Exhibit 1
▇▇▇▇▇▇ PREFERRED CAPITAL CORPORATION
(a Maryland corporation)
10,000,000 Shares
[ ] % Noncumulative Exchangeable Preferred Stock, Series A
PURCHASE AGREEMENT
------------------
______________, 1998
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
▇▇▇▇▇▇▇ ▇▇▇▇▇ SECURITIES INC.
[OTHER UNDERWRITERS]
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇▇ Preferred Capital Corporation, a Maryland corporation (the
"Company"), and ▇▇▇▇▇▇ Trust and Savings Bank, an Illinois banking corporation
(the "Bank"), hereby confirm their agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇
Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and each of ▇▇▇▇▇▇▇
▇▇▇▇▇ Securities Inc. and [other underwriters] (collectively, the
"Underwriters," which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), with respect to the issue and sale
by the Company and the purchase by the Underwriters, acting severally and not
jointly, of the respective numbers of shares of the Company's [ ]% Noncumulative
Exchangeable Preferred Stock, Series A (the "Series A Preferred Shares") set
forth in Schedule A hereto. The aforesaid 10,000,000 shares of Series A
Preferred Shares to be purchased by the Underwriters are hereinafter called the
"Securities." Each share of the Series A Preferred Shares is exchangeable, on
the terms set forth in the Articles Supplementary for the Series A Preferred
Shares (the "Articles Supplementary"), into one share of the Bank's [ ]%
Noncumulative Preferred Stock, Series A (the "Bank Preferred Shares")[, which
such Bank Preferred Shares are described in and subject to the conditions set
forth in Section [ ] of the Charter of ▇▇▇▇▇▇ Trust and Savings Bank (the
"Charter Section")].
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Underwriters deem such offering
advisable after this Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-11, as amended (No. 333-
40257), covering the registration of the Securities under the Securities Act of
1933, as amended (the "1933 Act"), including the related preliminary prospectus
or prospectuses. Promptly after execution and delivery of this Agreement, the
Company will either (i) prepare and file a prospectus in accordance with the
provisions of Rule 430A ("Rule 430A") of the rules and regulations of the
Commission under the 1933 Act (the "1933 Act Regulations") and paragraph (b) of
Rule 424 ("Rule 424(b)") of the 1933 Act Regulations or (ii) if the Company has
elected to rely upon Rule 434 ("Rule 434") of the 1933 Act Regulations, prepare
and file a term sheet (a "Term Sheet") in accordance with the provisions of Rule
434 and Rule 424(b). The information included in such prospectus or in such
Term Sheet, as the case may be, that was omitted from such registration
statement at the time it became effective but that is deemed to be part of such
registration statement at the time it became effective (a) pursuant to paragraph
(b) of Rule 430A is referred to as "Rule 430A Information" or (b) pursuant to
paragraph (d) of Rule 434 is referred to as "Rule 434 Information." Each
prospectus used before such registration statement became effective, and any
prospectus that omitted, as applicable, the Rule 430A Information or the Rule
434 Information, that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called a "preliminary
prospectus." Such registration statement, including the exhibits thereto and
schedules thereto at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final prospectus in
the form first furnished to the Underwriters for use in connection with the
offering of the Securities is herein called the "Prospectus." If Rule 434 is
relied on, the term "Prospectus" shall refer to the preliminary prospectus dated
________, 1998 together with the Term Sheet and all references in this Agreement
to the date of the Prospectus shall mean the date of the Term Sheet. For
purposes of this Agreement, all references to the Registration Statement, any
preliminary prospectus, the Prospectus or any Term Sheet or any amendment or
supplement to any of the foregoing shall be deemed to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system ("▇▇▇▇▇").
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company and the Bank. Each of
the Company and the Bank, jointly and severally, represents and warrants to each
Underwriter as of the date hereof, and as of the Closing Time referred to in
Section 2(b) hereof, and as of each Date of Delivery (if any) referred to in
Section 2(b) hereof, and agrees with each Underwriter, as follows:
2
(i) Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the
Company or the Bank, are contemplated by the Commission, and any request on
the part of the Commission for additional information has been complied
with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time, the Registration Statement, the Rule
462(b) Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations and did not and will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading. Neither the Prospectus nor any amendments or supplements
thereto, at the time the Prospectus or any such amendment or supplement was
issued and at the Closing Time, included or will include an untrue
statement of a material fact or omitted or will omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If Rule 434 is
used, the Company will comply with the requirements of Rule 434 and the
Prospectus shall not be "materially different", as such term is used in
Rule 434, from the prospectus included in the Registration Statement at the
time it became effective. The representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by any
Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration
Statement or Prospectus.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectus delivered to the Underwriters for
use in connection with this offering was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to ▇▇▇▇▇,
except to the extent permitted by Regulation S-T.
(ii) Independent Accountants. Each of KPMG Peat Marwick and Coopers
& ▇▇▇▇▇▇▇ L.L.P., the accountants who certified the financial statements
included in the Registration Statement, are independent public accountants
as required by the 1933 Act and the 1933 Act Regulations.
(iii) Financial Statements. The financial statements included in
the Registration Statement and the Prospectus, together with the related
schedules and notes, present fairly the financial position of the Bank and
its consolidated subsidiaries at the dates indicated
3
and the statement of operations, stockholders' equity and cash flows of the
Bank and its consolidated subsidiaries for the periods specified; said
financial statements have been prepared in conformity with generally
accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved. The supporting schedules, if any,
included in the Registration Statement present fairly in accordance with
GAAP the information required to be stated therein. The selected financial
data and the summary financial information included in the Prospectus
present fairly the information shown therein and have been compiled on a
basis consistent with that of the audited financial statements included in
the Registration Statement.
(iv) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, except as otherwise stated therein, (A) there has not been
any material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of: (i) the Company,
whether or not arising in the ordinary course of business (a "Company
Material Adverse Effect") or (ii) the Bank and its subsidiaries considered
as one enterprise, whether or not arising in the ordinary course of
business (a "Bank Material Adverse Effect" and, together with a Company
Material Adverse Effect, a "Material Adverse Effect"), (B) there have been
no transactions entered into by: (i) the Company or (ii) the Bank or any
of its subsidiaries, other than those in the ordinary course of business,
which are material with respect to the Company or the Bank and its
subsidiaries considered as one enterprise, as the case may be, and (C)
there has been no dividend or distribution of any kind declared, paid or
made by: (i) the Company on any class of its stock or (ii) the Bank on any
class of its stock.
(v) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Maryland and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its obligations
under this Agreement; and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not result
in a Company Material Adverse Effect.
(vi) Good Standing of the Bank. The Bank has been duly organized and
is validly existing as an Illinois banking corporation with full power
(corporate and other) and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus and
to enter into its obligations under this Agreement; the Bank is duly
qualified as a foreign corporation to transact business and is in good
standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify or be in good
standing would not result in a Bank Material Adverse Effect. The Bank's
deposit accounts are insured by the Federal Deposit Insurance Corporation
4
(the "FDIC") to the fullest extent provided under applicable law, and no
proceedings for the termination or revocation of such insurance are pending
or, to the knowledge of the Bank, threatened.
(vii) No Subsidiaries. The Company has no subsidiaries.
(viii) Good Standing of the Subsidiaries. Each subsidiary of the
Bank has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation, has
full power (corporate and other) and authority to own, lease and operate
its properties and conduct its business as described in the Prospectus (or,
if not so described, as presently conducted), and is duly qualified as a
foreign corporation to transact business and is in good standing in each
other jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property of the conduct of business,
except where the failure to so qualify or to be in good standing would not
result in a Bank Material Adverse Effect; all of the issued and outstanding
capital stock of each subsidiary of the Bank has been duly authorized and
validly issued and is fully paid and nonassessable and is owned, directly
or through other subsidiaries of the Bank, by the Bank; and all of the
capital stock of each subsidiary of the Bank that is owned by the Bank,
directly or through other subsidiaries of the Bank, is owned free and clear
of any pledge, lien, encumbrance, claim or equity.
(ix) Capitalization and Authorization of the Company. The
authorized, issued and outstanding capital stock of the Company is as set
forth in the Prospectus in the column entitled "Actual" under the caption
"Capitalization" (except for subsequent issuances, if any, pursuant to this
Agreement). The shares of issued and outstanding capital stock of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable. None of the outstanding shares of capital stock of the
Company was issued in violation of the preemptive or other similar rights
of any securityholder of the Company. All of the outstanding shares of
common stock, par value $1.00 per share (the "Common Stock"), are owned by
the Bank free and clear of any liens, charges or encumbrances.
(x) Capitalization of the Bank. All of the outstanding shares of
common stock of the Bank have been duly authorized and validly issued, are
fully paid and nonassessable, are owned as indicated in the Prospectus
under the caption "The Bank" and are subject only to such pledges, liens,
security interests, charges, claims, equities and encumbrances of any kind
to the extent set forth in the Prospectus under the caption "The Bank."
The authorized, issued and outstanding capital stock and any outstanding
short-term debt, long-term debt and capital lease obligations of the Bank
at September 30, 1997 are as set forth in the Prospectus under the caption
"Capitalization," and any subsequent borrowings and issuances have been
made in the ordinary course of business.
(xi) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by each of the Company and the Bank.
5
(xii) Authorization and Description of the Securities. The
Securities have been duly authorized for issuance and sale to the
Underwriters pursuant to this Agreement and, when issued and delivered by
the Company pursuant to this Agreement against payment of the consideration
set forth herein, will be validly issued and fully paid and non-assessable;
the Securities conform to the statements relating thereto contained in the
Prospectus and such description conforms to the provisions of the Articles
Supplementary; the relative rights, preferences, interests and powers of
the Securities are as set forth in the Articles Supplementary relating
thereto; and the issuance of the Securities is not subject to the
preemptive or other similar rights of any securityholder of the Company.
(xiii) Authorization and Description of the Bank Preferred Shares.
The Bank Preferred Shares have been duly authorized and, when issued upon
an Exchange Event (as defined in the Prospectus), will have been validly
issued and fully paid and non-assessable; the Bank Preferred Shares conform
to the statements relating thereto contained in the Prospectus and such
description conforms to the provisions of the Charter Section and the
resolutions of the Bank relating thereto (the "Bank Resolutions"); the
relative rights, preferences, interests and powers of the Bank Preferred
Shares are as set forth in the Charter Section and the Bank Resolutions
relating thereto; and the issuance of the Bank Preferred Shares is not
subject to the preemptive or other similar rights of any securityholder of
the Bank.
(xiv) Absence of Defaults and Conflicts. Neither the Company nor the
Bank and its subsidiaries considered as one enterprise is in violation of
its respective charter or by-laws or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in
any indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which it is a party or by which
it may be bound, or to which any of its property or assets is subject
(collectively, "Agreements and Instruments"), except for such defaults that
would not result in a Material Adverse Effect; and the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated herein and in the Prospectus (including the issuance and sale
of the Securities and the use of the proceeds from the sale of the
Securities as described in the Prospectus under the caption "Use of
Proceeds") and compliance by the Company and the Bank with their respective
obligations hereunder have been duly authorized by all necessary corporate
action and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach of,
or default or Repayment Event (as defined below) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any of their
respective property or assets pursuant to, the Agreements and Instruments
(except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not result in a Material Adverse Effect), nor will
such action result in any violation of the provisions of their respective
charter or by-laws or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over
them or any of their assets, properties or operations. As used herein, a
"Repayment Event" means any event or condition which
6
gives the holder of any note, debenture or other evidence of indebtedness
(or any person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or the Bank, as applicable.
(xv) Regulatory Compliance. Except as disclosed in the Prospectus,
the Company and the Bank and its subsidiaries are conducting their
respective businesses in compliance in all material respects with all laws,
rules, regulations, decisions, directives and orders [(including, without
limitation, all regulations and orders of, or agreements with, OSFI and the
FDIC)] applicable to them. There is no action, suit, investigation or
proceeding before or by any government, governmental instrumentality or
court, domestic or foreign, now pending or, to the knowledge of the Company
or the Bank, threatened against or affecting the Bank or any of its
subsidiaries (A) that is required to be disclosed in the Prospectus and not
disclosed therein, (B) that could result in a Material Adverse Effect, (C)
that could materially and adversely affect the properties, assets or
leasehold interests thereof or (D) that could adversely affect the
consummation of the transactions contemplated in this Agreement. All
pending legal or governmental proceedings to which the Company or the Bank
or any of its subsidiaries is a party or of which any of their property is
the subject, which are not described in the Prospectus, including ordinary
routine litigation incidental to their respective businesses, would not
result in a Material Adverse Effect.
(xvi) Business Activities. No business activities except for those
described in the Prospectus have been undertaken by the Company or the
Bank.
(xvii) Authorization of Other Agreements. At the Closing Time (as
defined herein), each of the agreements listed in Schedule C hereto has
been duly authorized, executed and delivered by the Company or the Bank, as
the case may be, and constitutes a valid and legally binding obligation of
the Company or the Bank, as the case may be, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, reorganization, moratorium
and similar laws of general applicability relating to or af fecting the
enforcement of creditors' rights.
(xviii) Accuracy of Exhibits. There are no contracts or documents
which are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits thereto which have not been so
described and filed as required.
(xix) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company or the Bank of
their respective obligations hereunder, in connection with the offering,
issuance or sale of the Securities hereunder or the consummation of the
transactions contemplated by this Agreement, except such as have been
already obtained or as may be required under the 1933 Act or the 1933 Act
Regulations or state securities
7
laws and the filing of the Articles Supplementary with the appropriate
authority in the State of Maryland and the filing of the Charter Section
with the applicable authorities.
(xx) Possession of Licenses and Permits. The Company and the Bank
possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by each of them or proposed
to be operated by them as described in the Prospectus; the Company and the
Bank are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure to so comply would not,
singly or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except where
the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and neither the Company nor the Bank has received
any notice of proceedings relating to the revocation or modification of any
such Governmental Licenses which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.
(xxi) Compliance with Cuba Act. Each of the Company and the Bank has
complied with, and is and will be in compliance with, the provisions of
that certain Florida act relating to disclosure of doing business with
Cuba, codified as Section 517.075 of the Florida statutes, and the rules
and regulations thereunder (collectively, the "Cuba Act") or is exempt
therefrom.
(xxii) Investment Company Act. Neither the Company nor the Bank is,
and upon the issuance and sale of the Securities as herein contemplated and
the application of the net proceeds therefrom as described in the
Prospectus, neither the Company nor the Bank will be, an "investment
company" or an entity "controlled" by an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended (the "1940
Act").
(xxiii) Registration Rights. There are no persons with registration
rights or other similar rights to have any securities registered pursuant
to the Registration Statement or otherwise registered by the Company under
the 1933 Act.
(xxiv) Bank Ownership of Company Common Stock. At the Closing Time
and so long as any Series A Preferred Shares remain outstanding, the Bank
will be the beneficial owner of at least 80% of the outstanding common
stock of the Company.
(xxv) REIT Qualification. The Company is organized and carries on its
business so as to qualify as "real estate investment trust" (a "REIT")
under Sections 856 through 860 of the Internal Revenue Code of 1986, as
amended (the "Code"), and no transaction or other event has occurred which
would cause the Company not to enable it to qualify as a REIT for its
current taxable year or for future taxable years.
8
(xxvi) Absence of Labor Dispute. No labor dispute with the employees
of the Company or the Bank or any subsidiary exists or, to the knowledge of
the Company or the Bank, is imminent, and the Company and the Bank are not
aware of any existing or imminent labor disturbance by the employees of any
of the Bank's subsidiaries' principal customers, which, in either case, may
reasonably be expected to result in a Material Adverse Effect.
(xxvii) Title to Mortgage Loans. The Bank (i) is the sole owner of
the Mortgage Loans (as defined in the Prospectus) and such ownership is
free and clear of any lien, security interest or other encumbrance, (ii)
has not granted, and will not grant, any participation or other interest or
assignment, other option or rights to the Mortgage Loans, other than
pursuant to the Mortgage Loan Purchase Agreement (as defined in the
Prospectus) and related documents and (iii) has not pledged, collaterally
assigned or otherwise hypothecated any interest therein, and will at no
time do so or agree to do so, other than pursuant to the Mortgage Loan
Purchase Agreement and related documents.
(xxviii) Title to Property. The Company and the Bank and its
subsidiaries have good and marketable title to all real property owned by
each of them and good title to all other properties owned by them, in each
case, free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind except such as (a) are
described in the Prospectus or (b) do not, singly or in the aggregate,
materially affect the value of such property and do not interfere with the
use made and proposed to be made of such property by the Bank or any of its
respective subsidiaries or the Company; and all of the leases and subleases
material to the business of the Company or the Bank and its subsidiaries,
considered as one enterprise, and under which the Company or the Bank or
any of its subsidiaries holds properties described in the Prospectus, are
in full force and effect, and none of the Bank or any subsidiary or the
Company has any notice of any material claim of any sort that has been
asserted by anyone adverse to the rights of the Company, the Bank or any
subsidiary under any of the leases or subleases mentioned above, or
affecting or questioning the rights of the Company, the Bank or such
subsidiary to the continued possession of the leased or subleased premises
under any such lease or sublease.
(xxix) Exemption. The Bank Preferred Shares are exempt securities
under Section 3(a)(5) of the 1933 Act, and registration of the Bank
Preferred Shares under the 1933 Act is not required in connection with the
offer, sale, issuance or delivery of the Bank Preferred Shares as
contemplated herein.
(xxx) Charter Section. Prior to the Closing Time, the Bank shall
have filed a dated copy of [the Charter Section], duly authorized and
adopted by the Bank, with the applicable regulatory body providing for the
issuance of the Bank Preferred Shares.
9
(xxxi) Other Representations and Warranties. The representations and
warranties of the Company or the Bank contained in the agreements listed on
Schedule C attached hereto are, as of the date hereof and will be as of
Closing Time, true and correct.
(b) Officer's Certificates. Any certificate signed by any officer of the
Company or the Bank or any of its subsidiaries delivered to the Underwriters or
to counsel for the Underwriters shall be deemed a representation and warranty by
the Company or the Bank, as applicable, to each Underwriter as to the matters
covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
------------------------------------------
(a) Securities. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Company, at
the price per share set forth in Schedule B, the number of Securities set forth
in Schedule A opposite the name of such Underwriter, plus any additional number
of Securities which such Underwriter may become obligated to purchase pursuant
to the provisions of Section 10 hereof.
(b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Securities shall be made at the offices of Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, or at such
other place as shall be agreed upon by the Underwriters and the Company, at 9:00
A.M. (Eastern time) on the third (fourth, if the pricing occurs after 4:30 P.M.
(Eastern time) on any given day) business day after the date hereof (unless
postponed in accordance with the provisions of Section 10), or such other time
not later than ten business days after such date as shall be agreed upon by the
Underwriters and the Company (such time and date of payment and delivery being
herein called "Closing Time").
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Underwriters for the respective accounts of the Underwriters of certificates
for the Securities to be purchased by them. It is understood that each
Underwriter has authorized the Underwriters, for its account, to accept delivery
of, receipt for, and make payment of the purchase price for, the Securities, if
any, which it has agreed to purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as
representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the Securities to be purchased by any
Underwriter whose funds have not been received by the Closing Time, but such
payment shall not relieve such Underwriter from its obligations hereunder.
(c) Denominations; Registration. Certificates for the Securities, if any,
shall be in such denominations and registered in such names as the Underwriters
may request in writing at least one full business day before the Closing Time.
The certificates for the Securities will be made available for examination and
packaging by the Underwriters in The City of New York not later than 10:00 A.M.
(Eastern time) on the business day prior to the Closing Time.
10
SECTION 3. Covenants of the Company and the Bank.
-------------------------------------
The Company and the Bank, jointly and severally, covenant with each
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests.
The Company, subject to Section 3(b), will comply with the requirements of
Rule 430A or Rule 434, as applicable, and will notify the Underwriters
immediately, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement shall become effective, or any
supplement to the Prospectus or any amended Prospectus shall have been
filed, (ii) of the receipt of any comments from the Commission, (iii) of
any request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus or for
additional information and (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or of
any order preventing or suspending the use of any preliminary prospectus,
or of the suspension of the qualification of the Securities for offering or
sale in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes. The Company will promptly effect the
filings necessary pursuant to Rule 424(b) and will take such steps as it
deems necessary to ascertain promptly whether the form of prospectus
transmitted for filing under Rule 424(b) was received for filing by the
Commission and, in the event that it was not, it will promptly file such
prospectus. The Company and the Bank will make every reasonable effort to
prevent the issuance of any stop order and, if any stop order is issued, to
obtain the lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will give the Underwriters
notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), any Term
Sheet or any amendment, supplement or revision to either the prospectus
included in the Registration Statement at the time it became effective or
to the Prospectus, will furnish the Underwriters with copies of any such
documents a reasonable amount of time prior to such proposed filing or use,
as the case may be, and will not file or use any such document to which the
Underwriters or counsel for the Underwriters shall object.
(c) Delivery of Registration Statements. The Company has furnished
or will deliver to the Underwriters and counsel for the Underwriters,
without charge, signed copies of the Registration Statement as originally
filed and of each amendment thereto (including exhibits filed therewith)
and signed copies of all consents and certificates of experts, and will
also deliver to the Underwriters, without charge, a conformed copy of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits). The copies of the Registration Statement and each
amendment thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
11
(d) Delivery of Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus
as such Underwriter reasonably requested, and the Company and the Bank
hereby consent to the use of such copies for purposes permitted by the 1933
Act. The Company will furnish to each Underwriter, without charge, during
the period when the Prospectus is required to be delivered under the 1933
Act or the Securities Exchange Act of 1934, as amended, (the "1934 Act"),
such number of copies of the Prospectus (as amended or supplemented) as
such Underwriter may reasonably request. The Prospectus and any amendments
or supplements thereto furnished to the Underwriters will be identical to
the electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will
comply with the 1933 Act and the 1933 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement and in the Prospectus. If at any time when a prospectus is
required by the 1933 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result of
which it is necessary, in the opinion of counsel for the Underwriters or
for the Company, to amend the Registration Statement or amend or supplement
the Prospectus in order that the Prospectus will not include any untrue
statements of a material fact or omit to state a material fact necessary in
order to make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to
amend the Registration Statement or amend or supplement the Prospectus in
order to comply with the requirements of the 1933 Act or the 1933 Act
Regulations, the Company will promptly prepare and file with the
Commission, subject to Section 3(b), such amendment or supplement as may be
necessary to correct such statement or omission or to make the Registration
Statement or the Prospectus comply with such requirements, and the Company
will furnish to the Underwriters such number of copies of such amendment or
supplement as the Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best efforts,
in cooperation with the Underwriters, to qualify the Securities for
offering and sale under the applicable securities laws of such states and
other jurisdictions as the Underwriters may designate and to maintain such
qualifications in effect for a period of not less than one year from the
later of the effective date of the Registration Statement and any Rule
462(b) Registration Statement; provided, however, that the Company shall
not be obligated to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is
not otherwise so subject. In each jurisdiction in which the Securities
have been so qualified, the Company will file such statements and reports
as may be required by the laws of such jurisdiction to continue such
qualification in effect for a period of not less than one year from the
effective date of the Registration Statement and any Rule 462(b)
Registration Statement.
12
(g) Rule 158. The Company will timely file such reports pursuant to
the 1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
(h) Rating of Securities. The Company and the Bank shall take all
reasonable action necessary to enable Standard & Poor's Rating Services, a
division of McGraw Hill, Inc. ("S&P") and ▇▇▇▇▇'▇ Investors Service, Inc.
("Moody's") to provide their respective credit ratings of the Series A
Preferred Shares.
(i) Use of Proceeds. The Company will use the net proceeds received
by it from the sale of the Securities in the manner specified in the
Prospectus under "Use of Proceeds".
(j) Listing. The Company will use its best efforts to effect the
listing of the Securities on the New York Stock Exchange.
(k) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act,
will file all documents required to be filed with the Commission pursuant
to the 1934 Act within the time periods and to the extent required by the
1934 Act and the rules and regulations of the Commission thereunder.
(l) REIT Qualification. Except to the extent that a Tax Event (as
defined in the Prospectus) shall have occurred, the Company and the Bank
will, in a timely manner, make the elections and take the procedural steps
described in the Prospectus under the heading "Federal Income Tax
Considerations" to meet the requirements for the Company to qualify, for
its taxable year ending December 31, 1998, as a REIT under the Code, as is
in effect on the date hereof and use every reasonable effort to do so.
(m) Restriction on Sale of Securities. During the period beginning
from the date of the Prospectus and continuing to and including the date 90
days after the date of the Prospectus, the Company will not (i) directly or
indirectly offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase or otherwise transfer or dispose of
any securities that are substantially similar to the Securities or any
securities convertible into or exercisable or exchangeable for securities
that are substantially similar to the Securities or file any registration
statement under the 1933 Act with respect to any of the foregoing or (ii)
enter into any swap or other agreement or transaction that transfers, in
whole or in part, the economic consequences of ownership of securities that
are substantially similar to the Securities or such other securities, in
cash or otherwise, without the prior written consent of ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated.
13
SECTION 4. Payment of Expenses. (a) Expenses. The Company and the Bank,
jointly and severally, covenant and agree with the several Underwriters to pay
or cause to be paid all expenses incident to the performance of their
obligations under this Agreement, including (i) the preparation, printing and
filing of the Registration Statement (including financial statements and
exhibits) as originally filed and of each amendment thereto, (ii) the
preparation, printing and delivery to the Underwriters of this Agreement, any
Agreement among Underwriters and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the
Securities and the Bank Preferred Shares, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriters, including
any stock or other transfer taxes and any stamp or other duties payable upon the
sale, issuance or delivery of the Securities to the Underwriters, (iv) the fees
and disbursements of the Company's and the Bank's respective counsel,
accountants and other advisors, (v) the qualification of the Securities under
securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey and any supplement thereto, (vi) the printing and
delivery to the Underwriters of copies of each preliminary prospectus, any Term
Sheets and of the Prospectus and any amendments or supplements thereto, (vii)
the preparation, printing and delivery to the Underwriters of copies of the Blue
Sky Survey and any supplement thereto, (viii) the fees and expenses of any
transfer agent or registrar for the Securities or the Bank Preferred Shares (ix)
any fees charged by securities rating services for rating the Securities, (x)
the filing fees incident to, and the reasonable fees and disbursements of
counsel to the Underwriters in connection with, the review by the National
Association of Securities Dealers, Inc. (the "NASD") of the terms of the sale of
the Securities, and (xi) the fees and expenses incurred in connection with the
listing of the Securities on the New York Stock Exchange.
(b) Termination of Agreement. If this Agreement is terminated by the
Underwriters in accordance with the provisions of Section 5 or Section 9(a)(i)
hereof, the Company shall reimburse the Underwriters for all of their out-of-
pocket expenses, including the reasonable fees and disbursements of counsel for
the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company and the Bank contained in Section
1 hereof or in certificates of any officer of the Company or the Bank delivered
pursuant to the provisions hereof, to the performance by each of the Company and
the Bank of their respective covenants and other obligations hereunder, and to
the following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time, no stop order suspending the effectiveness
of the Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission, and any
request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the
14
Underwriters. A prospectus containing the Rule 430A Information shall have
been filed with the Commission in accordance with Rule 424(b) (or a post-
effective amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430A) or, if
the Company has elected to rely upon Rule 434, a Term Sheet shall have been
filed with the Commission in accordance with Rule 424(b).
(b) Opinion of Counsel for Company. At Closing Time, the
Underwriters shall have received the favorable opinion, dated as of Closing
Time, of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters, to the
effect set forth in Exhibit A hereto and to such further effect as counsel
to the Underwriters may reasonably request. In giving such opinion such
counsel may rely, as to all matters governed by the laws of jurisdictions
other than the law of the States of Illinois and New York and the federal
law of the United States, upon the opinions of counsel satisfactory to the
Underwriters. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper,
upon certificates of officers of the Company and its subsidiaries and
certificates of public officials.
(c) Opinion of Counsel for Bank. At Closing Time, the Underwriters
shall have received the favorable opinion, dated as of Closing Time, of
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, counsel for the Bank, in form and substance
satisfactory to counsel for the Underwriters, together with signed or
reproduced copies of such letter for each of the Underwriters, to the
effect set forth in Exhibit B hereto and to such further effect as counsel
to the Underwriters may reasonably request. In giving such opinion such
counsel may rely, as to all matters governed by the laws of jurisdictions
other than the law of the States of Illinois and New York and the federal
law of the United States, upon the opinions of counsel satisfactory to the
Underwriters. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper,
upon certificates of officers of the Company and its subsidiaries and
certificates of public officials.
(d) Opinion of Counsel for The Bank of Montreal. At Closing Time,
the Under writers shall have received the favorable opinion, dated as of
Closing Time, of internal counsel for The Bank of Montreal, in form and
substance satisfactory to counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the Underwriters, to
the effect set forth in Exhibit C hereto and to such further effect as
counsel for the Underwriters may reasonably request.
(e) Opinion of Counsel for Underwriters. At Closing Time, the
Underwriters shall have received the favorable opinion, dated as of Closing
Time, of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the
Underwriters, with respect to the matters set forth in clauses [[ ] of
Exhibit A and clauses [ ] of Exhibit B.] In giving such opinion such
counsel may rely, as to all matters governed by the laws of jurisdictions
other than the law of the State of New York and the federal law of the
United States,
15
upon the opinions of counsel satisfactory to the Underwriters. Such
counsel may also state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and its subsidiaries and
certificates of public officials.
(f) Officers' Certificate. At Closing Time, there shall not have
been, since the date hereof or since the date as of which information is
given in the Prospectus, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company or the Bank and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and
the Underwriters shall have received a certificate of the President or a
Vice President of each of the Company and the Bank and of the chief
financial or chief accounting officer of each of the Company and the Bank,
dated as of Closing Time, to the effect that (i) there has been no such
material adverse change, (ii) the representations and warranties of the
Company or the Bank, as the case may be, in Section 1(a) hereof are true
and correct with the same force and effect as though expressly made at and
as of Closing Time, (iii) the Company or the Bank, as the case may be, have
complied with all agreements and satisfied all conditions on their part to
be performed or satisfied at or prior to Closing Time and (iv) no stop
order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or are
pending or are contemplated by the Commission.
(g) Accountants' Comfort Letter. At the time of the execution of
this Agreement, the Underwriters shall have received from KPMG Peat Marwick
and Coopers and ▇▇▇▇▇▇▇ L.L.P. a letter or letters dated such date, in form
and substance satisfactory to the Underwriters, together with signed or
reproduced copies of such letter or letters for each of the other
Underwriters containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to
the financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(h) Bring-down Comfort Letter. At Closing Time, the Underwriters
shall have received from KPMG Peat Marwick and Coopers and ▇▇▇▇▇▇▇ L.L.P. a
letter or letters, dated as of Closing Time, to the effect that they
reaffirm the statements made in the letter furnished pursuant to subsection
(g) of this Section, except that the specified date referred to shall be a
date not more than three business days prior to Closing Time.
(i) Maintenance of Rating. At Closing Time, the Securities shall be
rated "[ ]" by Moody's and "[ ]" by S&P and the Company shall have
delivered to the Underwriters a letter dated the Closing Time, from each
such rating agency, or other evidence satisfactory to the Underwriters,
confirming that the Securities have such ratings; and since the date of
this Agreement, there shall not have occurred a downgrading in the rating
assigned to the Securities or any of the Company's or the Bank's securities
by any "nationally recognized statistical rating agency," as that term is
defined by the
16
Commission for purposes of Rule 436(g)(2) under the 1933 Act, and no such
organization shall have publicly announced that it has under surveillance
or review its rating of the Securities or any of the Company's or the
Bank's securities.
(j) Approval of Listing. At Closing Time, the Securities shall have
been approved for listing on the New York Stock Exchange, subject only to
official notice of issuance.
(k) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
(l) Additional Documents. At Closing Time and at each Date of
Delivery counsel for the Underwriters shall have been furnished with such
documents and opinions as they may require for the purpose of enabling them
to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company and the Bank in
connection with the issuance and sale of the Securities as herein
contemplated shall be satisfactory in form and substance to the
Underwriters and counsel for the Underwriters.
(m) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement may be terminated by the Underwriters by notice to the
Company at any time at or prior to Closing Time and such termination shall
be without liability of any party to any other party except as provided in
Section 4 and except that Sections 1, 6, 7, and 8 shall survive any such
termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Company and the Bank,
jointly and severally, agree to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the
Rule 434 Information, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in any
preliminary prospectus, the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
17
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(d) below) any such settlement is effected with the written consent of the
Company and the Bank; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇ ▇▇▇▇▇), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus, any
preliminary offering circular, the Prospectus (or any amendment or supplement
thereto).
(b) Indemnification of Company, Bank, Directors and Officers. Each
Underwriter severally agrees to indemnify and hold harmless the Company and the
Bank, their respective directors, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company or the
Bank within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act against any and all loss, liability, claim, damage and expense described in
the indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto),
including the Rule 430A Information and the Rule 434 Information, if applicable,
or any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by such Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in
the Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties
18
shall be selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇, and, in the case of parties indemnified
pursuant to Section 6(b) above, counsel to the indemnified parties shall be
selected by the Company or the Bank, as applicable. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 7. Contribution. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Bank on the one hand and the Underwriters on the other hand from the offering of
the Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Bank on the one hand
and of the Underwriters on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Bank on the one hand
and the Underwriters on the other hand in connection with the offering of the
Securities pursuant to this
19
Agreement shall be deemed to be in the same respective proportions as the total
net proceeds from the offering of the Securities pursuant to this Agreement
(before deducting expenses) received by the Company and the total underwriting
discount received by the Underwriters, in each case as set forth on the cover of
the Prospectus, or, if Rule 434 is used, the corresponding location on the Term
Sheet, bear to the aggregate initial public offering price of the Securities as
set forth on such cover.
The relative fault of the Company and the Bank on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or the Bank or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company, the Bank and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company or the Bank, each officer of the Company who signed
the Registration Statement, and each person, if any, who controls the Company or
the Bank within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as the Company or the Bank,
as applicable. The Underwriters' respective obligations to contribute pursuant
to this Section 7 are several in proportion to the number of Securities set
forth opposite their respective names in Schedule A hereto and not joint.
20
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or the Bank or any of its subsidiaries
submitted pursuant hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or
controlling person, or by or on behalf of the Company or the Bank, and shall
survive delivery of the Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Underwriters may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company or the Bank and
its subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or the international
financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the
Underwriters, impracticable to market the Securities or to enforce contracts for
the sale of the Securities, or (iii) if trading in any securities of the Company
has been suspended or materially limited by the Commission or the New York Stock
Exchange, or if trading generally on the American Stock Exchange or the New York
Stock Exchange or in the Nasdaq National Market has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the National Association of Securities Dealers,
Inc. or any other governmental authority, or (iv) if a banking moratorium has
been declared by either Federal, New York, Illinois or Maryland authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7, and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. Default by One or More of the Underwriters. If one or more of
the Underwriters shall fail at Closing Time to purchase the Securities which it
or they are obligated to purchase under this Agreement (the "Defaulted
Securities"), the Underwriters shall have the right, within 24 hours thereafter,
to make arrangements for one or more of the non-defaulting Underwriters, or any
other underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the Underwriters shall not have completed such arrangements
within such 24-hour period, then:
21
(a) if the number of Defaulted Securities does not exceed 10% of the
number of Securities to be purchased on such date, each of the non-
defaulting Underwriters shall be obligated, severally and not jointly, to
purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of
all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
Securities to be purchased on such date, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either the Underwriters or the Company shall have the right to
postpone Closing Time for a period not exceeding seven days in order to effect
any required changes in the Registration Statement or Prospectus or in any other
documents or arrangements. As used herein, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 10.
SECTION 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to ▇▇▇▇▇▇▇ ▇▇▇▇▇ at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇; notices to the Company shall be
directed to it at [ ], attention of [ ]; and notices to
the Bank shall be directed to it at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, attention of [ ].
SECTION 12. Parties. This Agreement shall each inure to the benefit of
and be binding upon the Underwriters, the Company and the Bank and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Underwriters, the Company and the Bank and their respective successors
and the controlling persons and officers and directors referred to in Sections 6
and 7 and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Underwriters, the Company and
the Bank and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities
from any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
22
SECTION 14. Effect of Headings. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.
23
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to each of the Company and the Bank a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Company and the Bank in accordance
with its terms.
Very truly yours,
▇▇▇▇▇▇ PREFERRED CAPITAL
CORPORATION
By____________________________________
Title:
▇▇▇▇▇▇ TRUST AND SAVINGS BANK
By____________________________________
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
▇▇▇▇▇▇▇ ▇▇▇▇▇ SECURITIES INC.
[OTHER UNDERWRITERS]
By: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By_____________________________________________
Authorized Signatory
SCHEDULE A
Number of
Underwriters Securities
------------ ----------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇▇▇ ▇▇▇▇▇ Securities Inc.
[Other underwriters]
----------
Total................................ 10,000,000
==========
Sch A - 1
SCHEDULE B
▇▇▇▇▇▇ PREFERRED CAPITAL CORPORATION
10,000,000 Shares
[ ]% Noncumulative Exchangeable Preferred Stock, Series A
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $25.00.
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $[ ], being an amount equal to the initial
public offering price set forth above less $[ ] per share.
3. The dividend rate on the Securities will be [ ]% per annum.
Sch B - 1
SCHEDULE C
LIST OF OTHER AGREEMENTS ENTERED INTO BY THE COMPANY
1. Bank Loan Agreement (the "Loan Agreement") between ▇▇▇▇▇▇ Preferred Capital
Corporation and ▇▇▇▇▇▇ Trust and Savings Bank dated as of the Closing Date.
2. Servicing Agreement between ▇▇▇▇▇▇ Preferred Capital Corporation and ▇▇▇▇▇▇
Trust and Savings Bank dated as of the Closing Date.
3. Advisory Agreement between ▇▇▇▇▇▇ Preferred Capital Corporation and ▇▇▇▇▇▇
Trust and Savings Bank dated as of the Closing Date.
4. Custodial Agreement among ▇▇▇▇▇▇ Preferred Capital Corporation,
____________________ and ▇▇▇▇▇▇ Trust and Savings Bank dated as of the
Closing Date.
5. Mortgage Loan Assignment Agreement between ▇▇▇▇▇▇ Trust and Savings Bank
and ▇▇▇▇▇▇ Preferred Capital Corporation.
6. Notes evidencing loans made under the Loan Agreement (one for each of the
16 loans to be made pursuant to the Loan Agreement).
7. [Other Agreements]
Sch C - 1
(Exhibits intentionally omitted)