EXHIBIT 1.1
3,173,196 SHARES/1/
BNC MORTGAGE, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
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March_[10], 1998
CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp.
▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
c/o CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
On behalf of the several
Underwriters named on
Schedule I attached hereto
Ladies and Gentlemen:
BNC Mortgage, Inc., a Delaware corporation (the "Company"), and DLJ
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Mortgage Capital, Inc., a Delaware corporation (the "Selling Stockholder"),
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propose to sell to you and the other underwriters named on Schedule_I to this
Agreement (the "Underwriters"), for whom you are acting as Representatives (in
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such capacity, the "Representatives"), an aggregate of 3,173,196 shares (the
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"Firm Shares") of the Company's Common Stock, $0.01 par value (the "Common
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Stock"), with the Company selling an aggregate of 1,400,000 of such Firm Shares
and the Selling Stockholder selling an aggregate of 1,773,196 of such Firm
Shares. In addition, the Company proposes to grant to the Underwriters an
option to purchase up to an additional 475,979 shares (the "Option Shares") of
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Common Stock for the purpose of covering over-allotments in connection with the
sale of the Firm Shares. The Firm Shares and the Option Shares are together
called the "Shares."
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1. SALE AND PURCHASE OF THE SHARES. On the basis of the
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representations, warranties and agreements contained in, and subject to the
terms and conditions of, this Agreement:
(a) The Company and the Selling Stockholder, severally and not
jointly, agree to sell to the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company and the Selling
Stockholder, at $__________ per share (the
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/1/ Plus an option to purchase from BNC Mortgage, Inc. up to 475,979 additional
shares to cover over-allotments, if any.
"Initial Price"), the number of Firm Shares set forth opposite the name of such
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Underwriter on Schedule I to this Agreement, subject to adjustments under
Section 10. The number of Firm Shares to be purchased by each Underwriter from
the Company and the Selling Stockholder shall be as nearly as practicable in the
same proportion as the number of Firm Shares being sold by the Company and the
Selling Stockholder bears to the total number of Firm Shares to be sold
hereunder.
(b) The Company grants to the several Underwriters an option (the
"Option") to purchase, severally and not jointly, all or any part of the Option
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Shares at the Initial Price. The number of Option Shares to be purchased by each
Underwriter from the Company shall be as nearly as practicable in the same
proportion as the number of Firm Shares being sold by the Company to such
Underwriter bears to the total number of Firm Shares to be sold hereunder. Such
option may be exercised only to cover over-allotments in the sales of the Firm
Shares by the Underwriters and may be exercised in whole or in part from time to
time within 30 days after the date of this Agreement, in each case upon written
or telegraphic notice, or verbal or telephonic notice confirmed by written or
telegraphic notice, by the Representatives to the Company no later than 12:00
noon, New York City time, at least two business days before the Option Shares
Closing Date (as defined below), setting forth the number of Option Shares to be
purchased and the time and date of such purchase.
(c) The Company agrees to issue, on the Firm Shares Closing Date (as
defined below), to CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. and ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc. (for their own
account and not as the Representatives of the several Underwriters), for an
aggregate price of $3,173, warrants (the "Warrants") to purchase an aggregate of
317,319 shares of Common Stock (the "Warrant Shares"), exercisable at a price
per Warrant Share equal to 110% of the price the Shares are first offered to the
public by the Underwriters. The Warrants will be exercisable at any time and
from time to time on or after the first anniversary of the date of this
Agreement up to the fifth anniversary thereof. Each Warrant shall be
substantially identical to the form of Warrant filed as an exhibit to the
Registration Statement (as defined below).
2. DELIVERY AND PAYMENT. The closing of the transactions
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contemplated by this Agreement (including upon exercise of the Option) shall
take place at the offices of Freshman, Marantz, Orlanski, ▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; provided,
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however, that delivery by the Company and the Selling Stockholder of the Firm
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Shares to the Representatives for the respective accounts of the Underwriters,
and payment of the purchase price by certified or official bank checks payable
in New York Clearing House (next day) funds to the Company and to the order of
the Attorney-in-Fact (as defined below), shall take place at the offices of CIBC
▇▇▇▇▇▇▇▇▇▇▇ Corp., at ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., New York City time, on the fifth business day
following the date of this Agreement, or at such time on such other date, not
later than 10 business days after the date of this Agreement, as shall be agreed
upon by the Company, the Attorney-in-Fact and the Representatives (such time and
date of delivery and payment are called the "Firm Shares Closing
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Date").
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In the event the Option is exercised, delivery by the Company of the
Option Shares to the Representatives for the respective accounts of the
Underwriters and payment of the purchase price by certified or official bank
checks payable in New York Clearing House (next day) funds to the Company shall
take place at the offices of CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. specified above at the time
and on the date (which may be the same date as, but in no event shall be earlier
than, the Firm Shares Closing Date) specified in the notice referred to in
Section 1(b) (such time and date of delivery and payment are called the "Option
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Shares Closing Date"). The Firm Shares Closing Date and the Option Shares
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Closing Date are called, individually, a "Closing Date" and, together, the
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"Closing Dates."
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Certificates evidencing the Shares shall be registered in such names
and shall be in such denominations as the Representatives shall request at least
two full business days before the Firm Shares Closing Date or, in the case of
Option Shares, on the day of notice of exercise of the Option as described in
Section 1(b) and shall be made available to the Representatives for checking and
packaging, at such place as is designated by the Representatives, at least one
full business day before the Firm Shares Closing Date (or the Option Shares
Closing Date in the case of the Option Shares).
3. REGISTRATION STATEMENT AND PROSPECTUS; PUBLIC OFFERING. The
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Company has prepared in conformity with the requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and the published rules and
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regulations thereunder (the "Rules") adopted by the Securities and Exchange
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Commission (the "Commission"), a registration statement on Form S-1 (No. 333-
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38651), including a preliminary prospectus relating to the Shares, and has filed
with the Commission the Registration Statement (as hereinafter defined) and such
amendments thereof as may have been required to the date of this Agreement.
Copies of such Registration Statement (including all amendments thereof) and of
the related preliminary prospectus have heretofore been delivered by the Company
to you. The term "Preliminary Prospectus" means any preliminary prospectus (as
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described in Rule 430 of the Rules) included at any time as a part of the
Registration Statement. The Registration Statement as amended at the time and
on the date it becomes effective (the "Effective Date"), including all
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exhibits and information, if any, deemed to be part of the Registration
Statement pursuant to Rule 424(b) and Rule 430A of the Rules, is called the
"Registration Statement." The term "Prospectus" means the prospectus in the
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form first used to confirm sales of the Shares (whether such prospectus was
included in the Registration Statement at the time of effectiveness or was
subsequently filed with the Commission pursuant to Rule 424(b) of the Rules).
The Company understands that the Underwriters propose to make a public
offering of the Shares, as set forth in and pursuant to the Prospectus, as soon
after the Effective Date and the date of this Agreement as the Representatives
deem advisable. The Company hereby confirms that the Underwriters and dealers
have been authorized to distribute or cause to be distributed each Preliminary
Prospectus and are authorized to distribute the Prospectus (as from time to time
amended or supplemented if the Company furnishes amendments or supplements
thereto to the Underwriters).
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
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hereby represents and warrants to each Underwriter as follows:
(a) On the Effective Date, the Registration Statement complied, and,
(i) on the date of the Prospectus, (ii) on the date any post-effective amendment
to the Registration Statement shall become effective, (iii) on the date any
supplement or amendment to the Prospectus is filed with the Commission and
(iv) on each Closing Date, the Registration Statement and the Prospectus (and
any amendment thereof or supplement thereto) will comply, in all material
respects, with the applicable provisions of the Securities Act and the Rules and
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
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rules and regulations of the Commission thereunder. The Registration Statement
did not, as of the Effective Date, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading, and on the
other dates referred to above neither the Registration Statement nor the
Prospectus, nor any amendment thereof or supplement thereto, will contain any
untrue statement of a material fact or will omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. When any related Preliminary Prospectus was first filed
with the Commission (whether filed as part of the Registration Statement or any
amendment thereto or pursuant to Rule 424(a) of the Rules) and when any
amendment thereof or supplement thereto was first filed with the Commission,
such Preliminary Prospectus as amended or supplemented complied in all material
respects with the applicable provisions of the Securities Act and the Rules and
did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading. Notwithstanding the foregoing, the Company
makes no representation or warranty as to (1) the paragraph with respect to
stabilization on the inside front cover page of the Prospectus and (2) the
statements contained under the caption "Underwriting" in the Prospectus. The
Company acknowledges that the statements referred to in the previous sentence
constitute the only information furnished in writing by the Representatives on
behalf of the several Underwriters specifically for inclusion in the
Registration Statement, any Preliminary Prospectus or the Prospectus.
(b) There is no document or contract of a character required to be
described in the Registration Statement or Prospectus or to be filed as an
exhibit to the Registration Statement which is not described or filed as
required.
(c) The financial statements of the Company (including all notes and
schedules thereto) included in the Registration Statement and Prospectus present
fairly the financial position, the results of operations and cash flows and the
stockholders' equity and the other
information purported to be shown therein of the Company at the respective dates
and for the respective periods to which they apply. Such financial statements
have been prepared in conformity with generally accepted accounting principles,
consistently applied throughout the periods involved, and all adjustments
necessary for a fair presentation of the results for such periods have been
made.
(d) Ernst & Young LLP, whose reports are filed with the Commission as
a part of the Registration Statement, are and, during the periods covered by its
reports, were independent public accountants as required by the Securities Act
and the Rules.
(e) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware. The
Company has no direct or indirect "significant subsidiaries" (as defined in Rule
1-02(v) of Regulation S-X) other than those listed on Exhibit 21.1 to the
Registration Statement (collectively, the "Subsidiaries") and, other than the
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Subsidiaries, does not control, directly or indirectly, any corporation,
partnership, joint venture, association or other business organization. Each
Subsidiary has been duly incorporated and is validly existing as a corporation
or limited partnership, as the case may be, in good standing under the laws of
its jurisdiction of incorporation. The Company and each Subsidiary are duly
qualified and in good standing as a foreign corporation or limited partnership,
as the case may be, in each jurisdiction in which the character or location of
their respective assets or properties (owned, leased or licensed) or the nature
of their respective businesses makes such qualification necessary, except for
such jurisdictions where the failure to so qualify would not have a material
adverse effect on the assets or properties, business, results of operations or
financial condition of the Company and the Subsidiaries, taken as a whole (a
"Material Adverse Effect"). The Company and the Subsidiaries have all requisite
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corporate or limited partnership power and authority, and all necessary
authorizations, approvals, consents, orders, licenses, certificates and permits
of and from all governmental or regulatory bodies or any other person or entity,
to own, lease and license their respective assets and properties and conduct
their respective businesses as now being conducted and as described in the
Registration Statement and the Prospectus, except for such authorizations,
approvals, consents, orders, licenses, certificates and permits of which the
failure to so obtain would not result in a Material Adverse Effect. No such
authorization, approval, consent, order, license, certificate or permit contains
a materially burdensome restriction other than as disclosed in the Registration
Statement and the Prospectus. The Company has all such corporate power and
authority, and such authorizations, approvals, consents, orders, licenses,
certificates and permits, to enter into, deliver and perform this Agreement and
to issue and sell the Shares (except as may be required under the Securities Act
and state and foreign Blue Sky laws).
(f) The Company and each Subsidiary own or possess adequate and
enforceable rights to use all patents, patent applications, trademarks,
trademark applications, trade names, service marks, copyrights, copyright
applications, licenses, know-how and other similar
rights and proprietary knowledge (collectively, "Intangibles") necessary for the
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conduct of their respective businesses as described in the Registration
Statement and the Prospectus. Neither the Company nor any Subsidiary has
received any notice of any conflict with asserted rights of others with respect
to any Intangibles which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material Adverse
Effect.
(g) The Company and each Subsidiary have (i) good title to each of the
items of personal property which are reflected in the financial statements
referred to in Section 4(c) or are referred to in the Prospectus as being owned
by it and (ii) valid and enforceable leasehold interests in each of the items of
real and personal property which are referred to in the Prospectus as being
leased by it, in each case free and clear of all liens, encumbrances, claims,
security interests and defects, other than those described in the Prospectus or
those the existence of which would not result in a Material Adverse Effect.
(h) There is no legal or governmental or other proceeding or
investigation before any court or before or by any public body or board pending
or, to the Company's knowledge, threatened, against, or involving the assets,
properties or business of, the Company or any Subsidiary which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
result in a Material Adverse Effect.
(i) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as disclosed or
described therein, (i) there has not been any material adverse change in the
assets or properties, business, results of operations, prospects or condition
(financial or otherwise), of the Company or any Subsidiary, whether or not
arising from transactions in the ordinary course of business; (ii) neither the
Company nor any Subsidiary has sustained any material loss or interference with
its assets, businesses or properties (whether owned or leased) from fire,
explosion, earthquake, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or any court or legislative or other
governmental action, order or decree; and (iii) since the date of the latest
balance sheet included in the Registration Statement and the Prospectus, except
as disclosed or described therein, neither the Company nor any Subsidiary has
(a) issued any securities or incurred any liability or obligation, direct or
contingent, for borrowed money, except such liabilities or obligations incurred
in the ordinary course of business or (b) declared or paid any dividend or made
any distribution on any shares of its stock or redeemed, purchased or otherwise
acquired or agreed to redeem, purchase or otherwise acquire any shares of its
stock.
(j) Each agreement listed in the Exhibits to the Registration
Statement is in full force and effect and is valid and enforceable by and
against the Company or the Subsidiary, or both, as the case may be, assuming the
due authorization, execution and delivery thereof by each of the other parties
thereto, except as such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles. Neither the Company, any
Subsidiary, nor to the Company's knowledge, any other party, is in default in
the observance or performance of any term or obligation to be performed by it
under any such agreement, and no event has occurred which with notice or lapse
of time or both would constitute such a default, except for such defaults or
events the occurrence of which would not result in a Material Adverse Effect. No
default exists, and no event has occurred which with notice or lapse of time or
both would constitute a default, in the due performance and observance of any
term, covenant or condition by the Company or any Subsidiary of any other
agreement or instrument to which the Company or any Subsidiary is a party or by
which it or its properties or business may be bound or affected, except for such
defaults or events the occurrence of which would not result in a Material
Adverse Effect.
(k) Neither the Company nor any Subsidiary is in violation of any term
or provision of its charter or by-laws or of any franchise, license, permit,
judgment, decree, order, statute, rule or regulation, except for such violations
the occurrence of which would not result in a Material Adverse Effect.
(l) Neither the execution, delivery and performance of this Agreement
and the Warrants by the Company nor the consummation of any of the transactions
contemplated hereby (including, without limitation, the issuance and sale by the
Company of the Shares and the Warrants) will give rise to a right to terminate
or accelerate the due date of any payment due under, or result in the breach or
violation of any term or provision of, or constitute a default (or an event
which with notice or lapse of time or both would constitute a default) under, or
require any consent or waiver under, or result in the execution or imposition of
any lien, charge or encumbrance upon any properties or assets of the Company or
any Subsidiary pursuant to the terms of, any indenture, mortgage, deed of trust
or other agreement or instrument to which the Company or any Subsidiary is a
party or by which it or any of its properties or businesses is bound, or any
franchise, license, permit, judgment, decree, order, statute, rule or regulation
applicable to the Company or any Subsidiary or violate any provision of the
charter or by-laws of the Company or any Subsidiary, except: (1) for such
consents or waivers which have already been obtained and are in full force and
effect or (2) where the failure to obtain such consents and waivers, either
singly or in the aggregate, would not result in a Material Adverse Effect.
(m) The Company has authorized and outstanding capital stock as set
forth under the caption "Capitalization" in the Prospectus (including footnote
(3) thereto with respect to employee benefit plans). All of the outstanding
shares of Common Stock have been duly and validly issued and are fully paid and
nonassessable and none of them was issued in violation of any preemptive or
other similar right. The Company has reserved and kept available for the
exercise of the Warrants such number of authorized but unissued shares as are
sufficient
to permit the exercise in full of the Warrants. The Shares, when issued and sold
pursuant to this Agreement, and the Warrant Shares, when issued and sold
pursuant to the Warrants, will be duly and validly issued, fully paid and
nonassessable and none of them will be issued in violation of any preemptive or
other similar right. Except as disclosed in the Registration Statement and the
Prospectus, there is no outstanding option, warrant or other right calling for
the issuance of, and there is no commitment, plan or arrangement to issue, any
share of stock of the Company or any security convertible into, or exercisable
or exchangeable for, such stock. The Common Stock, the Warrants and the Shares
conform in all material respects to all statements in relation thereto contained
in the Registration Statement and the Prospectus.
(n) Except as disclosed in the Registration Statement, there are no
persons with registration or other similar rights to have any securities
registered pursuant to the Registration Statement or otherwise registered by the
Company under the Securities Act. Each director and officer of the Company has
delivered to the Representatives his enforceable written agreement that he will
not, for a period of 180 days after the date of this Agreement, offer for sale,
sell, distribute, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, or exercise any registration rights with respect to, any
shares of Common Stock (or any securities convertible into, exercisable for, or
exchangeable for any shares of Common Stock) owned by him or her, without the
prior written consent of CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp.
(o) All necessary corporate action has been duly and validly taken by
the Company to authorize the execution, delivery and performance of this
Agreement and the Warrants and the issuance and sale of the Shares and the
Warrant Shares by the Company. This Agreement has been, and the Warrants on the
Firm Shares Closing Date will be, duly and validly authorized, executed and
delivered by the Company and constitutes and will constitute the legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
by general equitable principles.
(p) Except as disclosed in the Prospectus, neither the Company nor any
of its Subsidiaries is engaged in any unfair labor practice which could result
in a Material Adverse Effect. Except as disclosed in the Prospectus and for
matters which, singly or in the aggregate, would not result in a Material
Adverse Effect, (i) there is (1) no unfair labor practice complaint pending, or
to the Company's knowledge, threatened, against the Company or any of its
Subsidiaries before the National Labor Relations Board, and no grievance or
arbitration proceeding arising out of or under collective bargaining agreements
is pending or, to the Company's knowledge, threatened, (2) no strike, labor
dispute, slowdown or stoppage pending or, to the Company's knowledge,
threatened, against the
Company or any of its Subsidiaries and (3) no union representation question
existing with respect to the employees of the Company or any of its Subsidiaries
and, to the Company's knowledge, no union organizing activities are taking place
and (ii) there has been no violation by the Company of any federal, state, local
or foreign law relating to discrimination in the hiring, promotion or pay of
employees, or any applicable wage or hour laws, nor any provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA") or the rules and
regulations promulgated thereunder. -----
(q) No transaction has occurred between or among the Company or any
Subsidiary and any of the Company's or any Subsidiary's officers or directors or
any affiliate or affiliates of any such officer or director that is required to
be described in and is not described in the Registration Statement and the
Prospectus.
(r) The Company and each of its Subsidiaries has obtained all permits,
licenses and other authorizations that are required under all environmental
laws, including but not limited to, the Federal Water Pollution Control Act (33
U.S.C. (S) 1251 et seq.), Resource Conservation & Recovery Act (42 U.S.C.
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(S) 6901 et seq.), Safe Drinking Water Act (21 U.S.C. (S)(S) 201, 300f), Toxic
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Substances Control Act (15 U.S.C. (S) 349, 42 U.S.C. (S) 7401 et seq.),
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Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
(S) 9601 et seq.), and any other laws of any applicable jurisdiction, relating
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to emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or wastes
into the environment (including, without limitation, ambient air, surface water,
ground water or land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or wastes or under any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder (collectively, the "Environmental Laws"), except as otherwise set
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forth in the Prospectus or to the extent that the failure to have any such
permit, license or authorization, singly or in the aggregate, would not result
in a Material Adverse Effect. Except as described in the Prospectus, each of
the Company and the Subsidiaries is in compliance with all terms and conditions
of any required permits, licenses and authorizations, and is also in compliance
with all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in the
Environmental Laws, except to the extent the failure to comply would not result
in a Material Adverse Effect.
(s) There are no past or present events, conditions, circumstances,
activities, facts, practices, incidents, actions, or plans relating to the
business as presently being conducted by the Company or the Subsidiaries that
interfere with or prevent material compliance or continued material compliance
with the Environmental Laws, or which would be reasonably likely to give rise to
any legal liability (whether statutory or common law) or otherwise would be
reasonably likely to form the basis of any claim, action, demand, suit,
proceeding, hearing, notice of violation, study, investigation, remediation or
cleanup based on or related to the generation, manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge, release into the workplace, the community or the
environment of any pollutant, contaminant, chemical or industrial, toxic or
hazardous substance or waste, except for any liabilities or any claims, demands
or other actions specified above that would not, singly or in the aggregate,
result in a Material Adverse Effect.
(t) The Company and each Subsidiary have filed all Federal, state,
local and foreign tax returns which are required to be filed through the date
hereof, or have received extensions thereof, and have paid all taxes shown on
such returns and all assessments received by each to the extent that the same
are material and have become due.
(u) The Company has filed a registration statement pursuant to
Section 12(b) of the Exchange Act to register the Common Stock. The Shares have
been duly authorized for listing on the NASDAQ National Market, subject to
official notice of issuance.
(v) Neither the Company nor any Subsidiary is 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.
(w) None of the Company or any of its directors, officers or
controlling persons has taken or will take, directly or indirectly, any action
designed to or which might reasonably be expected to cause or result, under the
Securities Act or otherwise, in, or which has constituted or which reasonably
might be expected to constitute, the stabilization or manipulation of the price
of any securities of the Company or facilitation of the sale or resale of the
Shares.
(x) None of the Company, any Subsidiary or any officer or director
purporting to act exclusively on behalf of the Company or any Subsidiary has at
any time (i) made any contributions to any candidate for political office, or
failed to disclose fully any such contributions, in violation of law; (ii) made
any payment to any Federal, state, local or foreign governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or allowed by applicable law; (iii) made any
payment in violation of law outside the ordinary course of business to any
purchasing or selling agent or person charged with similar duties of any entity
to which the Company or any Subsidiary sells or from which the Company or any
Subsidiary buys products for the purpose of influencing such agent or person to
buy products from or sell products to the Company or any Subsidiary; or (iv)
engaged in any material transaction, maintained any material bank account or
used any material corporate funds except for transactions, bank accounts and
funds which have been and are reflected in the normally maintained books and
records of the Company and the Subsidiaries, taken as a whole, and except for
any of the foregoing, the occurrence of which would not be reasonably likely to
result in a Material Adverse Effect.
(y) The Company and each Subsidiary have adequate liability and other
insurance policies insuring them against the risks of loss arising out of or
related to their respective businesses, as described in the Registration
Statement and Prospectus, issued by insurers of recognized financial
responsibility except where the failure to have such insurance would not result
in a Material Adverse Effect.
(z) Other than as provided to the Underwriters under this Agreement,
the Company has not incurred any liability for finder's or broker's fees or
agent's commissions in connection with the execution and delivery of this
Agreement, the offer and sale of the Shares or the transactions hereby
contemplated.
(aa) The Company and each Subsidiary maintain a system of internal
accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(bb) The Company and the Subsidiaries are in compliance with Florida
blue sky law relating to disclosure of issuers doing business with Cuba.
Neither the Company nor any of the Subsidiaries is presently doing business with
the government of Cuba or with any person or affiliate located in Cuba and will
notify the Florida Department of Banking and Finance, Division of Securities and
Investor Protection, if the Company or any such Subsidiary commences doing
business with the government of Cuba or any person or affiliate located in Cuba.
(cc) The merger of the Company with and into BNC Mortgage, Inc., a
Delaware corporation and a wholly-owned subsidiary of the Company ("Merger
Sub"), in order to effect the reincorporation of the Company in Delaware (the
"Reincorporation Merger"), has been approved by all necessary corporate action
on behalf of the Company and Merger Sub and the merger agreement and related
certificates, in appropriate form to effect the Reincorporation Merger, have
been filed with the Secretary of State of Delaware and the Secretary of State of
California in order to permit the Reincorporation Merger to become effective at
8:00 A.M., New York City time, on the Firm Shares Closing Date.
In addition, the Selling Stockholder represents and warrants to each Underwriter
as follows:
(a) Such Selling Stockholder has all requisite power to enter into
this Agreement and to sell, assign, transfer and deliver to the Underwriters the
Shares to be sold by such Selling Stockholder hereunder in accordance with the
terms of this Agreement. This Agreement has been duly executed and delivered by
such Selling Stockholder and constitutes
and will constitute the legal, valid and binding obligation of such Selling
Stockholder enforceable against such Selling Stockholder in accordance with its
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyances, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by general
equitable principles.
(b) Such Selling Stockholder has duly executed and delivered a power
of attorney and custody agreement (with respect to such Selling Stockholder, the
"Power-of-Attorney" and the "Custody Agreement," respectively), each in the form
----------------- -----------------
heretofore delivered to the Representatives, appointing each of Evan_R. ▇▇▇▇▇▇▇
and Kelly_W. ▇▇▇▇▇▇▇ as such Selling Stockholder's attorneys-in-fact (the
"Attorneys-in-Fact") with authority to execute, deliver and perform this
------------------
Agreement on behalf of such Selling Stockholder and appointing U.S. Stock
----------
Transfer Corporation as custodian thereunder (the "Custodian"). Certificates in
-------------------- ---------
negotiable form, endorsed in blank or accompanied by blank stock powers duly
executed, with signatures appropriately guaranteed, representing the Shares to
be sold by such Selling Stockholder hereunder have been deposited with the
Custodian pursuant to the Custody Agreement for the purpose of delivery pursuant
to this Agreement. Such Selling Stockholder has full power to enter into the
Custody Agreement and the Power-of-Attorney and to perform its obligations under
the Custody Agreement. The Custody Agreement and the Power-of-Attorney have
been duly executed and delivered by such Selling Stockholder and are the legal,
valid, binding and enforceable instruments of such Selling Stockholder
enforceable against such Selling Stockholder in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyances, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles. Such Selling Stockholder agrees that each of the Shares
represented by the certificates on deposit with the Custodian is subject to the
interests of the Underwriters hereunder, that the arrangements made for such
custody, the appointment of the Attorney-in-Fact and the right, power and
authority of the Attorney-in-Fact to execute and deliver this Agreement and to
carry out the terms of this Agreement, are to that extent irrevocable and that
the obligations of such Selling Stockholder hereunder shall not be terminated,
except as provided in this Agreement or the Custody Agreement, by any act of
such Selling Stockholder, by operation of law or otherwise, whether in the case
of any individual Selling Stockholder by the death or incapacity of such Selling
Stockholder, in the case of a trust or estate by the death of the trustee or
trustees or the executor or executors or the termination of such trust or
estate, or in the case of a corporate or partnership Selling Stockholder by its
liquidation or dissolution or by the occurrence of any other event. If any
individual Selling Stockholder, trustee or executor should die or become
incapacitated or any such trust should be terminated, or if any corporate or
partnership Selling Stockholder shall liquidate or dissolve, or if any other
event should occur, before the delivery of such Shares hereunder, the
certificates for such Shares deposited with the Custodian shall be delivered by
the Custodian in accordance with the respective terms and conditions of this
Agreement as if such death, incapacity, termination,
liquidation or dissolution or other event had not occurred, regardless of
whether or not the Custodian or the Attorney-in-Fact shall have received notice
thereof.
(c) Such Selling Stockholder is the lawful record and beneficial owner
of the Shares to be sold by such Selling Stockholder hereunder. Upon sale and
delivery of, and payment for, such Shares, as provided herein, such Selling
Stockholder will convey good and marketable title to such Shares, free and clear
of any security interests, liens, encumbrances, equities, claims, options,
rights of third parties or other defects.
(d) To the extent that any statements or omissions are made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by the Selling Stockholder specifically for
use therein, such Preliminary Prospectus did, and the Registration Statement and
the Prospectus and any amendments or supplements thereto, when they become
effective or are filed with the Commission, as the case may be, will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they are made, not misleading. The
Selling Stockholder has reviewed the information regarding the Selling
Stockholder set forth therein under the caption "Principal and Selling
Stockholders" in the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus) and the Registration Statement, and the
information regarding the Selling Stockholder set forth therein under the
caption "Principal and Selling Stockholders" is complete and accurate.
(e) The sale of the Shares to the Underwriters by such Selling
Stockholder pursuant to this Agreement, the compliance by such Selling
Stockholder with the other provisions of this Agreement, the Custody Agreement
and the consummation of the other transactions herein contemplated do not
(a) require the consent, approval, authorization, registration or qualification
of or with any governmental authority, except such as have been obtained, such
as may be required under state and foreign Blue Sky laws and, if the
Registration Statement is not effective under the Securities Act as of the time
of execution hereof, such as may be required (and shall be obtained as provided
in this Agreement) under the Securities Act and the Exchange Act, or (b) result
in a material breach or violation of any of the terms and provisions of, or
constitute a material default under, any indenture, mortgage, deed of trust,
lease or other agreement or instrument to which such Selling Stockholder is a
party or by which such Selling Stockholder or any of such Selling
Stockholder's properties are bound, or any statute or any judgment, decree,
order, rule or regulation of any court or other governmental authority or any
arbitrator applicable to such Selling Stockholder.
(f) The Selling Stockholder has not, directly or indirectly (except
for the sale of Firm Shares by the Selling Stockholder under this Agreement),
(i) taken any action designed to cause or result in, or that has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Shares or (ii) since the filing of the Registration Statement
(A) sold, bid for, purchased, or paid anyone any compensation for soliciting
purchases of, the Shares or (B) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of the
Company.
(g) The Selling Stockholder has not distributed and, prior to the
later of (i) the Closing Date and (ii) the completion of the distribution of the
Shares, will not distribute any offering material in connection with the
offering and sale of the Shares other than the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus or any amendment
or supplement thereto, or other materials, if any, permitted by the Securities
Act.
(h) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Internal Revenue Code of 1986, as
amended, with respect to the transactions herein contemplated, the Selling
Stockholder agrees to deliver to you prior to or on the Firm Closing Date (as
hereinafter defined) a properly completed and executed United States Treasury
Department Form W-8 or W-9 (or other applicable form of statement specified by
Treasury Department regulations in lieu thereof).
5. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of
-------------------------------------------
the Underwriters under this Agreement are several and not joint. The respective
obligations of the Underwriters to purchase the Shares are subject to each of
the following terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission in
accordance with Section 6(a) of this Agreement.
(b) No order preventing or suspending the use of any preliminary
prospectus or the Prospectus shall have been or shall be in effect and no order
suspending the effectiveness of the Registration Statement shall be in effect
and no proceedings for such purpose shall be pending before or threatened by the
Commission, and any requests for additional information on the part of the
Commission (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the satisfaction of the
Representatives.
(c) The representations and warranties of the Company and the Selling
Stockholder contained in this Agreement and in the certificates delivered
pursuant to Sections 5(d) and 5(e) shall be true and correct when made and on
and as of each Closing Date as if made on such date and the Company and the
Selling Stockholder shall have performed in all material respects all covenants
and agreements and satisfied all the conditions contained in this Agreement
required to be performed or satisfied by them at or before such Closing Date.
(d) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives and dated such Closing Date, of
the chief executive or chief operating officer and the chief financial officer
or chief accounting officer of the Company to the effect that the signers of
such certificate have carefully examined the Registration Statement, the
Prospectus and this Agreement and that the representations and warranties of the
Company in this Agreement are true and correct on and as of such Closing Date
with the same effect as if made on such Closing Date and the Company has
performed all covenants and agreements and satisfied all conditions contained in
this Agreement required to be performed or satisfied by it at or prior to such
Closing Date.
(e) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives and dated such Closing Date, of
the Selling Stockholder to the effect that the signers of such certificate have
carefully examined this Agreement and that the representations and warranties of
such Selling Stockholder in this Agreement are true and correct on and as of
such Closing Date with the same effect as if made on such Closing Date and such
Selling Stockholder has performed all covenants and agreements and satisfied all
conditions contained in this Agreement required to be performed or satisfied by
him at or prior to such Closing Date.
(f) The Representatives shall have received at the time this Agreement
is executed and on each Closing Date a signed letter from Ernst & Young LLP
addressed to the Representatives and dated, respectively, the date of this
Agreement and each such Closing Date, in form and substance reasonably
satisfactory to the Representatives, confirming that they are independent
accountants within the meaning of the Securities Act and the Rules, that the
response to Item 10 of the Registration Statement is correct insofar as it
relates to them and stating in effect that:
(i) in their opinion the audited consolidated financial
statements and financial statement schedules included in the Registration
Statement and the Prospectus and reported on by them comply as to form in
all material respects with the applicable accounting requirements of the
Securities Act and the Rules;
(ii) on the basis of a reading of the amounts included in the
Registration Statement and the Prospectus under the headings "Summary
Consolidated Financial
and Other Data" and "Selected Consolidated Financial Data," carrying out
certain procedures (but not an examination in accordance with generally
accepted auditing standards) which would not necessarily reveal matters of
significance with respect to the comments set forth in such letter, a
reading of the minutes of the meetings of the stockholders and directors of
the Company, and inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the Company as to
transactions and events subsequent to the date of the latest audited
financial statements, except as disclosed in the Registration Statement and
the Prospectus, nothing came to their attention which caused them to believe
that:
(A) the unaudited financial statements and supporting schedules
of the Company included in the Registration Statement are not presented
on a basis substantially consistent with that of the audited financial
statements included in the Registration Statement;
(B) any material modifications should be made to the unaudited
consolidated financial statements and supporting schedules of the
Company included in the Registration Statement and the Prospectus do
not agree with the corresponding amounts in the audited and unaudited
consolidated financial statements from which such amounts were derived;
or
(C) (i) at January 31, 1998, there was any change in the Capital
Stock, increase in long-term debt or decrease in consolidated assets or
shareholders' equity of the Company, as compared with the amounts shown
on, or derived from, the Company's audited balance sheet for the six
months ended June 30, 1995 and the Company's unaudited balance sheet
for the nine months ended September 30, 1995 included in the
Registration Statement or (ii) for the period from January 1, 1998 to
January 31, 1998 there was any decrease, as compared with the
corresponding period in the preceding year, in consolidated revenues or
in consolidated net income; and
(iii) they have performed certain other procedures as a result of which
they determined that certain information of an accounting, financial or
statistical nature (which is limited to accounting, financial or statistical
information derived from the
general accounting records of the Company) set forth in the Registration
Statement and the Prospectus and specified by the Representatives agrees
with the accounting records of the Company.
References to the Registration Statement and the Prospectus in this
paragraph (f) are to such documents as amended and supplemented at the date
of the letter.
(g) The Representatives shall have received on each Closing Date an
opinion from Freshman, Marantz, Orlanski, ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel for the
Company, to the effect that:
(i) the Company and each of the Subsidiaries have been duly
organized and are validly existing as corporations in good standing under
the laws of their respective jurisdictions of incorporation and are duly
qualified to transact business as foreign corporations and are in good
standing under the laws of all other jurisdictions where the ownership or
leasing of their respective properties or the conduct of their respective
businesses requires such qualification, except where the failure to be so
qualified would not be reasonably likely to result in a Material Adverse
Effect;
(ii) the Company and each of the Subsidiaries have all requisite
corporate power to own or lease their respective properties and conduct
their respective businesses as described in the Registration Statement and
the Prospectus, and the Company has all requisite corporate power to enter
into, deliver and perform this Agreement and the Warrants and to issue and
sell the Shares and the Warrant Shares, other than those required under the
Securities Act and state and foreign Blue Sky laws;
(iii) the issued shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully paid
and nonassessable and are owned beneficially by the Company free and clear
of any perfected security interests or, to the knowledge of such counsel,
any other security interests, liens, encumbrances or claims;
(iv) the Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus; all of the issued shares of
capital stock of the Company have been duly authorized and validly issued
and are fully paid and nonassessable, all of the shares of capital stock of
the Company issued since October 2, 1997 have been issued in compliance with
all applicable federal and state securities laws and were not issued in
violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities; each of the Shares and the Warrant
Shares have been duly authorized by all necessary corporate action of the
Company
and, when issued and delivered to and paid for by the Underwriters pursuant
to this Agreement, will be validly issued, fully paid and nonassessable; the
Shares have been duly included for trading on the Nasdaq National Market; to
the knowledge of such counsel, no holders of outstanding shares of capital
stock of the Company are entitled as such to any preemptive or other rights
to subscribe for any of the Shares; and, to the knowledge of such counsel,
no holders of securities of the Company, other than the Selling Stockholder,
are entitled to have such securities registered under the Registration
Statement;
(v) the statements set forth under the heading "Description of
Capital Stock" in the Prospectus, insofar as such statements purport to
summarize certain provisions of the capital stock of the Company, provide a
fair summary of such provisions; and the statements set forth under the
heading "Shares Eligible for Future Sale" in the Prospectus, insofar as such
statements constitute a summary of the legal matters, documents or
proceedings referred to therein, provide a fair summary of such legal
matters, documents and proceedings in all material respects;
(vi) the execution and delivery of this Agreement and the Warrants
have been duly authorized by all necessary corporate action of the Company,
this Agreement has been, and the Warrants on the Firm Shares Closing Date
will be, duly executed and delivered by the Company, and the Warrants, when
so executed and delivered, will constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance
with their terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally
and by general equitable principles;
(vii) to the knowledge of such counsel, (A) no legal or
governmental proceedings are pending to which the Company or any of the
Subsidiaries is a party or to which the property of the Company or any of
the Subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not described therein, and
no such proceedings have been threatened against the Company or any of the
Subsidiaries or with respect to any of their respective properties and
(B) no contract or other document is required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement that is not described therein or filed as required;
(viii) the issuance, offering and sale by the Company of the Firm
Shares to the Underwriters and the Warrants to CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. and
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ Inc., in each case pursuant to this Agreement, the
compliance by the Company with the other provisions of this Agreement and
the Warrants and the consummation of the other transactions contemplated
herein or therein, do not (A) require the consent,
approval, authorization, registration or qualification of or with any
governmental authority, except such as have been obtained and such as may be
required under state securities or blue sky laws, or (B) conflict with or
result in a breach or violation of any of the terms and provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, lease or
other agreement or instrument known to such counsel to which the Company or
any of the Subsidiaries is a party or by which the Company or any of the
Subsidiaries or any of their respective properties are bound, except for
such breaches, violations or defaults the occurrence of which would not be
reasonably likely to result in a Material Adverse Effect, or the charter
documents or by-laws of the Company or any of the Subsidiaries, or, so far
as it is known to such counsel, any statute or any judgment, decree, order,
rule or regulation of any court or other governmental authority or any
arbitrator having jurisdiction over the Company or any of the Subsidiaries;
(ix) the Registration Statement is effective under the Securities Act;
any required filing of the Prospectus, or any Term Sheet that constitutes a
part thereof, pursuant to Rules 434 and 424(b) has been made in the manner
and within the time period required by Rules 434 and 424(b); and, to such
counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto has been issued, and, to
such counsel's knowledge, no proceedings for that purpose have been
instituted or threatened or are contemplated by the Commission;
(x) the Registration Statement originally filed with respect to the
Securities and each amendment thereto, any Rule 462(b) Registration
Statement and the Prospectus (in each case, other than the financial
statements and other financial and statistical information contained
therein, as to which such counsel need express no opinion) comply as to form
in all material respects with the applicable requirements of the Securities
Act and the Rules;
(xi) the Company is not, and the transactions contemplated by this
Agreement will not cause the Company to become, an investment company
subject to registration under the Investment Company Act of 1940, as
amended;
(xii) the specimen stock certificate of the Company filed as an
exhibit to the Registration Statement is in due and proper form to evidence
shares of Common Stock, has been duly authorized and approved by the Board
of Directors of the Company and complies with all legal requirements
applicable under the Delaware General Corporation Law; and
(xiii) the execution and delivery of the merger agreement effecting
the Reincorporation Merger have been duly authorized by all necessary
corporate action on the part of the Company and Merger Sub; the
Reincorporation Merger has been
consummated and is effective in accordance with Delaware and California law
subject only to confirmation of the acceptance of the filing of the merger
agreement and related certificates by the State of California.
Such counsel shall also state that they have no reason to believe that the
Registration Statement, as of its effective date, contained any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus, as of its date or the date of such opinion, included or includes any
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering any such opinion, such counsel may rely, as to matters of fact,
to the extent such counsel deem(s) proper, on certificates of responsible
officers of the Company and public officials. References to the Registration
Statement and the Prospectus in this paragraph (g) shall include any amendment
or supplement thereto at the date of such opinion.
(h) The Representatives shall have received an opinion, dated the Firm
Closing Date, of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq., counsel to the Selling Stockholder, to
the effect that:
(i) the Selling Stockholder has full corporate power to enter into
this Agreement and the Custody Agreement and to sell, transfer and deliver
the Firm Shares being sold by the Selling Stockholder hereunder in the
manner provided in this Agreement and to perform its obligations under the
Custody Agreement; the execution and delivery of this Agreement and the
Custody Agreement have been duly authorized by all necessary corporate
action of the Selling Stockholder; this Agreement and the Custody Agreement
have been duly executed and delivered by the Selling Stockholder; assuming
due authorization, execution and delivery by the Agent, the Custody
Agreement is the legal, valid and binding agreement of the Selling
Stockholder, enforceable against the Selling Stockholder in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally
and by general equitable principles;
(ii) the delivery by the Selling Stockholder to the several
Underwriters of certificates for the Firm Shares being sold hereunder by the
Selling Stockholder against payment therefor as provided herein, will convey
good and marketable title to such Firm Shares to the several Underwriters,
free and clear of all security interests, liens, encumbrances, equities or
claims to each of the several Underwriters who have purchased such Firm
Shares in good faith and without notice of any such
security interest, lien, encumbrance, equity or claim or other adverse claim
within the meaning of the Uniform Commercial Code as in effect in the State
of New York; and
(iii) the sale of the Firm Shares to the Underwriters by the Selling
Stockholder pursuant to this Agreement, the compliance by the Selling
Stockholder with the other provisions of this Agreement and the Custody
Agreement and the consummation of the other transactions herein contemplated
do not (i) require the consent, approval, authorization, registration or
qualification of or with any governmental authority, except such as have
been obtained and such as may be required under state securities or blue sky
laws, or (ii) conflict with or result in a breach or violation of any of the
terms and provisions of, or constitute a default under any indenture,
mortgage, deed of trust, lease or other agreement or instrument to which the
Selling Stockholder or any of its subsidiaries is a party or by which the
Selling Stockholder or any of its subsidiaries or any of their respective
properties are bound, or the charter documents or by-laws of the Selling
Stockholder or any of its subsidiaries, so far as is known to such counsel,
or any statute, judgment, decree, order, rule or regulation of any court or
other governmental authority or any arbitrator applicable to the Selling
Stockholder or any of its subsidiaries.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deem(s) proper, on certificates of responsible
officers of the Selling Stockholder and public officials. References to the
Registration Statement and the Prospectus in this paragraph (h) shall include
any amendment or supplement thereto at the date of such opinion.
(i) All proceedings taken in connection with the sale of the Firm
Shares, the Warrants and the Option Shares as herein contemplated shall be
reasonably satisfactory in form and substance to the Representatives and their
counsel and the Underwriters shall have received from ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇
LLP a favorable opinion, addressed to the Representatives and dated such Closing
Date, with respect to the Warrants, the Shares, the Registration Statement and
the Prospectus, and such other related matters, as the Representatives may
reasonably request, and the Company shall have furnished to ▇▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters.
6. ADDITIONAL COVENANTS OF THE COMPANY AND THE SELLING STOCKHOLDER.
---------------------------------------------------------------
(A) The Company covenants and agrees as follows:
(a) The Company shall prepare the Prospectus in a form approved by the
Representatives and file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than the Commission's close of business on the second
business day following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under the
Securities Act, and shall promptly advise the Representatives (i) when any
amendment to the Registration Statement shall have become effective, (ii) of any
request by the Commission for any amendment of the Registration Statement or the
Prospectus or for any additional information, (iii) of the prevention or
suspension of the use of any preliminary prospectus or the Prospectus or of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any proceeding for
that purpose and (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose. The Company shall not file or prepare any amendment of the
Registration Statement or supplement to the Prospectus unless the Company has
furnished the Representatives a copy for its review within a reasonable amount
of time prior to filing or use and shall not file or use any such proposed
amendment or supplement to which the Representatives reasonably object. The
Company shall use its best efforts to prevent the issuance of any such stop
order and, if issued, to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Shares is
required to be delivered under the Securities Act and the Rules, any event
occurs as a result of which the Prospectus as then amended or supplemented would
include any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it shall be necessary to amend
or supplement the Prospectus to comply with the Securities Act or the Rules, the
Company promptly shall notify the Representatives and prepare and file with the
Commission, subject to the second sentence of paragraph (a) of this Section 6,
an amendment or supplement that shall correct such statement or omission or an
amendment that shall effect such compliance.
(c) The Company shall make generally available to its security holders
and to the Representatives as soon as practicable, but not later than 45 days
after the end of the 12-month period beginning at the end of the fiscal quarter
of the Company during which the "effective date" (as defined in Rule 158 of the
Rules) of the Registration Statement occurs (or 90 days if such 12-month period
coincides with the Company's fiscal year), an earnings statement (which need not
be audited) of the Company, covering such 12-month period,
which shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 of the Rules.
(d) The Company shall furnish to the Representatives and counsel for
the Underwriters, without charge, signed copies of the Registration Statement
(including all exhibits thereto and amendments thereof) and to each other
Underwriter a copy of the Registration Statement (without exhibits thereto) and
all amendments thereof and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Securities Act or the Rules, as
many copies of any Preliminary Prospectus and the Prospectus and any amendments
thereof and supplements thereto as the Representatives may reasonably request.
(e) The Company shall cooperate with the Representatives and their
counsel in endeavoring to qualify the Shares for offer and sale under the laws
of such jurisdictions as the Representatives may designate and shall maintain
such qualifications in effect so long as required for the distribution of the
Shares; provided, however, that the Company shall not be required in connection
-------- -------
therewith, as a condition thereof, to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction or subject
itself to taxation as doing business in any jurisdiction. In each jurisdiction
in which the Shares 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.
(f) For a period of five years after the date of this Agreement, the
Company shall supply to the Representatives, and to each other Underwriter who
may so request in writing, copies of such financial statements and other
periodic and special reports as the Company may from time to time distribute
generally to the holders of any class of its capital stock and to furnish to the
Representatives a copy of each annual or other report it shall be required to
file with the Commission.
(g) Without the prior written consent of CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. for a
period of 180 days after the date of this Agreement, the Company shall not
issue, sell or register with the Commission (other than on Form S-8 or on any
successor form thereto), or otherwise dispose of, directly or indirectly, any
equity securities of the Company (or any securities convertible into or
exercisable or exchangeable for equity securities of the Company), except for
the issuance of the Shares pursuant to the Registration Statement the issuance
of shares of Common Stock pursuant to the Company's existing stock option plan
in the form filed as an exhibit to the Registration Statement. In the event
that during this period, (i) any shares are issued pursuant to the Company's
existing stock option plan or (ii) any registration is effected on Form S-8 or
on any successor form thereto, the Company shall obtain the written agreement of
such grantee or purchaser or holder of such registered securities that, for a
period of 180 days after the date of this Agreement, such person will not,
without the prior written consent of CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp., offer for sale,
sell, distribute,
grant any option for the sale of, or otherwise dispose of, directly or
indirectly, or exercise any registration rights with respect to, any shares of
Common Stock (or any securities convertible into, exercisable for, or
exchangeable for any shares of Common Stock) owned by such person.
(h) On or before completion of this offering, the Company shall make
all filings required under applicable securities laws and by the Nasdaq National
Market (including any required registration under the Exchange Act).
[(i) Prior to a Closing Date, the Company will not issue, directly or
indirectly, without the Representatives' prior written consent which shall not
be unreasonably withheld, any press release or other communication or hold any
press conference with respect to the Company or its activities or this offering,
other than trade releases issued in the ordinary course of the Company's
business with respect to the Company's operations.]
(j) The Company will comply with all of the provisions of any
undertakings contained in the Prospectus or the Registration Statement.
(k) The Company will apply the net proceeds from the sale of the
Shares substantially in accordance with the description set forth in the
Prospectus.
(l) Except as stated in this Agreement and in the Prospectus, the
Company will not take, directly or indirectly (except for any action taken by
the Underwriters), any action designed to or that might reasonably be expected
to cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares.
(m) The Company and the Selling Stockholder (on the basis of __% and
__%, respectively) agree to pay, or reimburse if paid by the Representatives,
whether or not the transactions contemplated hereby are consummated or this
Agreement is terminated, all costs and expenses incident to the public offering
of the Shares and the performance of the obligations of the Company and the
Selling Stockholder under this Agreement including those relating to: (i) the
preparation, printing, filing and distribution of the Registration Statement
including all exhibits thereto, each preliminary prospectus, the Prospectus, all
amendments and supplements to the Registration Statement and the Prospectus, and
the printing, filing and distribution of this Agreement; (ii) the preparation
and delivery of certificates for the Shares to the Representatives and the
Underwriters and the Warrants to CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. and ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.;
(iii) the registration or qualification of the Shares for offer and sale under
the securities or Blue Sky laws of the various jurisdictions referred to in
Section 6(e), including the reasonable fees and disbursements of counsel for the
Underwriters in connection with such registration and qualification and the
preparation, printing, distribution and shipment of preliminary and
supplementary Blue Sky memoranda; (iv) the furnishing (including costs of
shipping and mailing) to the Representatives and to
the Underwriters of copies of each preliminary prospectus, the Prospectus and
all amendments or supplements to the Prospectus, and of the several documents
required by this Section to be so furnished, as may be reasonably requested for
use in connection with the offering and sale of the Shares by the Underwriters
or by dealers to whom Shares may be sold; (v) the filing fees of the National
Association of Securities Dealers, Inc. in connection with its review of the
terms of the public offering; (vi) the furnishing (including costs of shipping
and mailing) to the Representatives and to the Underwriters of copies of all
reports and information required by Section 6(f); (vii) inclusion of the Shares
for listing on the Nasdaq National Market; and (viii) all transfer taxes, if
any, with respect to the sale and delivery of the Shares by the Company and the
Selling Stockholder to the Underwriters.
(B) The Selling Stockholder agrees with the several Underwriters as follows:
(a) As soon as such Selling Stockholder is advised thereof, such
Selling Stockholder will advise CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. and confirm such advice
in writing of (i) receipt by such Selling Stockholder, or by any representative
of such Selling Stockholder, of any communication from the Commission relating
to the Registration Statement, the Prospectus or any Preliminary Prospectus, or
any notice or order of the Commission received by such Selling Stockholder
relating to the Company or such Selling Stockholder and (ii) the happening of
any event during the period from and after the effective date of the
Registration Statement that, in the reasonable judgment of such Selling
Stockholder, makes any statement made in the Registration Statement or the
Prospectus in reliance on written information furnished by the Selling
Stockholder untrue or that requires the making of any change in the Registration
Statement or the Prospectus in order to make such statements, in light of the
circumstances in which they were made, not misleading.
(b) Such Selling Stockholder will deliver to CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp.,
prior to the effective date of the Registration Statement, a properly completed
and executed United States Treasury Department Form W-9 (or other applicable
form or statement specified by Treasury Department regulations in lieu thereof).
7. INDEMNIFICATION.
---------------
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act against any
and all losses, claims, damages and liabilities, joint or several (including any
reasonable investigation, legal and other expenses incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other Federal or state law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus or any amendment thereof or supplement thereto, or arise out of or
are based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that such indemnity shall not inure to the
benefit of any Underwriter (or any person controlling such Underwriter) on
account of any losses, claims, damages or liabilities arising from the sale of
the Shares to any person by such Underwriter if such untrue statement or
omission or alleged untrue statement or omission was made in such Preliminary
Prospectus, the Registration Statement or the Prospectus, or such amendment or
supplement, in reliance upon and in conformity with information furnished in
writing to the Company by the Representatives on behalf of any Underwriter
specifically for use therein and provided, further, that with respect to any
Preliminary Prospectus, the foregoing indemnification shall not inure to the
benefit of any Underwriter from whom the person asserting any loss, claim,
damage, liability or expense purchased Shares, or to any person controlling such
Underwriter, if copies of the Prospectus were timely delivered to such
Underwriter pursuant to the terms hereof and a copy of the Prospectus (as then
amended or supplemented if the Company shall have timely furnished any
amendments or supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law to have been so delivered, at or
prior to the written confirmation of the sale of the Shares to such person, and
if such Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage, liability or expense. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have.
(b) The Selling Stockholder agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
against any and all losses, claims, damages and liabilities, joint or several
(including any reasonable investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted), to which they, or any of them, may become
subject under the Securities Act, the Exchange Act or other Federal or state law
or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact based on written information
furnished by or on behalf of the Selling Stockholder and contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
amendment thereof or supplement thereto, or arise out of or are based upon any
omission or alleged omission by the Selling Stockholder to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading. This indemnity agreement will be in addition to any
liability which the Selling Stockholder may otherwise have. In no event,
however, shall the liability of the Selling Stockholder for indemnification
under this Section 7(b) exceed the net proceeds received by the Selling
Stockholder from the Underwriters in the offering.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company and each Selling Stockholder, each person, if any,
who controls the Company or such Selling Stockholder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, and each of
their respective partners, directors, officers (if the Selling Stockholder is
not an individual) and each person who signs the Registration Statement, to the
same extent as the foregoing indemnity from the Company and the Selling
Stockholder to each Underwriter, but only insofar as such losses, claims,
damages or liabilities arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which was made in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment thereof or supplement thereto, contained in the last paragraph of the
cover page, in the paragraph relating to stabilization on the inside front cover
page of the Prospectus and the statements contained under the caption
"Underwriting" in the Prospectus; provided, however, that the obligation of each
Underwriter to indemnify the Company and the Selling Stockholder (including any
of their respective controlling persons, directors or officers) shall be limited
in the aggregate to the net proceeds received by the Company from such
Underwriter.
(d) Any party that proposes to assert the right to be indemnified
under this Section will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section, notify each
such indemnifying party of the commencement of such action, suit or proceeding,
enclosing a copy of all papers served. No indemnification provided for in
Section 7(a), 7(b) or 7(c) shall be available to any party who shall fail to
give notice as provided in this Section 7(d) if the party to whom notice was not
given was unaware of the proceeding to which such notice would have related and
was prejudiced by the failure to give such notice but the omission so to notify
such indemnifying party of any such action, suit or proceeding shall not relieve
it from any liability that it may have to any indemnified party for contribution
or otherwise than under this Section. In case any such action, suit or
proceeding shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in, and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and the approval by the indemnified
party of such counsel, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses, except as provided below and
except for the reasonable costs of investigation subsequently incurred by such
indemnified party in connection with the defense thereof. The indemnified party
shall have the right to employ its counsel in any such action, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the employment of counsel by such indemnified party has been
authorized in writing by the indemnifying parties, (ii) the indemnified party
shall have reasonably concluded, based on the advice of its counsel, that
there may be a conflict of interest between the indemnifying parties and the
indemnified party in the conduct of the defense of such action (in which case
the indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party) or (iii) the indemnifying parties
shall not have employed counsel to assume the defense of such action within a
reasonable time after notice of the commencement thereof, in each of which cases
the fees and expenses of counsel shall be at the expense of the indemnifying
parties, it being understood, however, that the indemnifying parties shall not
be liable for the expenses of more than one separate counsel, which counsel
shall be reasonably approved by the indemnifying parties. An indemnifying party
shall not be liable for any settlement of any action, suit, proceeding or claim
effected without its written consent.
8. CONTRIBUTION. In order to provide for just and equitable
------------
contribution in circumstances in which the indemnification provided for in
Section 7(a) and 7(b) is due in accordance with its terms but for any reason is
held to be unavailable from the Company or the Selling Stockholder, the Company,
the Selling Stockholder, and the Underwriters shall contribute to the aggregate
losses, claims, damages and liabilities (including any investigation, legal and
other expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting any contribution received by the Company or the Selling Stockholder
from persons other than the Underwriters, such as persons who control the
Company or the Selling Stockholder within the meaning of the Securities Act,
officers of the Company who signed the Registration Statement and directors of
the Company, who may also be liable for contribution) to which the Company, the
Selling Stockholder and one or more of the Underwriters may be subject in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Stockholder on the one hand and the Underwriters on the
other from the offering of the Shares or, if such allocation is not permitted by
applicable law or indemnification is not available as a result of the
indemnifying party not having received notice as provided in Section 7 hereof,
in such proportion as is appropriate to reflect not only the relative benefits
referred to above but also the relative fault of the Company and the Selling
Stockholder on the one hand and the Underwriters on the other in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company, the Selling Stockholder and the
Underwriters shall be deemed to be in the same proportion as (x) the total
proceeds from the offering (net of underwriting discounts but before deducting
expenses) received by the Company, and the Selling Stockholder, as set forth in
the table on the cover page of the Prospectus, bear to (y) the underwriting
discounts received by the Underwriters, as set forth in the table on the cover
page of the Prospectus. The relative fault of the Company, the Selling
Stockholder or the Underwriters shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact
related to information supplied by the Company and the Selling Stockholder or
the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholder and the Underwriters agree that it would
not be just and equitable if contribution
pursuant to this Section 8 were determined by pro rata allocation (even if the
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. Notwithstanding the provisions of this Section 8, (i) in no
case shall any Underwriter (except as may be provided in the Agreement Among
Underwriters) be liable or responsible for any amount in excess of the
underwriting discount applicable to the Shares purchased by such Underwriter
hereunder, and (ii) the Company and the Selling Stockholder shall be
proportionately liable and responsible for any amount in excess of such
underwriting discount; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act shall have the same rights
to contribution as such Underwriter, and each person, if any, who controls the
Company or the Selling Stockholder within the meaning of the Section 15 of the
Securities Act or Section 20(a) of the Exchange Act, each officer of the Company
who shall have signed the Registration Statement and each director of the
Company shall have the same rights to contribution as the Company, subject in
each case to clauses (i) and (ii) in the immediately preceding sentence of this
Section 8. Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim for contribution may be made against another party or
parties under this Section, notify such party or parties from whom contribution
may be sought, but the omission so to notify such party or parties from whom
contribution may be sought shall not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this Section 8. No party shall be liable for
contribution with respect to any action, suit, proceeding or claim settled
without its written consent. The Underwriter's obligations to contribute
pursuant to this Section 8 are several in proportion to their respective
underwriting commitments and not joint.
9. TERMINATION. This Agreement may be terminated with respect to
-----------
the Shares to be purchased on a Closing Date by the Representatives by notifying
the Company at any time
(a) in the sole and absolute discretion and judgment of the
Representatives at or before any Closing Date: (i) if the Company or any
Subsidiary shall have sustained a material or substantial loss by fire, flood,
accident, hurricane, earthquake, theft, sabotage or other calamity or malicious
act which, whether or not said loss shall have been insured, will make it
inadvisable to proceed with the offering; (ii) if there has been, since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, any material adverse change in the operations, earnings,
properties or condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole, whether or not arising in the ordinary course of
business; (iii) if on or prior to such date, any domestic or international event
or act or occurrence has materially disrupted, or in the opinion of the
Representatives will in the future materially disrupt, the securities markets;
(iv) if there has occurred any new outbreak or material escalation of
hostilities or other
calamity or crisis the effect of which on the financial markets of the United
States is such as to make it, in the judgment of the Representatives,
inadvisable to proceed with the offering; (v) if there shall be such a material
adverse change in general financial, political or economic conditions or the
effect of international conditions on the financial markets in the United States
is such as to make it, in the judgment of the Representatives, inadvisable or
impracticable to market the Shares; (vi) if trading in the Shares has been
suspended by the Commission or trading generally on the New York Stock Exchange,
Inc. or on the American Stock Exchange, Inc. has been suspended or limited, or
minimum or maximum ranges for prices for securities shall have been fixed, or
maximum ranges for prices for securities have been required, by said exchanges
or by order of the Commission, the National Association of Securities Dealers,
Inc., or any other governmental or regulatory authority; or (vii) if a banking
moratorium has been declared by any state or Federal authority, the effect of
which is to make it, in the judgment of the Representatives, inadvisable or
impracticable to proceed with the offering; or
(b) at or before any Closing Date, that any of the conditions
specified in Section 5 shall not have been fulfilled when and as required by
this Agreement.
If this Agreement is terminated pursuant to any of its provisions, the
Company and the Selling Stockholder shall not be under any liability to any
Underwriter, and no Underwriter shall be under any liability to the Company or
the Selling Stockholder, except that (y) if this Agreement is terminated by the
Representatives or the Underwriters because of any failure, refusal or inability
on the part of the Company or the Selling Stockholder to comply with the terms
or to fulfill any of the conditions of this Agreement, the Company and the
Selling Stockholder (on the basis of __% and __%, respectively) will reimburse
the Underwriters for all actual out-of-pocket expenses (including the reasonable
fees and disbursements of their counsel) incurred by them in connection with the
proposed purchase and sale of the Shares or in contemplation of performing their
obligations hereunder, up to a maximum of $150,000; provided, however, that the
-------- -------
Company and the Selling Stockholder shall not in such circumstances be liable to
any of the Underwriters for loss of anticipated profits from the transactions
contemplated by this Agreement, and (z) no Underwriter who shall have failed or
refused to purchase the Shares agreed to be purchased by it under this
Agreement, without some reason sufficient hereunder to justify cancellation or
termination of its obligations under this Agreement, shall be relieved of
liability to the Company, the Selling Stockholder or to the other Underwriters
for damages occasioned by its failure or refusal.
10. SUBSTITUTION OF UNDERWRITERS. If one or more of the Underwriters
----------------------------
shall fail (other than for a reason sufficient to justify the cancellation or
termination of this Agreement under Section 9) to purchase on any Closing Date
the Shares agreed to be purchased on such Closing Date by such Underwriter or
Underwriters, the Representatives may find one or more substitute underwriters
to purchase such Shares or make such other arrangements as the Representatives
may deem advisable or one or more of the remaining Underwriters may agree to
purchase such Shares in such proportions as may be approved by the
Representatives, in each case upon the terms set forth
in this Agreement. If no such arrangements have been made by the close of
business on the business day following such Closing Date,
(a) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall not exceed 10% of the Shares that all
the Underwriters are obligated to purchase on such Closing Date, then each of
the nondefaulting Underwriters shall be obligated to purchase such Shares on the
terms herein set forth in proportion to their respective obligations hereunder;
provided, that in no event shall the maximum number of Shares that any
Underwriter has agreed to purchase pursuant to Section 1 be increased pursuant
to this Section 10 by more than one-ninth of such number of Shares without the
written consent of such Underwriter, or
(b) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall exceed 10% of the Shares that all the
Underwriters are obligated to purchase on such Closing Date, then the Company
and the Selling Stockholder shall be entitled to an additional business day
within which they may, but are not obligated to, find one or more substitute
underwriters reasonably satisfactory to the Representatives to purchase such
Shares upon the terms set forth in this Agreement.
In any such case, the Representatives, the Company or the Selling
Stockholder shall have the right to postpone the applicable Closing Date for a
period of not more than five business days in order that necessary changes and
arrangements (including any necessary amendments or supplements to the
Registration Statement or Prospectus) may be effected by the Representatives,
the Company and the Selling Stockholder. If the number of Shares to be
purchased on such Closing Date by such defaulting Underwriter or Underwriters
shall exceed 10% of the Shares that all the Underwriters are obligated to
purchase on such Closing Date, and none of the nondefaulting Underwriters, the
Company or the Selling Stockholder shall make arrangements pursuant to this
Section within the period stated for the purchase of the Shares that the
defaulting Underwriters agreed to purchase, this Agreement shall terminate with
respect to the Shares to be purchased on such Closing Date without liability on
the part of any nondefaulting Underwriter to the Company and the Selling
Stockholder and without liability on the part of the Company and the Selling
Stockholder, except in both cases as provided in the last paragraph of Section 6
and in Sections 7, 8 and 9. The provisions of this Section shall not in any way
affect the liability of any defaulting Underwriter to the Company and the
Selling Stockholder or the nondefaulting Underwriters arising out of such
default. A substitute underwriter hereunder shall become an Underwriter for all
purposes of this Agreement.
11. MISCELLANEOUS. The respective agreements, representations,
-------------
warranties, indemnities and other statements of the Company or its officers, of
the Selling Stockholder and of the Underwriters set forth in or made pursuant to
this Agreement shall remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter, the Company or the
Selling Stockholder or any of the officers, directors or controlling persons
referred to in Sections 7 and 8 hereof, and shall survive delivery of and
payment for the Shares. The provisions of the last
paragraph of Section 6 and of Sections 7, 8 and 9 shall survive the termination
or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the
Underwriters, the Company and the Selling Stockholder and their respective
successors and assigns, and, to the extent expressed herein, for the benefit of
persons controlling any of the Underwriters or the Company, and directors and
officers of the Company, and their respective successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchaser of
Shares from any Underwriter merely because of such purchase.
All notices and communications hereunder shall be in writing and
mailed or delivered or by telephone or telegraph if subsequently confirmed in
writing, (a) if to the Representatives, c/o CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp., World
Financial Center, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: General
Counsel, (b) if to the Company, to its agent for service as such agent's address
appears on the cover page of the Registration Statement, with a copy to
Freshman, Marantz, Orlanski, ▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., and
(c) if to the Selling Stockholder, to ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Mortgage
Capital, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. Attention: N. ▇▇▇▇▇
▇▇▇▇▇▇▇, Senior Vice President.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflict of
laws.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
among us.
Very truly yours,
BNC MORTGAGE, INC.
By:
Title:
DLJ MORTGAGE CAPITAL, INC.
By:
Title:
Confirmed:
CIBC ▇▇▇▇▇▇▇▇▇▇▇ CORP.
▇▇▇▇▇ ▇▇▇▇▇▇▇ INC.
Acting severally on their behalf and
as representatives of the several Underwriters
named in Schedule I annexed hereto.
By: CIBC ▇▇▇▇▇▇▇▇▇▇▇ CORP.
By:
Title:
SCHEDULE I
Name Number of
---- Firm Shares to
Be Purchased
--------------
CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp.
▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
--------------
Total:
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