwise,
insofar as such loss, expense, liability 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 Company) or in a Prospectus (the term
Prospectus for the purpose of this Section 8 being deemed to include any
Preliminary Prospectus, the Prospectus and the Prospectus as amended or
supplemented by 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 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 Underwriter to the Company
expressly for use in such Registration Statement or such Prospectus, provided,
however, that the indemnity agreement contained in this subsection (a) with
respect to the Preliminary Prospectus or the Prospectus shall not inure to the
benefit of the Underwriter (or to the benefit of any person controlling the
Underwriter) with respect to any person asserting any such loss, expense,
liability or claim which is the subject thereof if the Prospectus or any
supplement thereto prepared with the consent of the Underwriter and furnished to
the Underwriter prior to the Closing Time corrected any such alleged untrue
statement or omission and if the 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 Notes to such person, unless such failure resulted
from noncompliance by the Company with Section 4(b).
If any action is brought against the Underwriter or a controlling person in
respect of which indemnity may be sought against the Company pursuant to the
preceding paragraph, the 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. The 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
17
expense of the 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 and which counsel
to the Underwriter believes may present a conflict for counsel representing the
Company and the Underwriter (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 counsel for the
Underwriter or controlling persons in any one action or series of related
actions in the same jurisdiction representing the indemnified parties who are
parties to such action). Anything in this paragraph to the contrary
notwithstanding, the Company shall not be liable for any settlement of any such
claim or action effected without the its written consent.
(b) The Underwriter agrees to indemnify, defend and hold harmless the
Company, its directors, the officers that signed the Registration Statement and
any person who controls 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 or claim (including the reasonable cost of investigation)
which, jointly or severally, the Company or any such person may incur under the
Securities Act, the Exchange Act or otherwise, insofar as such loss, expense,
liability 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 the Underwriter 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 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 made, not misleading.
The statements set forth in the last paragraph on the cover page and under the
caption "Underwriting" in the Preliminary Prospectus and the Prospectus (to the
extent such statements relate to the Underwriter) constitute the only
information furnished by or on behalf of the Underwriter to the Company for
purposes of this Section 8(b).
If any action is brought against the Company or any such person in respect
of which indemnity may be sought against the Underwriter pursuant to the
foregoing paragraph, the Company or such person shall promptly notify the
Underwriter in writing of the institution of such action and the Underwriter
shall assume the defense of such action, including the employment of counsel and
payment of expenses. 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 Company or such person unless the employment of
such counsel shall have been authorized in writing by the Underwriter in
connection with the defense of such action or the Underwriter 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
Underwriter (in which case the Underwriter shall not have the right to
18
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
Underwriter and paid as incurred (it being understood, however, that the
Underwriter shall not be liable for the expenses of more than one separate
counsel in any one action or series of related actions in the same jurisdiction
representing the indemnified parties who are parties to such action). Anything
in this paragraph to the contrary notwithstanding, the Underwriter shall not be
liable for any settlement of any such claim or action effected without the
written consent of the Underwriter.
(c) If the indemnification provided for in this Section 8 is unavailable to
an indemnified party under subsections (a) and (b) of this Section 8 in respect
of any losses, expenses, liabilities 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 indemnified party as a
result of such losses, expenses, liabilities or claims in such proportion as is
appropriate to reflect (i) the relative benefits received by the Company on the
one hand and the Underwriter on the other hand from the offering of the Notes
and (ii) the relative fault of the Company on the one hand and of the
Underwriter on the other in connection with the statements or omissions which
resulted in such losses, expenses, liabilities or claims, as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriter on the other shall be deemed to be
in the same proportion as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company bear to the underwriting discounts and commissions received by
the Underwriter. The relative fault of the Company on the one hand and of the
Underwriter on the other 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
Company or by the Underwriter 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 Company and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by pro rata
allocation (even if the Underwriter 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) above. Notwithstanding
the provisions of this Section 8, (i) the Underwriter shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Notes underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which the Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission and (ii) the Company shall not be required to
contribute any amount in excess of the amount by which the proceeds received in
connection herewith exceed the amount of any damages which the Company 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 Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
19
9. Survival: The indemnity and contribution agreements contained
--------
in Section 8 and the covenants, warranties and representations of the Company
contained in Sections 3, 4 and 5 shall remain in full force and effect
regardless of any investigation made by or on behalf of the Underwriter, or any
person who controls the 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
Company, its directors and officers or any person who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, and the indemnity and contribution agreements contained in Section
8 and the Company's covenants in Section 5 shall survive any termination of this
Agreement or the sale and delivery of the Notes. The Company and the Underwriter
agree promptly to notify the other of the commencement of any litigation or
proceeding against it and, in the case of the Company, against any of the
Company's officers and directors, in connection with the sale and delivery of
the Notes, or in connection with the Registration Statement or Prospectus.
10. Entire Agreement: This Agreement contains the entire agreement
----------------
and understanding among the parties hereto with respect to the
subject matter hereof and supersedes all prior oral and written agreements and
understandings (including, without limitation, the engagement letter dated July
24, 1996 between the Underwriter and the Company) relating to such subject
matter.
11. Notices: Except as otherwise herein provided, all statements,
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requests, notices and agreements shall be in writing or by telegram
and, if to the Underwriter, shall be sufficient in all respects if delivered to
▇▇▇▇▇▇▇▇, Billings, ▇▇▇▇▇▇ & Co., Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Compliance Department; if to the Company, shall be
sufficient in all respects if delivered to the Company at the offices of the
Company at ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ Attention. ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇.
12. GOVERNING LAW; HEADINGS: THIS AGREEMENT SHALL BE GOVERNED BY,
-----------------------
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, 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.
13. Parties at Interest: The Agreement herein set forth has been
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and is made solely for the benefit of the Underwriter, the
Company and the controlling persons, directors and officers referred to in
Sections 8 and 9 hereof, and their respective successors, assigns, executors and
administrators. No other person, partnership, association or corporation
(including a purchaser, as such purchaser, from the Underwriter) shall acquire
or have any right under or by virtue of this Agreement.
14. Counterparts: This Agreement may be signed by the parties in
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counterparts which together shall constitute one and the same agreement among
the parties.
If the foregoing correctly sets forth the understanding among the Company
and the Underwriter, please so indicate in the space provided below for the
purpose, whereupon this Agreement shall constitute a binding agreement among the
Company and the Underwriter.
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Very truly yours,
WILSHIRE FINANCIAL SERVICES GROUP INC.
By: ______________________________________
Title:
Accepted and agreed to as
of the date first above written:
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
CO., INC.
By: ________________________________
Title:
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