Exhibit 1
Draft of November 13, 1996
CHEVY CHASE PREFERRED CAPITAL CORPORATION
(a Maryland corporation)
3,000,000 Shares
% Noncumulative Exchangeable Preferred Stock, Series A
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PURCHASE AGREEMENT
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November , 1996
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▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & CO., INC.
▇▇▇▇▇ ▇▇▇▇▇▇ INC.
as Representatives of the several Underwriters
c/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
▇▇▇▇▇ ▇▇▇▇▇ Preferred Capital Corporation, a Maryland corporation (the
"Company"), and Chevy Chase Bank, F.S.B., a federally chartered and federally
insured stock savings bank (the "Bank"), hereby confirm their agreement with
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
("▇▇▇▇▇▇▇ ▇▇▇▇▇") and each of the other Underwriters named in Schedule A hereto
(collectively, the "Underwriters," which term shall also include any underwriter
substituted as hereinafter provided in Section 10 hereof), for whom ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Co., Inc. and ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. are acting
as representatives (in such capacity, the "Representatives"), with respect to
the issue and sale by the Company and the purchase by the Underwriters, acting
severally and not jointly, of the respective numbers of shares of the Company's
__% Noncumulative Exchangeable Preferred Stock, Series A (the "Series A
Preferred Shares") set forth in said Schedule A, and with respect to the grant
by the Company to the Underwriters, acting severally and not jointly, of the
option described in Section 2(b) hereof to purchase all or any part of 300,000
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additional shares of such preferred stock to cover over-allotments, if any. The
aforesaid
3,000,000 shares of Series A Preferred Shares (the "Initial Securities") to be
purchased by the Underwriters and all or any part of the 300,000 shares of
Series A Preferred Shares subject to the option described in Section 2(b) hereof
(the "Option Securities") are hereinafter called, collectively, the
"Securities." Each share of the Series A Preferred Shares is exchangeable, on
the terms set forth in the certificate of designation for the Series A Preferred
Shares (the "Certificate of Designation"), into one share of the Bank's __%
Noncumulative Preferred Stock, Series B (the "Bank Preferred Shares").
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem such offering
advisable after this Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-11 (No. 333-10495) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b).
The information included in such prospectus or in such Term Sheet, as the case
may be, that was omitted from such registration statement at the time it became
effective but that is deemed to be part of such registration statement at the
time it became effective (a) pursuant to paragraph (b) of Rule 430A is referred
to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 is
referred to as "Rule 434 Information." Each prospectus used before such
registration statement became effective, and any prospectus that omitted, as
applicable, the Rule 430A Information or the Rule 434 Information, that was used
after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto and schedules thereto at the time it
became effective and including the Rule 430A Information and the Rule 434
Information, as applicable, is herein called the "Registration Statement." Any
registration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations
is herein referred to as the "Rule 462(b) Registration Statement," and after
such filing the term "Registration Statement" shall include the Rule 462(b)
Registration Statement. The final prospectus in the form first furnished to the
Underwriters for use in connection with the offering of the Securities is herein
called the "Prospectus." If Rule 434 is relied on, the term "Prospectus" shall
refer to the preliminary prospectus dated _____, 1996 together with the Term
Sheet and all references in this Agreement to the date of the Prospectus shall
mean the date of the Term Sheet. For purposes of this Agreement, all references
to the Registration Statement, any preliminary prospectus, the Prospectus or any
Term Sheet or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system ("▇▇▇▇▇").
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The Bank has prepared and filed on October 3, 1996 with the Office of
Thrift Supervision (the "OTS") a preliminary offering circular under cover of
Form OC (Docket No. 08145), also filed with the Commission as an attachment to
the Registration Statement, for the registration of the Bank Preferred Shares
pursuant to 12 C.F.R. (S) 563g of the rules and regulations of the OTS (all of
the rules and regulations of the OTS set forth in Chapter V of Title 12 of the
Code of Federal Regulations, including, without limitation, 12 C.F.R. (S) 563g,
and the rules and regulations of the Commission made applicable to the offering
circular by the rules and regulations of the OTS, are hereinafter collectively
referred to as the "OTS Rules and Regulations"). The Bank will promptly prepare
and file an offering circular (which includes the information (the "Pricing
Information") excluded from the preliminary offering circular in reliance upon
12 C.F.R. S 563g.2(c)(2) of the OTS Rules and Regulations and 17 C.F.R. (S) 230-
430A of the 1933 Act Regulations) in accordance with the provisions of Rule
424(b). Each offering circular used before the time such offering circular is
declared effective by the OTS and any offering circular that omits the Pricing
Information that is used after such effectiveness and prior to the date hereof
is herein called a "preliminary offering circular." Such filing under cover of
Form OC, and the offering circular constituting a part thereof, as amended at
the time the offering circular becomes effective under the OTS Rules and
Regulations (and including the Pricing Information), including all documents
incorporated by reference therein, are hereinafter referred to as the "Form OC"
and the "Offering Circular," respectively, except that if any amended or
supplemented offering circular shall be provided to the Underwriters by the Bank
for use in connection with the offering of the Bank Preferred Shares which
differs from the Offering Circular at the time it becomes effective (whether or
not such revised offering circular is required to be filed by the Bank pursuant
to the Rules and Regulations (including Rule 424(b)), the term "Of fering
Circular" shall refer to such newly amended or supplemented offering circular
from and after the time it is first provided to the Underwriters for such use.
SECTION 1. Representations and Warranties.
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(a) Representations and Warranties by the Company. The Company represents
and warrants to each Underwriter as of the date hereof, as of the Closing Time
referred to in Section 2(c) hereof, and as of each Date of Delivery (if any)
referred to in Section 2(b) hereof, and agrees with each Underwriter, as
follows:
(i) Compliance with Registration Requirements. Each of the
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Registration Statement and any Rule 462(b) Registration Statement has become
effective under the 1933 Act and no stop order suspending the effectiveness of
the Registration Statement or any Rule 462(b) Registration Statement has been
issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are contemplated
by the Commission, and any request on the part of the Commission for additional
information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any Option Securities are purchased,
at the Date of Delivery), the Registration
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Statement, the Rule 462(b) Registration Statement and any amendments and
supplements thereto complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and did not and will
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading. Neither the Prospectus nor any amendments or supplements
thereto, at the time the Prospectus or any such amendment or supplement was
issued and at the Closing Time (and, if any Option Securities are purchased, at
the Date of Delivery), included or will include an untrue statement of a
material fact or omitted or will omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. If Rule 434 is used, the Company will
comply with the requirements of Rule 434 and the Prospectus shall not be
"materially different", as such term is used in Rule 434, from the prospectus
included in the Registration Statement at the time it became effective. The
representations and warranties in this subsection shall not apply to statements
in or omissions from the Registration Statement or Prospectus made in reliance
upon and in conformity with information furnished to the Company in writing by
any Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration
Statement or Prospectus.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment thereto,
or filed pursuant to Rule 424 under the 1933 Act, complied when so filed in all
material respects with the 1933 Act Regulations and each preliminary prospectus
and the Prospectus delivered to the Underwriters for use in connection with this
offering was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T.
(ii) Independent Accountants. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, the accountants
-----------------------
who certified the financial statements included in the Registration Statement,
are independent public accountants as required by the 1933 Act and the 1933 Act
Regulations.
(iii) No Material Adverse Change in Business. Since the respective
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dates as of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (A) there has been no material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company, whether or not arising in
the ordinary course of business (a "Material Adverse Effect"), (B) there have
been no transactions entered into by the Company, other than those in the
ordinary course of business, which are material with respect to the Company, and
(C) there has been no dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock.
(iv) Good Standing of the Company. The Company has been duly
----------------------------
organized and is validly existing as a corporation in good standing under the
laws of the State of Maryland and has corporate power and authority to own,
lease and operate its properties and to conduct
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its business as described in the Prospectus and to enter into and perform its
obligations under this Agreement; and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a Material
Adverse Effect.
(v) No Subsidiaries. The Company has no subsidiaries.
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(vi) Capitalization. The authorized, issued and outstanding capital
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stock of the Company is as set forth in the Prospectus in the column entitled
"Actual" under the caption "Capitalization" (except for subsequent issuances, if
any, pursuant to this Agreement). The shares of issued and outstanding capital
stock of the Company have been duly authorized and validly issued and are fully
paid and non-assessable; none of the outstanding shares of capital stock of the
Company was issued in violation of the preemptive or other similar rights of any
securityholder of the Company.
(vii) Authorization of Agreement. This Agreement has been duly
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authorized, executed and delivered by the Company.
(viii) Authorization and Description of Common Stock. The common
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stock of the Company, par value $0.01 per share (the "Common Stock"), conforms
to all statements relating thereto contained or incorporated by reference in the
Prospectus and such description conforms to the rights set forth in the
instruments defining the same. All of the outstanding shares of Common Stock
have been duly authorized and validly issued, are fully paid and nonassessable,
and are owned by the Bank free and clear of any liens, charges or encumbrances.
(ix) Authorization and Description of Securities. The Securities
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have been duly authorized for issuance and sale to the Underwriters pursuant to
this Agreement and, when issued and delivered by the Company pursuant to this
Agreement against payment of the consideration set forth herein, will be validly
issued and fully paid and non-assessable; the Securities conform to the
statements relating thereto contained in the Prospectus and such description
conforms to the provisions of the Certificate of Designation; the relative
rights, preferences, interests and powers of the Securities are as set forth in
the Certificate of Designation relating thereto; no holder of the Securities
will be subject to personal liability by reason of being such a holder; and the
issuance of the Securities is not subject to the preemptive or other similar
rights of any securityholder of the Company.
(x) Absence of Defaults and Conflicts. The Company is not in
---------------------------------
violation of its charter or by-laws or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the
5
Company or any of its subsidiaries is a party or by which it or any of
them may be bound, or to which any of the property or assets of the Company is
subject (collectively, "Agreements and Instruments") except for such defaults
that would not result in a Material Adverse Effect; and the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated herein and in the Registration Statement (including the issuance
and sale of the Securities and the use of the proceeds from the sale of the
Securities as described in the Prospectus under the caption "Use of Proceeds")
and compliance by the Company with its obligations hereunder have been duly
authorized by all necessary corporate action and do not and will not, whether
with or without the giving of notice or passage of time or both, conflict with
or constitute a breach of, or default or Repayment Event (as defined below)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any subsidiary
pursuant to, the Agreements and Instruments (except for such conflicts, breaches
or defaults or liens, charges or encumbrances that would not result in a
Material Adverse Effect), nor will such action result in any violation of the
provisions of the charter or by-laws of the Company or any subsidiary or any
applicable law, statute, rule, regulation, judgment, order, writ or decree of
any government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any of its assets, properties or operations.
As used herein, a "Repayment Event" means any event or condition which gives the
holder of any note, debenture or other evidence of indebtedness (or any person
acting on such holder's behalf) the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by the Company.
(xi) Absence of Proceedings. There is no action, suit, proceeding,
----------------------
inquiry or investigation before or brought by any court or governmental agency
or body, domestic or foreign, now pending, or, to the knowledge of the Company,
threatened, against or affecting the Company, which is required to be disclosed
in the Registration Statement (other than as disclosed therein), or which might
reasonably be expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the properties or
assets thereof or the consummation of the transactions contemplated in this
Agreement or the performance by the Company of its obligations hereunder; the
aggregate of all pending legal or governmental proceedings to which the Company
is a party or of which any of their respective property or assets is the subject
which are not described in the Registration Statement, including ordinary
routine litigation incidental to the business, could not reasonably be expected
to result in a Material Adverse Effect.
(xii) Authorization of Other Agreements. Each of the agreements
---------------------------------
listed in Schedule C hereto has been duly authorized, executed and delivered by
the Company and constitutes a valid and legally binding obligation of the
Company and is enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general applicability
relating to or affecting the enforcement of creditors' rights.
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(xiii) Accuracy of Exhibits. There are no contracts or documents
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which are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits thereto which have not been so described
and filed as required.
(xiv) Absence of Further Requirements. No filing with, or
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authorization, approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency is necessary or
required for the performance by the Company of its obligations hereunder, in
connection with the offering, issuance or sale of the Securities hereunder or
the consummation of the transactions contemplated by this Agreement, except such
as have been already obtained or as may be required under the 1933 Act or the
1933 Act Regulations or state securities laws or the OTS approval referred to in
Section 1(b)(xiii) hereof [and the filing of the Certificate of Designation in
the State of Maryland].
(xv) Possession of Licenses and Permits. The Company possesses
----------------------------------
such permits, licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to conduct the
business now operated by it; the Company is in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure so to
comply would not, singly or in the aggregate, have a Material Adverse Effect;
all of the Governmental Licenses are valid and in full force and effect, except
when the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a Material
Adverse Effect; and neither the Company nor any of its subsidiaries has received
any notice of proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material Adverse
Effect.
(xvi) Investment Company Act. The Company is not, and upon the
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issuance and sale of the Securities as herein contemplated and the application
of the net proceeds therefrom as described in the Prospectus will not be, an
"investment company" or an entity "controlled" by an "investment company" as
such terms are defined in the Investment Company Act of 1940, as amended (the
"1940 Act").
(xvii) Registration Rights. There are no persons with registration
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rights or other similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Company under the 1933
Act.
(xviii)The Company is organized and carries on its business so as to
qualify as "real estate investment trust" (a "REIT") under Sections 856 through
860 of the Internal Revenue Code of 1986, as amended (the "Code"), and no
transaction or other event has occurred which would cause the Company not to
enable it to qualify as a REIT for its current taxable year or for future
taxable years.
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(b) Representations and Warranties by the Bank. The Bank represents and
warrants to each Underwriter as of the date hereof, as of the Closing Time
referred to in Section 2(c) hereof, and as of each Date of Delivery (if any)
referred to in Section 2(b) hereof, and agrees with each Underwriter, as
follows:
(i) Compliance with Requirements. The Form OC and the Offering
----------------------------
Circular, at the respective times the Form OC and any post-effective
amendments thereto became effective, at the date hereof and at all times
subsequent thereto up to the Closing Time (and, if any Option Securities
are purchased, at the Date of Delivery), complied and will comply in all
material respects with the requirements of the OTS Rules and Regulations.
The Form OC, at the respective times the Form OC and any post-effective
amendments thereto became effective, and at the date hereof, did not or
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. The Offering Circular, at the respective times
the Form OC and any post-effective amendments thereto became effective, at
the date hereof and at all times subsequent thereto up to the Closing Time
(and, if any Option Securities are purchased, at the Date of Delivery),
did not and will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the representations and warranties in
this paragraph (b)(i) shall not apply to statements in or omissions from
the Form OC or the Offering Circular made in reliance upon and in
conformity with information furnished to the Bank in writing by any
Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use therein.
(ii) Incorporated Documents. The documents incorporated or deemed
----------------------
to be incorporated by reference in the Form OC and the Offering Circular,
at the time they were or hereafter are filed with the OTS, complied and
will comply in all material respects with the requirements of the OTS
Rules and Regulations, and, when read together with the other information
in the Offering Circular, at the time the Form OC became effective, at the
time the Offering Circular was issued and at the Closing Time (and if any
Option Securities are purchased, at the Date of Delivery), did not and
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
(iii) Independent Accountants. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, the accountants
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who have certified the financial statements included in the Offering
Circular, are and were at all relevant times, with respect to the Bank and
its subsidiaries, independent public accountants within the meaning of
Rule 1.01 of the Code of Professional Ethics of the American Institute of
Certified Public Accountants.
(iv) Financial Statements. The consolidated financial statements
--------------------
and the related notes thereto included in the Offering Circular present
fairly the financial position of the
8
Bank and its subsidiaries as of the latest respective dates of such
financial statements, and the results of operations of the Bank and its
subsidiaries for the respective periods covered thereby. Such statements
and related notes have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved. The tables included in the Offering Circular present fairly the
information purported to be shown thereby at the respective dates thereof
and for the respective periods covered thereby and conform in all material
respects with the OTS Rules and Regulations.
(v) No Material Adverse Change in Business. Since the respective
--------------------------------------
dates as of which information is given in the Form OC and the Offering
Circular, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Bank and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, (B) there have been no transactions entered
into by the Bank or any of its sub sidiaries, other than those in the
ordinary course of business, which are material with respect to the Bank
and its subsidiaries considered as one enterprise and (C) there has been
no dividend or distribution of any kind declared, paid or made by the Bank
on any class of its capital stock except as descibed in the Offering
Circular.
(vi) Good Standing of the Bank. The Bank has been duly organized
-------------------------
and is validly existing as a federally chartered savings bank organized in
stock form under the laws of the United States of America with full power
(corporate and other) and authority to own, lease and operate its
properties and to conduct its business as described in the Offering
Circular. The Bank is duly qualified as a foreign corporation to transact
business in all places where such qualification is necessary or, to the
extent not so qualified, where the failure to obtain such qualification
would not have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs or business prospects of the Bank
and its subsidiaries, considered as one enterprise. The Bank is a member
in good standing of the Federal Home Loan Bank of Atlanta, and the Bank's
deposit accounts are insured by the Federal Deposit Insurance Corporation
(the "FDIC") to the fullest extent provided under applicable law and the
OTS Rules and Regulations, and no proceedings for the termination or
revocation of such insurance are pending or, to the knowledge of the Bank,
threatened.
(vii) Good Standing of the Subsidiaries. The Bank does not own or
---------------------------------
control, directly or indirectly, any corporation, association (other than
homeowners' associations formed by certain of the Bank's subsidiaries in
connection with the Bank's planned unit developments) or other entity
other than the Company and the subsidiaries listed in Exhibit 21.1 to the
Form OC. Each subsidiary of the Bank has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has full power (corporate and other)
and authority to own, lease and operate its properties and conduct its
business as described in the Offering Circular (or, if not so described,
as presently conducted), and is duly qualified as a foreign corporation to
transact business and is in good standing in all places where such
qualification or good standing is necessary or to the extent
9
not so qualified or not in good standing, where the failure to obtain such
qualification or to be in good standing would not have a material adverse
effect on the condition (financial or otherwise), earnings, business
affairs or business prospects of the Bank and its subsidiaries, considered
as one enterprise; no proceeding has been instituted in any such
jurisdiction, revoking, limiting or curtailing, or seeking to revoke,
limit or curtail, such power and authority or qualification; the
activities of the subsidiaries of the Bank are permitted to subsidiaries
of a federally chartered savings bank under applicable law and the OTS
Rules and Regulations; all of the issued and outstanding capital stock of
each subsidiary of the Bank has been duly authorized and validly issued
and is fully paid and nonassessable and is owned, directly or through
other subsidiaries of the Bank, by the Bank; and all of the capital stock
of each subsidiary of the Bank that is owned by the Bank, directly or
through other subsidiaries of the Bank, is owned free and clear of any
pledge, lien, encumbrance, claim or equity.
(viii) Capitalization. All of the outstanding shares of common
--------------
stock of the Bank have been duly authorized and validly issued, are fully
paid and nonassessable, are owned as indicated in the Offering Circular
under the caption "Ownership of Capital Stock --Common Stock" and are
subject only to such pledges, liens, security interests, charges, claims,
equities and encumbrances of any kind to the extent set forth in the
Offering Circular under the caption "Ownership of Capital Stock -- Common
Stock." The authorized, issued and outstanding capital stock and any
outstanding short-term debt, long-term debt and capital lease obligations
of the Bank at June 30, 1996 are as set forth in the Offering Circular
under the caption "Capitalization," and any subsequent borrowings and
issuances have been made in the ordinary course of business.
(ix) Authorization of Agreement. This Agreement has been duly
--------------------------
authorized, executed and delivered by the Bank.
(x) Absence of Defaults and Conflicts. Neither the Bank nor any
---------------------------------
of its subsidiaries is in violation of its federal stock charter or
certificate of incorporation, as the case may be, or by-laws; nor is the
Bank or any of its subsidiaries in default in the performance or
observance of any obligation, agreement, covenant or condition contained
in any contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument to which the Bank or any of its subsidiaries is a
party or by which it or any of them or any of their properties may be
bound, except for such defaults which would not, in the aggregate, have a
material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the Bank and its
subsidiaries, considered as one enterprise; and the execution and delivery
of this Agreement, the incurrence of the obligations herein set forth and
the consummation of the transactions herein contemplated have been duly
authorized by all necessary corporate action of the Bank and will not
result in any violation of the federal stock charter or by-laws of the
Bank or the certificate of incorporation or by-laws of any of its
subsidiaries, and do not and will not contravene or conflict with, or
constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any
10
property or assets of the Bank or any of its subsidiaries under, (A) any
contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument to which the Bank or any of its subsidiaries is a
party or by which it or any of them or any of their properties may be
bound, except for breaches or defaults which would not, in the aggregate,
have a material adverse effect on the condition (financial to otherwise),
earnings, business affairs or business prospects of the Bank and its
subsidiaries, considered as one enterprise, (B) any existing applicable
law, rule or regulation or (C) any judgment, order or decree of, or
agreement with, any government or governmental instrumentality or court,
domestic or foreign, having jurisdiction over the Bank or any of its
subsidiaries or any of their respective properties.
(xi) Regulatory Compliance. Except as disclosed in the Offering
---------------------
Circular, the Bank and its subsidiaries are conducting their respective
businesses in compliance in all material respects with all laws, rules,
regulations, decisions, directives and orders (including, without
limitation, all regulations and orders of, or agreements with, the OTS and
the FDIC) applicable to them. There is no action, suit, investigation or
proceeding before or by any government, governmental instrumentality or
court, domestic or foreign, now pending or, to the knowledge of the Bank,
threatened against or affecting the Bank or any of its subsidiaries (A)
that is required to be disclosed in the Offering Circular and not
disclosed therein, (B) that could result in any material adverse change in
the condition (financial or otherwise), earnings, business affairs or
business prospects of the Bank and its subsidiaries, considered as one
enterprise, (C) that could materially and adversely affect the properties,
assets or leasehold interests thereof or (D) that could adversely affect
the consummation of the transactions contemplated in this Agreement. All
pending legal or governmental proceedings to which the Bank or any of its
subsidiaries is a party or of which any of their property is the subject,
which are not described in the Offering Circular, including ordinary
routine litigation incidental to their respective businesses, would not
have a material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the Bank and its
subsidiaries, considered as one enterprise.
(xii) Absence of Labor Dispute. No labor dispute with the employees
------------------------
of the Bank or any subsidiary exists or, to the knowledge of the Bank, is
imminent, and the Bank is not aware of any existing or imminent labor
disturbance by the employees of any of its or any subsidiary's principal
suppliers, manufacturers, customers or contractors, which, in either case,
may reasonably be expected to result in a material adverse change in the
condition (financial or otherwise), earnings, business affairs or business
prospects of the Bank and its subsidiaries, considered as one enterprise.
(xiii) Accuracy of Exhibits. There are no contracts or documents
--------------------
which are required to be described in the Registration Statement, the Form
OC, the Prospectus or the Offering Circular or to be filed as exhibits
thereto which have not been so described and filed as required.
11
(xiv) Absence of Further Requirements. No filing with, or
-------------------------------
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Bank of its
obligations hereunder, in connection with the offering, issuance or sale
of the Securities hereunder or the consummation of the transactions
contemplated by this Agreement, except such as have been already obtained
or as may be required under applicable law or the OTS Rules and
Regulations or state securities laws or the OTS approval referred to in
the next sentence. Without limiting the foregoing, (A) the Bank has
submitted an application to the OTS for approval by the OTS for the
inclusion of the minority interest represented by the Securities in the
Bank's regulatory capital pursuant to 12 C.F.R. (S) 563.81, which
application and notice, as originally filed and at the time of the filing
of any supplement or amendment to either thereto, were true and accurate
in all material respects and did not contain 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 and (B) the Bank will comply with the conditions
set forth in any approval of the OTS related to such application or notice
at the times required thereby. At or prior to the Closing Time, the Bank
will have received from the OTS approval for inclusion of the minority
interest represented by the Securities in the Bank's regulatory capital
pursuant to 12 C.F.R. (S) 563.81 and at the Closing Time (and, if any
Option Securities are purchased, at the Date of Delivery) such approval
shall continue to be in full force and effect.
(xv) Possession of Licenses and Permits. The Bank and its
----------------------------------
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by each of them; the Bank
and its subsidiaries are in compliance with the terms and conditions of
all such Governmental Li censes, except where the failure so to comply
would not, singly or in the aggregate, result in a material adverse change
in the condition (financial or otherwise), earnings, business affairs or
business prospects of the Bank and its subsidiaries, considered as one
enterprise; all of the Governmental Licenses are valid and in full force
and effect, except when the inval idity of such Governmental Licenses or
the failure of such Governmental Licenses to be in full force and effect
would not result in a material adverse change in the condition (financial
or otherwise), earnings, business affairs or business prospects of the
Bank and its subsidiaries, considered as one enterprise; and neither the
Bank nor any of its subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such Governmental
Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a material
adverse change in the condition (financial or otherwise), earnings,
business affairs or business prospects of the Bank and its subsidiaries,
considered as one enterprise.
(xvi) Title to Property. The Bank and its subsidiaries have good
-----------------
and marketable title to all real property owned by each of them and good
title to all other properties owned by them, in each case, free and clear
of all mortgages, pledges, liens, security interests, claims, restrictions
12
or encumbrances of any kind except such as (a) relate to participating
interests held by third parties in certain real estate held by two of the
Bank's subsidiaries, (b) are described in the Prospectus or the Offering
Circular or (c) do not, singly or in the aggregate, materially affect the
value of such property and do not interfere with the use made and proposed
to be made of such property by the Bank or any of its subsidiaries; and
all of the leases and subleases material to the business of the Bank and
its subsidiaries, considered as one enterprise, and under which the Bank
or any of its subsidiaries holds properties described in the Prospectus or
the Offering Circular, are in full force and effect, and neither the Bank
nor any subsidiary has any notice of any material claim of any sort that
has been asserted by anyone adverse to the rights of the Bank or any
subsidiary under any of the leases or subleases mentioned above, or
affecting or questioning the rights of the Bank or such subsidiary to the
continued possession of the leased or subleased premises under any such
lease or sublease.
(xvii) Compliance with Cuba Act. The Bank has complied with, and
------------------------
is and will be in compliance with, the provisions of that certain Florida
act relating to disclosure of doing business with Cuba, codified as
Section 517.075 of the Florida statutes, and the rules and regulations
thereunder (collectively, the "Cuba Act") or is exempt therefrom.
(xviii)Registration Rights. There are no holders of securities of
-------------------
the Bank who by reason of the filing of the Offering Circular with the OTS
have the right to request the Bank to register under the Rules and
Regulations securities held by them.
(xix) Exemption. The Bank Preferred Shares are exempt securities
---------
under Section 3(a)(5) of the 1933 Act, and registration of the Bank
Preferred Shares under the 1933 Act is not required in connection with the
offer, sale, issuance or delivery of the Bank Preferred Shares as contem
plated herein.
(xx) Certificate of Designation. Prior to the Closing Time, the
--------------------------
Bank shall have filed a certificate of designation with the Maryland
Department of Assessments and Taxation providing for the issuance of the
Bank Preferred Shares.
(xxi) Authorization and Description of Bank Preferred Shares. The
------------------------------------------------------
Bank Preferred Shares have been duly authorized and, if and when issued
and delivered by the Bank pursuant to the terms and conditions set forth
in the Certificate of Designation, will be validly issued and fully paid
and non-assessable; the Bank Preferred Shares conform to the statements
relating thereto contained in the Offering Circular and such description
conforms to the rights set forth in the instruments defining the same; no
holder of the Bank Preferred Shares will be subject to personal liability
by reason of being such a holder; and the issuance of the Bank Preferred
Shares is not subject to the preemptive or other similar rights of any
securityholder of the Bank.
(xxii) Other Representations and Warranties. The representations
------------------------------------
and warranties of the Bank contained in the residential mortgage loan
purchase agreements between the Company and the Bank and affiliates of the
Bank, and the servicing agreements between the Company and the
13
Bank and/or one or more affiliates of the Bank, are, as of the date hereof
and will be as of Closing Time (and, if any Option Securities are
purchased, as of the Date of Delivery), true and correct.
(c) Officer's Certificates. Any certificate signed by any officer of the
Company or the Bank or any of its subsidiaries delivered to the Representatives
or to counsel for the Underwriters shall be deemed a representation and warranty
by the Company or the Bank, as applicable, to each Underwriter as to the matters
covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
------------------------------------------
(a) Initial Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Company, at
the price per share set forth in Schedule B, the number of Initial Securities
set forth in Schedule A opposite the name of such Underwriter, plus any
additional number of Initial Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the Representatives, severally
and not jointly, to purchase up to an additional ____ shares of the Company's
Series A Preferred Shares at the price per share set forth in Schedule B. The
option hereby granted will expire 30 days after the date hereof and may be
exercised in whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Securities upon notice by the Representatives to the
Company setting forth the number of Option Securities as to which the
Representatives are then exercising the option and the time and date of payment
and delivery for such Option Securities. Any such time and date of delivery (a
"Date of Delivery") shall be determined by the Representatives, but shall not be
later than seven full business days after the exercise of said option, nor in
any event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the Option Securities, each of the
Underwriters, acting severally and not jointly, will purchase that proportion of
the total number of Option Securities then being purchased which the number of
Initial Securities set forth in Schedule A opposite the name of such Underwriter
bears to the total number of Initial Securities, subject in each case to such
adjustments as the Representatives in their discretion shall make to eliminate
any sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, or at such other place as shall be agreed upon by the Representatives and
the Company, at 9:00 A.M. (Eastern time) on the third (fourth, if the pricing
occurs after 4:30 P.M. (Eastern time) on any given day) business day after the
date hereof (unless postponed in accordance with the provisions of Section 10),
or such other time not later than ten business days after such date as shall
14
be agreed upon by the Representatives and the Company (such time and date of
payment and delivery being herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Company, on each Date of Delivery as specified in the notice from the
Representatives to the Company. Payment shall be made to the Company by wire
transfer of immediately available funds to a bank account designated by the
Company, against delivery to the Representatives for the respective accounts of
the Underwriters of certificates for the Securities to be purchased by them. It
is understood that each Underwriter has authorized the Representatives, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Initial Securities and the Option Securities, if any, which it
has agreed to purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as representative
of the Underwriters, may (but shall not be obligated to) make payment of the
purchase price for the Initial Securities or the Option Securities, if any, to
be purchased by any Underwriter whose funds have not been received by the
Closing Time or the relevant Date of Delivery, as the case may be, but such
payment shall not relieve such Underwriter from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such denominations and registered
in such names as the Representatives may request in writing at least one full
business day before the Closing Time or the relevant Date of Delivery, as the
case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representatives in The City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time or the relevant Date of Delivery,
as the case may be.
SECTION 3. Covenants.
---------
(1) The Company covenants with each Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests.
The Company, subject to Section 3(b), will comply with the requirements of
Rule 430A or Rule 434, as applicable, and will notify the Representatives
immediately, and confirm the notice in writing, when any post-effective
amendment to the Registration Statement shall become effective, or any
supplement to the Prospectus or any amended Prospectus shall have been
filed, of the receipt of any comments from the Commission, of any request
by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information,
and of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of
the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for
any of such purposes. The Company will promptly effect the filings
necessary pursuant to Rule 424(b) and will take such steps as it deems
necessary to ascertain promptly
15
whether the form of prospectus transmitted for filing under Rule 424(b)
was received for filing by the Commission and, in the event that it was
not, it will promptly file such prospectus. The Company will make every
reasonable effort to prevent the issuance of any stop order and, if any
stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
(b) Filing of Amendments. The Company will give the Representatives
notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), any Term
Sheet or any amendment, supplement or revision to either the prospectus
included in the Registration Statement at the time it became effective or
to the Prospectus, will furnish the Representatives with copies of any
such documents a reasonable amount of time prior to such proposed filing
or use, as the case may be, and will not file or use any such document to
which the Representatives or counsel for the Underwriters shall object.
(c) Delivery of Registration Statements. The Company has furnished or
will deliver to the Representatives and counsel for the Underwriters,
without charge, signed copies of the Registration Statement as originally
filed and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein) and signed copies of all consents and
certificates of experts, and will also deliver to the Representatives,
without charge, a conformed copy of the Registration Statement as
originally filed and of each amendment thereto (without exhibits) for each
of the Underwriters. The copies of the Registration Statement and each
amendment thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus
as such Underwriter reasonably requested, and the Company hereby consents
to the use of such copies for purposes permitted by the 1933 Act. The
Company will furnish to each Underwriter, without charge, during the
period when the Prospectus is required to be delivered under the 1933 Act
or the Securities Exchange Act of 1934, as amended, (the "1934 Act"), such
number of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will
comply with the 1933 Act and the 1933 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement and in the Prospectus. If at any time when a prospectus is
required by the 1933 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result of
which it is necessary, in the opinion of counsel for the Underwriters or
for the Company, to amend the Registration Statement or amend or
supplement the Prospectus in order that the Prospectus will not include
any untrue statements of a material fact or omit to state a material fact
necessary in order to make the
16
statements therein not misleading in the light of the circumstances
existing at the time it is delivered to a purchaser, or if it shall be
necessary, in the opinion of such counsel, at any such time to amend the
Registration Statement or amend or supplement the Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations,
the Company will promptly prepare and file with the Commission, subject to
Section 3(b), such amendment or supplement as may be necessary to correct
such statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements, and the Company will furnish to
the Underwriters such number of copies of such amendment or supplement as
the Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best efforts,
in cooperation with the Underwriters, to qualify the Securities for
offering and sale under the applicable securities laws of such states and
other jurisdictions as the Representatives may designate and to maintain
such qualifications in effect for a period of not less than one year from
the later of the effective date of the Registration Statement and any Rule
462(b) Registration Statement; provided, however, that the Company shall
-------- -------
not be obligated to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is
not otherwise so subject. In each jurisdiction in which the Securities
have been so qualified, the Company will file such statements and reports
as may be required by the laws of such jurisdiction to continue such
qualification in effect for a period of not less than one year from the
effective date of the Registration Statement and any Rule 462(b)
Registration Statement.
(g) Rule 158. The Company will timely file such reports pursuant to
the 1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received
by it from the sale of the Securities in the manner specified in the
Prospectus under "Use of Proceeds".
(i) Listing. The Company will use its best efforts to effect the
listing of the Securities on the New York Stock Exchange.
(j) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act,
will file all documents required to be filed with the Commission pursuant
to the 1934 Act within the time periods required by the 1934 Act and the
rules and regulations of the Commission thereunder.
(k) REIT Qualification. Except to the extent that a Tax Event (as
defined in the Prospectus) shall have occurred, the Company will, in a
timely manner, make the elections and take the procedural steps described
in the Prospectus under the heading "Federal Income Tax Considerations" to
meet the requirements to qualify, for its taxable year ending December 31,
17
1996, as a REIT under the Code, as is in effect on the date hereof and use
every reasonable effort to do so.
(2) The Bank covenants with each Underwriter as follows:
(a) Compliance with Regulations and OTS Requests. The Bank will
notify the Underwriters immediately, and confirm the notice in writing,
(i) of the effectiveness of the Offering Circular and any amendment
thereto, (ii) of the receipt by the Bank or its counsel of any comments
from the OTS with respect to the offering of the Securities, (iii) of any
request to the Bank or its counsel by the OTS for any amendment or
supplement to the Offering Circular or for additional information and
(iv) of the issuance or initiation by the OTS or by any other state or
federal banking or securities regulatory authority of any stop order or
cease-and-desist proceeding to suspend the effectiveness of the Offering
Circular or interfering with the offering of the Securities, or of the
suspension of the qualification of the Securities for offering or sale in
any jurisdiction, or the initiation or threat of any other orders or
proceedings for any of such purposes. The Bank will make every reasonable
effort to prevent the issuance or initiation of any such stop orders or
cease-and-desist proceedings and, if any such stop orders or cease-and-
desist proceedings are issued or initiated, to obtain the lifting or
dismissal thereof at the earliest possible moment.
(b) Filing of Amendments. The Bank will give the Representatives
notice of its intention to file or prepare any amendment to the Offering
Circular (or to any preliminary offering circular, as the case may be) or
any amendment, supplement or revision to the Offering Circular, will
furnish the Representatives with copies of any such documents a reasonable
amount of time prior to such proposed filing or use, as the case may be,
and will not file or use any such document to which the Representatives or
counsel for the Underwriters shall object.
(c) Delivery of Form OC. The Bank has furnished or will deliver to
the Representatives and counsel for the Underwriters, without charge,
signed copies of the Form OC, as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by reference
therein) and signed copies of all consents and certificates of experts,
and will also deliver to the Representatives, without charge, a conformed
copy of the Form OC, as originally filed and of each amendment thereto
(without exhibits) for each of the Underwriters.
(d) Continued Compliance with Laws. If any event shall occur as a
result of which it is necessary, in the opinion of counsel for the
Underwriters, to amend or supplement the Offering Circular in order to
make the Offering Circular not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, the
Bank will forthwith amend or supplement the Offering Circular by preparing
and furnishing to the Underwriters a reasonable number of copies of an
amendment or amendments of, or a supplement or supplements to, the
Offering Circular (in form and substance reasonably satisfactory to such
counsel) so that, as so amended or supplemented, the Offering Circular
will not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the
18
circumstances existing at the time the Offering Circular is delivered to a
purchaser, not misleading, and the Bank will furnish to each Underwriter
such number of copies of such amendment or supplement as such Underwriter
shall reasonably request. For the purposes of this subsection, the Bank
shall furnish such information with respect to itself to the
Representatives, counsel for the Underwriters and counsel for the Bank, as
may be necessary for counsel for the Underwriters and counsel for the Bank
to be aware of and to consult with the Representatives and the Bank with
respect to the need to amend or supplement the Offering Circular and shall
furnish such further information as may from time to time be reasonably
requested.
(e) Earnings Reports. The Bank will timely file such reports in
connection with the Securities as are necessary in order to make generally
available as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, 12 C.F.R. (S) 563.81 or
12 C.F.R. (S) 563g.12.
(f) Reporting Requirements. The Bank, during the period when the
Offering Circular is required to be delivered under 12 C.F.R. (S) 563g,
will file all documents required to be filed with the OTS within the time
periods required by 12 C.F.R. (S) 563g and the rules and regulations of
the OTS thereunder.
SECTION 4. Payment of Expenses. (a) Expenses. The Company and the Bank,
-------------------
jointly and severally, covenant and agree with the several Underwriters to pay
or cause to be paid all expenses incident to the performance of their
obligations under this Agreement, including (i) the preparation, printing and
filing of the Registration Statement and the Form OC (including financial
statements and exhibits) as originally filed and of each amendment thereto, (ii)
the preparation, printing and delivery to the Underwriters of this Agreement,
any Agreement among Underwriters and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the
Securities and the Bank Preferred Shares, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriters, including
any stock or other transfer taxes and any stamp or other duties payable upon the
sale, issuance or delivery of the Securities to the Underwriters, (iv) the fees
and disbursements of the Company's counsel, accountants and other advisors, (v)
the qualification of the Securities under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, preliminary offering circular, any Term Sheets and of
the Prospectus and the Offering Circular and any amendments or supplements
thereto, (vii) the preparation, printing and delivery to the Underwriters of
copies of the Blue Sky Survey and any supplement thereto, (viii) the fees and
expenses of any transfer agent or registrar for the Securities or the Bank
Preferred Shares (ix) any fees charged by securities rating services for rating
the Securities, (x) the filing fees incident to, and the reasonable fees and
disbursements of counsel to the Underwriters in connection with, the review by
the National Association of Securities Dealers, Inc. (the "NASD") of the terms
of the sale of the Securities, and (xi) the fees and expenses incurred in
connection with the listing of the Securities on the New York Stock Exchange.
19
(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or
Section 9(a)(i) hereof, the Company shall reimburse the Underwriters for all of
their out-of-pocket expenses, including the reasonable fees and disbursements
of counsel forthe Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
---------------------------------------
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company and the Bank contained in Section
1 hereof or in certificates of any officer of the Company or the Bank delivered
pursuant to the provisions hereof, to the performance by each of the Company and
the Bank of their respective covenants and other obligations hereunder, and to
the following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery) no stop order suspending the
effectiveness of the Registration Statement shall have been issued under
the 1933 Act or proceedings therefor initiated or threatened by the
Commission, and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction
of counsel to the Underwriters. A prospectus containing the Rule 430A
Information shall have been filed with the Commission in accordance with
Rule 424(b) (or a post-effective amendment providing such information
shall have been filed and declared effective in accordance with the
requirements of Rule 430A) or, if the Company has elected to rely upon
Rule 434, a Term Sheet shall have been filed with the Commission in
accordance with Rule 424(b).
(b) Effectiveness of Offering Circular. The Offering Circular has
become effective and at Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery), no stop order or cease-and-desist
proceeding suspending the effectiveness of the Offering Circular or
interfering with the offering of the Securities or the Bank Preferred
Shares shall have been issued and no proceedings for purposes of issuing a
stop order or cease-and-desist proceedings shall have been instituted or
shall be pending or, to the knowledge of the Bank, shall be contemplated
by the OTS or by any other state or federal banking or securities
regulatory authority. Any request on the part of the OTS for additional
information or for inclusion of additional infor mation in the Form OC
shall have been complied with to the reasonable satisfaction of counsel
for the Underwriters.
(c) Opinion of Counsel for Company. At Closing Time, the
Representatives shall have received the favorable opinions, dated as of
Closing Time, of ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, counsel for the
Company, in form and substance satisfactory to counsel for the
Underwriters, together with signed or reproduced copies of each such
letter for each of the other Underwriters to the effect set forth in
Exhibits A-1 and A-2 hereto and to such further effect as counsel to the
Underwriters may reasonably request.
(d) Opinions of Counsel for Bank. At Closing Time, the
Representatives shall have received [(A)] the favorable opinions, dated as
of Closing Time, of ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ &
20
▇▇▇▇▇▇▇▇▇▇, counsel for the Bank to the effect set forth in Exhibits B-1
and B-2 hereto, in form and substance satisfactory to counsel for the
Underwriters[, and (B) the favorable opinion, dated as of Closing Time, of
internal counsel for the Bank, in form and substance satisfactory to
counsel for the Underwriters,] together with signed or reproduced copies
of [each] such opinion for each of the other Underwriters. Such opinion[s]
shall be to such further effect with respect to other legal matters
relating to this Agreement and the sale of the Securities pursuant to this
Agreement as counsel for the Underwriters may reasonably request.
The opinions required by Sections 5(c) and 5(d) may be limited to New York
State, Maryland State, District of Columbia and federal law. In giving such
opinions, such counsel may rely, as to all matters governed by the laws of
jurisdictions other than the laws of the State of New York, the State of
Maryland and the District of Columbia and the federal law of the United States,
upon opinions of other counsel, who shall be counsel satisfactory to counsel for
the Underwriters, in which case each applicable opinion shall state that they
believe the Underwriters and they are entitled to so rely.
(e) Opinion of Counsel for Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of
Closing Time, of ▇▇▇▇▇▇▇, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the
Underwriters, together with signed or reproduced copies of such letter for
each of the other Underwriters with respect to the matters set forth in
clauses (iv), (v), (vi) and (xiii), (xiv) of Exhibits A and B-1 hereto. In
giving such opinion such counsel may rely, as to all matters governed by
the laws of jurisdictions other than the law of the State of New York and
the federal law of the United States, upon the opinions of counsel
satisfactory to the Representatives. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company and
its subsidiaries and certificates of public officials.
(f) Officers' Certificate. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectus or the Offering Circular, any
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company or the
Bank and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Representatives shall
have received a certificate of the President or a Vice President of each
of the Company and the Bank and of the chief financial or chief accounting
officer of each of the Company and the Bank, dated as of Closing Time, to
the effect that (i) there has been no such material adverse change,
(ii) the representations and warranties in Sections 1(a) and 1(b) hereof
are true and correct with the same force and effect as though expressly
made at and as of Closing Time, (iii) the Company and the Bank have
complied with all agreements and satisfied all conditions on its part to
be performed or satisfied at or prior to Closing Time, (iv) no stop order
suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or are pending or
are contemplated by the Commission, and (v) no stop order suspending the
effectiveness of the Offering Circular has been issued and no proceedings
for that purpose have been instituted or are pending or are contemplated
by the OTS.
21
(g) Accountants' Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
LLP a letter dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such letter
for each of the other Underwriters containing statements and information
of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain
financial information contained in the Registration Statement and the
Prospectus.
(h) Bring-down Comfort Letter. At Closing Time, the Representatives
shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (e) of this Section, except that the
specified date referred to shall be a date not more than three business
days prior to Closing Time.
(i) Maintenance of Rating. At Closing Time, the Securities shall be
rated "B" by ▇▇▇▇▇'▇ Investors Service and "B" by Standard & Poor's
Ratings Services, a division of ▇▇▇▇▇▇-▇▇▇▇, Inc and the Company shall
have delivered to the Representatives a letter dated the Closing Time,
from each such rating agency, or other evidence satisfactory to the
Representatives, confirming that the Securities have such ratings; and
since the date of this Agreement, there shall not have occurred a
downgrading in the rating assigned to the Securities or any of the
Company's or the Bank's securities by any "nationally recognized
statistical rating agency," as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the 1933 Act, and no such organization
shall have publicly announced that it has under surveillance or review its
rating of the Securities or any of the Company's or the Bank's securities.
(j) Approval of Listing. At Closing Time, the Securities shall have
been approved for listing on the New York Stock Exchange, subject only to
official notice of issuance.
(k) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
(l) Other Conditions. At Closing Time (and, if any Option Securities
are purchased, at the Date of Delivery), (A) there shall not have occurred
any change from the date hereof in the number of shares of common stock of
the Bank, directly or indirectly, legally or beneficially, owned, held or
controlled by ▇▇. ▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇, (B) there shall not have been, since
the latest respective dates as of which information is given in the most
recent financial statements of ▇. ▇. ▇▇▇▇ Real Estate Investment Trust
(the "Trust") and ▇. ▇. ▇▇▇▇ Company ("▇▇▇▇ Company") furnished to the
Underwriters, any material adverse change or development in the condition
(financial or otherwise), earnings, business affairs or business prospects
of the Trust and its subsidiaries, considered as one enterprise, or of the
▇▇▇▇ Company and its subsidiaries, considered as one enterprise, whether
or not arising in the ordinary course of business, (C) no action, suit or
proceeding before or by any government, governmental instrumentality or
court, domestic or foreign, that has not been disclosed in the Offering
Circular, the financial statements referred to
22
in clause (B) above or in a written notice addressed to the
Representatives prior to the date hereof, shall be pending against the
Trust, ▇▇▇▇ Company or any of the subsidiaries of either of them that
could result in any material adverse change in the condition (financial or
otherwise), earnings, business affairs or business prospects of the Trust
and its subsidiaries, considered as one enterprise, or of the ▇▇▇▇ Company
and its subsidiaries, considered as one enterprise, whether or not arising
in the ordinary course of business, (D) no event of default shall exist
under any contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument constituting indebtedness of the Trust, ▇▇▇▇
Company or any of the subsidiaries of either of them, nor shall the Trust,
▇▇▇▇ Company or any of such subsidiaries be in default in the performance
or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note,
lease or other agreement or instrument to which the Trust, ▇▇▇▇ Company or
any of such subsidiaries is a party or by which it or any of them or any
of their properties may be bound, except for such defaults that have been
disclosed in the Offering Circular, the financial statements referred to
in clause (B) above or in a written notice addressed to the
Representatives prior to the date hereof or that would not, in the
aggregate, have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs or business prospects of the Trust
and its subsidiaries, considered as one enterprise, or of the ▇▇▇▇ Company
and its subsidiaries, considered as one enterprise, and (E) the execution
and delivery of this Agreement by the Bank and the incurrence of the
obligations herein set forth and the consummation of the transactions
herein contemplated will not result in any violation of, and do not and
will not contravene or conflict with, or constitute a default under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Trust, the ▇▇▇▇ Company or any of the
subsidiaries of either of them under (1) any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or instrument to
which the Trust, ▇▇▇▇ Company or any of such subsidiaries is a party or by
which any of their respective properties may be bound, (2) any existing
applicable law, rule or regulation applicable to the Trust, the ▇▇▇▇
Company or any of such subsidiaries or (3) any judgment, order or decree
of, or agreement with, any government or governmental instrumentality or
court, domestic or foreign, having jurisdiction over the Trust, the ▇▇▇▇
Company or any of such subsidiaries or any of their respective properties.
(m) Conditions to Purchase of Option Securities. In the event that
the Underwriters exercise their option provided in Section 2(b) hereof to
purchase all or any portion of the Option Securities, the representations
and warranties of each of the Company and the Bank contained herein and
the statements in any certificates furnished by each of the Company or the
Bank or any subsidiary hereunder shall be true and correct as of each Date
of Delivery and, at the relevant Date of Delivery, the Representatives
shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
---------------------
Delivery, of the President or a Vice President of each of the Company
and the Bank and of the chief financial or chief accounting officer
of each of the Company and the Bank confirming that the certificate
delivered at the Closing Time pursuant to Section 5(f) hereof remains
true and correct as of such Date of Delivery.
23
(ii) Opinions of Counsel for Company. The favorable opinions of
-------------------------------
▇▇▇▇, Pittman, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, counsel for the Company, in form
and substance satisfactory to counsel for the Underwriters, dated
such Date of Delivery, relating to the Option Securities to be
purchased on such Date of Delivery and otherwise to the same effect
as the opinion required by Section 5(c) hereof.
(iii) Opinions of Counsel for Bank. The favorable opinions of ▇▇▇▇,
----------------------------
▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, counsel for the Bank, and of internal
counsel for the Bank, in form and substance satisfactory to counsel
for the Underwriters, each dated such Date of Delivery, relating to
the Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinions required by Section 5(d)
hereof.
(iv) Opinion of Counsel for Underwriters. The favorable opinion
-----------------------------------
of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the
Underwriters, dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise to
the same effect as the opinion required by Section 5(e) hereof.
(v) Bring-down Comfort Letter. A letter from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP,
-------------------------
in form and substance satisfactory to the Representatives and dated
such Date of Delivery, substantially in the same form and substance
as the letter furnished to the Representatives pursuant to Section
5(h) hereof, except that the "specified date" in the letter furnished
pursuant to this paragraph shall be a date not more than five days
prior to such Date of Delivery.
(vi) No Downgrading. Subsequent to the date of this Agreement, no
--------------
downgrading shall have occurred in the rating accorded the Securities
or of any of the Company's or the Bank's other securities by any
"nationally recognized statistical rating organization", as that term
is defined by the Commission for purposes of Rule 436(g)(2) under the
1933 Act, and no such organization shall have publicly announced that
it has under surveillance or review its ratings of any of the
Company's or the Bank's securities.
(n) Additional Documents. At Closing Time and at each Date of
Delivery counsel for the Underwriters shall have been furnished with such
documents and opinions as they may require for the purpose of enabling
them to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company and
the Bank in connection with the issuance and sale of the Securities as
herein contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Underwriters.
(o) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be
fulfilled, this Agreement, or, in the case of any condition to the
purchase of Option Securities on a Date of Delivery which is after the
Closing
24
Time, the obligations of the several Underwriters to purchase the relevant
Option Securities, may be terminated by the Representatives by notice to
the Company at any time at or prior to Closing Time or such Date of
Delivery, as the case may be, and such termination shall be without
liability of any party to any other party except as provided in Section 4
and except that Sections 1, 6, 7, and 8 shall survive any such termination
and remain in full force and effect.
SECTION 6. Indemnification.
---------------
(a) Indemnification of Underwriters. The Company and the Bank,
jointly and severally, agree to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement or the Form OC (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading
or arising out of any untrue statement or alleged untrue statement of a
material fact included in any preliminary prospectus, any preliminary
offering circular, the Prospectus or the Offering Circular (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(d) below) any such settlement is effected with the written consent of
the Company and the Bank; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇ ▇▇▇▇▇), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
-------- -------
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company or the
Bank by any Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the
Registration Statement
25
or the Form OC (or any amendment thereto), including the Rule 430A Information
and the Rule 434 Information, if applicable, or any preliminary prospectus, any
preliminary offering circular, the Prospectus or the Offering Circular (or any
amendment or supplement thereto).
(b) Indemnification of Company, Bank, Directors and Officers. Each
Underwriter severally agrees to indemnify and hold harmless the Company and the
Bank, their respective directors, each officer of the Company who signed the
Registration Statement, each officer of the Bank who signed the Form OC, and
each person, if any, who controls the Company or the Bank within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement or the Form OC (or any amendment thereto), including the
Rule 430A Information and the Rule 434 Information, if applicable, or any
preliminary prospectus, any preliminary offering circular, the Prospectus or the
Offering Circular (or any amendment or supplement thereto) in reliance upon and
in conformity with written information furnished to the Company or the Bank by
such Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration
Statement or the Form OC (or any amendment thereto) or such preliminary
prospectus, preliminary offering circular, the Prospectus or the Offering
Circular (or any amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company or the Bank. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
-------- -------
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
26
(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 7. Contribution. If the indemnification provided for in Section 6
------------
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Bank on the one hand and the Underwriters on the other hand from the offering of
the Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Bank on the one hand
and of the Underwriters on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Bank on the one hand
and the Underwriters on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Underwriters, in
each case as set forth on the cover of the Prospectus, or, if Rule 434 is used,
the corresponding location on the Term Sheet, bear to the aggregate initial
public offering price of the Securities as set forth on such cover.
The relative fault of the Company and the Bank on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or the Bank or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company, the Bank and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or
27
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the 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 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company or the Bank, each officer of the Company who signed
the Registration Statement, each officer of the Bank who signed Form OC and each
person, if any, who controls the Company or the Bank within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same
rights to contribution as the Company or the Bank, as applicable. The
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of Initial Securities set forth opposite
their respective names in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
--------------------------------------------------------------
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or the Bank or any of its subsidiaries
submitted pursuant hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or
controlling person, or by or on behalf of the Company or the Bank, and shall
survive delivery of the Securities to the Underwriters.
SECTION 9. Termination of Agreement.
------------------------
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus or the
Offering Circular, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company or the Bank and its subsidiaries considered as one enterprise, whether
or not arising in the ordinary course of business, or (ii) if there has occurred
any material adverse change in the financial markets in the United States, any
outbreak of hostilities or escalation thereof or other calamity or crisis or any
change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Representatives,
impracticable to market the Securities or to enforce contracts for the sale of
the Securities, or (iii) if trading in any securities of
28
the Company has been suspended or materially limited by the Commission or the
New York Stock Exchange, or if trading generally on the American Stock Exchange
or the New York Stock Exchange or in the Nasdaq National Market has been
suspended or materially limited, or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices have been required, by any of said
exchanges or by such system or by order of the Commission, the National
Association of Securities Dealers, Inc. or any other governmental authority, or
(iv) if a banking moratorium has been declared by either Federal or New York
authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7, and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. Default by One or More of the Underwriters. If one or more of
------------------------------------------
the Underwriters shall fail at Closing Time or a Date of Delivery to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representatives shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of
the number of Securities to be purchased on such date, each of the non-
defaulting Underwriters shall be obligated, severally and not jointly, to
purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of
all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of Securities to be purchased on such date, this Agreement or, with
respect to any Date of Delivery which occurs after the Closing Time, the
obligation of the Underwriters to purchase and of the Company to sell the
Option Securities to be purchased and sold on such Date of Delivery shall
terminate without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Company to sell the relevant Option Securities,
as the case may be, either the Representatives or the Company shall have the
right to postpone Closing Time or the relevant Date of Delivery, as the case may
be, for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectus or in any other documents or
29
arrangements. As used herein, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 10.
SECTION 11. Notices. All notices and other communications hereunder shall
-------
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to ▇▇▇▇▇▇▇ ▇▇▇▇▇ at North Tower, World Financial
Center, New York, New York 10281-1201, attention of ____________; notices to the
Company shall be directed to it at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.; and notices to the Bank
shall be directed to it at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇.
SECTION 12. Parties. This Agreement shall each inure to the benefit of
-------
and be binding upon the Underwriters, the Company and the Bank and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Underwriters, the Company and the Bank and their respective successors
and the controlling persons and officers and directors referred to in Sections 6
and 7 and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Underwriters, the Company and
the Bank and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
----------------------
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings herein
------------------
are for convenience only and shall not affect the construction hereof.
30
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to each of the Company and the Bank a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Company and the Bank in accordance
with its terms.
Very truly yours,
CHEVY CHASE PREFERRED CAPITAL
CORPORATION
By_____________________________
Title:
CHEVY CHASE BANK, F.S.B.
By______________________________
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & CO., INC.
▇▇▇▇▇ ▇▇▇▇▇▇ INC.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By_____________________________________________
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
31
SCHEDULE A
Underwriters Number of
------------ Initial
Securities
----------
▇▇▇▇▇▇▇ Lynch, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Co., Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
________
Total................................... 10,000,000
==========
Sch A - 1
SCHEDULE B
CHEVY CHASE PREFERRED CAPITAL CORPORATION
10,000,000 Shares
___% Noncumulative Exchangeable Preferred Stock, Series A
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $25.00.
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $____, being an amount equal to the initial public
offering price set forth above less $___ per share; provided that the purchase
price per share for any Option Securities purchased upon the exercise of the
over-allotment option described in Section 2(b) shall be reduced by an amount
per share equal to any dividends or distributions declared by the Company and
payable on the Initial Securities but not payable on the Option Securities.
3. The dividend rate on the Securities will be ___% per annum.
Sch B - 1
SCHEDULE C
[LIST OF OTHER AGREEMENTS ENTERED INTO BY THE COMPANY]
Sch C-1