EXHIBIT 1.1
GLOBAL PREFERRED HOLDINGS, INC.
_________________ Shares Common Stock
(Plus an Option to Acquire Up to ______________ Shares to Cover Overallotments)
UNDERWRITING AGREEMENT
May ____, 2002
Xxxxxxx Xxxxx & Company, L.L.C.
Xxxxxxx Xxxxx & Associates, Inc.
Xxxxxxx, Xxxxxxx Securities LLC
As Representatives of the Several
Underwriters Named in Schedule A
c/o Xxxxxxx Xxxxx & Company, L.L.C.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
SECTION 1. INTRODUCTORY. Global Preferred Holdings, Inc. ("Company"), a Delaware
corporation, has an authorized capital stock consisting of (i) 10,000,000 shares
of Preferred Stock, having par value of $2.00 per share ("Preferred Stock") of
which no shares were issued and outstanding as of the date hereof and 50,000,000
shares of Common Stock, having par value of $.001 per share ("Common Stock") of
which ___________ shares were issued and outstanding as of the date hereof. The
Company owns all of the issued and outstanding share capital of Global Preferred
Re Limited, a Bermuda company registered as a long-term insurer under the
Bermuda Insurance Act of 1978 (the "Subsidiary"). The Company proposes to issue
and sell ________________ shares of its authorized but unissued Common Stock to
the several underwriters named in Schedule A as it may be amended by the Pricing
Agreement hereinafter defined ("Underwriters"), who are acting severally and not
jointly. The aggregate ____________ shares of Common Stock proposed to be sold
by the Company are hereinafter referred to as the "Firm Shares." In addition,
the Company proposes to grant to the Underwriters an option to purchase up to
_____________ additional shares of Common Stock ("Option Shares") as provided in
Section 3 hereof. The Firm Shares and, to the extent such option is exercised,
the Option Shares, are hereinafter collectively referred to as the "Shares."
As part of the offering contemplated by this Agreement, the
Underwriters have agreed to reserve out of the Shares pursuant to this
Agreement, up to _______ shares of Common Stock for sale to the eligible, in
each case as identified by the Company, independent insurance agents associated
with World Financial Group, Inc., stockholders of the Company, employees of the
Company and such employees friends or members of their families (the
"Participants"), as set forth in the Registration Statement and Prospectus (the
"Directed Shares Program"). The Shares to be sold by the Underwriters pursuant
to the Directed Shares Program (the "Directed Shares") will be sold by the
Underwriters pursuant to this Agreement at the public offering price. Any
Directed Shares not confirmed for purchase in accordance with and prior to the
time specified in the materials prepared and circulated in connection with the
Directed Shares Program will be offered to the public by the Underwriters as set
forth in the Prospectus.
You have advised the Company that the Underwriters propose to make a
public offering of their respective portions of the Shares as soon as you deem
advisable after the registration statement hereinafter referred to becomes
effective, if it has not yet become effective, and the Pricing Agreement as
hereinafter defined has been executed and delivered.
Prior to the purchase and public offering of the Shares by the several
Underwriters, the Company, acting on behalf of the Company and the Subsidiary,
and the Representatives, acting on behalf of the several Underwriters, shall
enter into an agreement substantially in the form of Exhibit A hereto (the
"Pricing Agreement"). The Pricing Agreement may take the form of an exchange of
any standard form of written telecommunication between the Company and the
Representatives and shall specify such applicable information as is indicated in
Exhibit A hereto. The offering of the Shares will be governed by this
Underwriting Agreement (this "Agreement"), as supplemented by the Pricing
Agreement. From and after the date of the execution and delivery of the Pricing
Agreement, this Agreement shall be deemed to incorporate the Pricing Agreement.
The Company hereby confirms its agreement with the Underwriters as
follows:
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the several Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-83276) and
a related preliminary prospectus with respect to the Shares have been prepared
and filed with the Securities and Exchange Commission ("Commission") by the
Company in conformity with the requirements of the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder
(collectively, the "1933 Act;" all references herein to specific rules are rules
promulgated under the 0000 Xxx); and the Company has so prepared and has filed
such amendments thereto, if any, and such amended preliminary prospectuses as
may have been required to the date hereof and will file such additional
amendments thereto and such amended prospectuses as may hereafter be required
under the 1933 Act. Without limiting the foregoing, (i) if the Company has
elected not to rely upon Rule 430A, the Company has prepared and will promptly
file an amendment to the registration statement and an amended prospectus and
(ii) if the Company has elected to rely upon Rule 430A, it will prepare and file
a prospectus pursuant to Rule 424(b) that discloses the information previously
omitted from the prospectus in reliance upon Rule 430A. There have been or will
promptly be delivered to you three manually signed copies of such registration
statement and amendments, together with three copies of all documents
incorporated by reference therein, three copies of each exhibit filed therewith,
and conformed copies of such registration statement and amendments (but without
exhibits) and of the related preliminary prospectus or prospectuses and final
forms of prospectus for each of the Underwriters.
Such registration statement (as amended, if applicable) at the time it
becomes effective and the prospectus constituting a part thereof (including the
information, if any, deemed to be part thereof pursuant to Rule 430A(b) and/or
Rule 434), as from time to time amended or supplemented, are hereinafter
referred to as the "Registration Statement," and the "Prospectus," respectively,
except that if any revised prospectus shall be provided to the Underwriters by
the Company for use in connection with the offering of the Shares which differs
from the Prospectus on file at the Commission at the time the Registration
Statement became or becomes effective (whether or not such revised prospectus is
required to be filed by the Company pursuant to Rule 424(b)), the term
Prospectus shall, as the context requires, refer to such revised prospectus from
and after the time it was provided to the Underwriters for such use. If the
Company elects to rely on Rule 434 of the 1933 Act, all references to
"Prospectus" shall be deemed to include, without limitation, the form of
prospectus and the term sheet, taken together, provided to the Underwriters by
the Company in accordance with Rule 434 of the 1933 Act ("Rule 434 Prospectus").
Any registration statement (including any amendment or supplement thereto or
information which is deemed part thereof) filed by the Company under Rule 462(b)
("Rule 462(b) Registration Statement") shall be deemed to be part of the
"Registration Statement" as defined herein, and any prospectus (including any
amendment or supplement thereto or information which is deemed part thereof)
included in such registration statement shall be deemed to be part of the
"Prospectus", as defined herein, as appropriate. The Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission thereunder are
hereinafter collectively referred to as the "Exchange Act." Any document
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filed by the Company under the Exchange Act after the effective date of the
Registration Statement or the date of the Prospectus and incorporated by
reference in the Prospectus shall be deemed to be included in the Registration
Statement and the Prospectus as of the date of such filing.
(b) The Commission has not issued any order preventing or
suspending the use of any preliminary prospectus, and each preliminary
prospectus has conformed in all material respects with the requirements of the
1933 Act and, as of its date, has not included any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein not misleading; and when the Registration Statement became or
becomes effective, and at all times subsequent thereto, up to the First Closing
Date or the Second Closing Date hereinafter defined, as the case may be, the
Registration Statement, including the information deemed to be part of the
Registration Statement at the time of effectiveness pursuant to Rule 430A(b), if
applicable, and the Prospectus and any amendments or supplements thereto,
contained or will contain all statements that are required to be stated therein
in accordance with the 1933 Act and in all material respects conformed or will
in all material respects conform to the requirements of the 1933 Act, and
neither the Registration Statement nor the Prospectus, nor any amendment or
supplement thereto, included or will include any untrue statement of a material
fact or omitted or will omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, that the Company and the Subsidiary make no representation or warranty
as to information contained in or omitted from any preliminary prospectus, the
Registration Statement, the Prospectus or any such amendment or supplement in
reliance upon and in conformity with information contained in a signed writing
referencing this provisions of this Agreement furnished to the Company by or on
behalf of any Underwriter through the Representatives specifically for use in
the preparation thereof.
(c) The Company and the Subsidiary, have been duly incorporated
and are validly existing as corporations in good standing under the laws of
their respective places of incorporation, with the corporate power and authority
to own their properties and conduct their business as described in the
Prospectus; the Company and the Subsidiary are duly qualified to do business as
foreign corporations under the corporation law of, and are in good standing as
such in, each jurisdiction in which they own or lease substantial properties,
have an office, or in which business is conducted and such qualification or
license is required except in any such case where the failure to so qualify or
be in good standing would not have a material adverse effect upon the condition
(financial or otherwise), business, assets or results of operations of the
Company and the Subsidiary taken as a whole or upon the Company's or the
Subsidiary's ability to perform its obligations under this Agreement or the
transactions contemplated hereby (a "Material Adverse Effect"); and no
proceeding of which the Company or the Subsidiary has knowledge has been
instituted in any such jurisdiction, revoking, limiting or curtailing, or
seeking to revoke, limit or curtail, such power and authority or qualification
or license.
(d) The Company has no subsidiaries other than the Subsidiary. The
Company owns directly 100 percent of the issued and outstanding share capital of
the Subsidiary, free and clear of any claims, liens, encumbrances or security
interests and all of such share capital has been duly authorized and validly
issued and is fully paid and nonassessable. The Subsidiary has not issued, and
there are no outstanding, options, warrants, rights or convertible securities
which can be exercised for or converted into, or otherwise require the issuance
of, any capital stock, options, warrants, rights or other securities of the
Subsidiary. There are no agreements between the Company and/or the Subsidiary
and any third-party entitling any third-party a right to purchase securities of
the Subsidiary or granting any third-party any preemptive, co-sale, first
refusal or any similar right with respect to the securities of the Subsidiary.
The Company is not subject to any subordinated debt agreement with the
Subsidiary or any parental guaranty of the Subsidiary.
(e) As of the date of this Agreement, the Company has an
authorized and outstanding capitalization as described under the caption
"Capitalization" in the Prospectus and Section 1 hereof. The
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issued and outstanding shares of capital stock of the Company as set forth in
the Prospectus have been duly authorized and validly issued, are fully paid and
nonassessable, and conform to the description thereof contained in the
Prospectus; and except as described in the Prospectus, there is no commitment,
plan or arrangement to issue, and no outstanding option, warrant or other right
calling for the issuance of, any share of capital stock of the Company or the
Subsidiary; and except as described in the Prospectus, there is outstanding no
security or other instrument that by its terms is convertible into or
exchangeable for capital stock of the Company or the Subsidiary, and there is no
commitment, plan or arrangement to issue such a security or instrument.
(f) The Shares have been duly authorized and when issued,
delivered and paid for pursuant to this Agreement, will be validly issued, fully
paid and nonassessable, and (i) will conform to the description thereof
contained in the Prospectus, (ii) will be free of any Encumbrance (hereinafter
defined) or preemptive rights, rights of first refusal, rights of co-sale or
similar rights in favor of stockholders with respect to any of the Shares, or
the issuance or sale thereof, whether pursuant to the Charter Documents, the
Order or Regulation of any Governmental Authority, Contract (as these terms are
hereinafter defined) or otherwise, (iii) will not be subject to any voting trust
arrangements and (iv) will be duly and validly authorized and qualified for
inclusion on the Nasdaq National Market, subject to notice of issuance.
(g) The making and performance by the Company of this Agreement
and the Pricing Agreement have been duly authorized by all necessary corporate
action and will not violate any provision of the Company's certificate of
incorporation or amended and restated bylaws or the Subsidiary's memorandum of
association, bylaws or other similar organizational documents or instruments
(hereafter such certificates of incorporation, bylaws, memoranda of association
and other similar organizational documents are collectively referred to as,
"Charter Documents") and will not result in the breach, violation or
contravention of or default under, as applicable, (i) any provision of any
material contract, agreement, lease, franchise or License (as hereinafter
defined) or, without regard to whether or not material, any loan agreement,
credit agreement, promissory note, indenture, mortgage, deed of trust,
instrument or other obligation (each such material contract, agreement, lease,
franchise, License,loan agreement, credit agreement, promissory note, indenture,
mortgage, deed of trust, instrument or other obligation a "Contract" and
collectively "Contracts") to which the Company or the Subsidiary is a party or
by which the Company, the Subsidiary or the property of either of them may be
bound or affected, (ii) any consent decree, writ, judgment, award, injunction or
order (collectively, "Order") or statute, law, rule, regulation, permit,
authorization, approval or registration (collectively "Regulation") applicable
to the Company, the Subsidiary or the property of either of them of any court,
arbitration authority or other alternative dispute forum, government or
governmental department, agency (including, any insurance authority, commission
or other insurance regulatory body), board, commission, bureau or
instrumentality or other regulatory authority or body, (in each case whether
foreign, federal, state, local or otherwise and collectively referred to as a
"Governmental Authority") having jurisdiction over the Company, the Subsidiary
or any of their respective properties or (iii) any order of any Governmental
Authority entered in any proceeding to which the Company or the Subsidiary was
or is now a party, by which they are bound or by which any of their properties
are affected. No consent, approval, authorization or other order of any
Governmental Authority is required for the execution and delivery of this
Agreement or the Pricing Agreement or the consummation of the transactions
contemplated herein or therein, except for compliance with the 1933 Act and
state securities laws applicable to the public offering of the Shares by the
several Underwriters and clearance of such offering with the National
Association of Securities Dealers, Inc. ("NASD"). This Agreement has been duly
authorized, executed and delivered by the Company.
(h) The accountants who have expressed their opinions with respect
to certain of the financial statements and schedules included or incorporated by
reference in the Registration Statement are independent accountants as required
by the 1933 Act.
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(i) The consolidated financial statements and schedules of the
Company included or incorporated by reference in the Registration Statement,
including the notes thereto, present fairly the consolidated financial position
of the Company as of the respective dates of such financial statements, and the
consolidated results of operations and cash flows of the Company for the
respective periods covered thereby, all in conformity with generally accepted
accounting principles in the United States consistently applied throughout the
periods involved, except as disclosed in the Prospectus and the supporting
schedules included in the Registration Statement present fairly the information
required to be stated therein. The financial information set forth in the
Prospectus under "Summary Financial Data" and "Selected Financial Data" presents
fairly on the basis stated in the Prospectus, the information set forth therein.
The pro forma information included in the Prospectus present fairly the
information shown therein, has been prepared in accordance with generally
accepted accounting principles and the Commission' s rules and guidelines with
respect to pro forma information, have been properly compiled on the pro forma
basis described therein, and, in the opinion of the Company and the Subsidiary,
the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate under the circumstances.
(j) Neither the Company nor the Subsidiary is in violation of its
Charter Documents or in default, violation or contravention under any Order of
any Governmental Authority, or in default, breach, violation or contravention
with respect to any material provision of any Contract to which either the
Company or the Subsidiary is a party or by which the property of either of them
may be bound or affected; and there does not exist any state of facts which
constitutes an event of default, breach, violation or contravention under or of
in such Orders or Contracts or which, with notice or lapse of time or both,
would constitute such an event of default, breach, violation or contravention,
in each case, except for defaults, breaches, violations or circumstances of
contravention which neither singly nor in the aggregate are material to the
Company and the Subsidiary taken as a whole or would have a Material Adverse
Effect.
(k) There are no material legal or Governmental Authority
proceedings pending, or to the Company's knowledge, threatened to which the
Company or the Subsidiary is or may be a party or of which material property
owned or leased by the Company or the Subsidiary is or may be the subject, or
which are related to environmental, discrimination or insurance regulatory
matters which are not disclosed in the Prospectus, or which question the
validity of this Agreement or the Pricing Agreement or any action taken or to be
taken pursuant hereto or thereto.
(l) The Company and the 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 in the United States 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.
(m) Except as disclosed in the Prospectus, there are no holders of
securities of the Company having rights to require or cause the Company to
effect registration of such securities, or the offer or sale thereof, persons
having preemptive rights or rights of first refusal, granted by the Company, to
purchase Common Stock. Holders of any registration rights with respect to the
Companies securities have waived such rights with respect to the offering being
made by the Prospectus.
(n) The Company and the Subsidiary have good and marketable title
to all the properties and assets reflected as owned in the financial statements
hereinabove described (or elsewhere in the Prospectus), subject to no lien,
security interest, mortgage, pledge, charge, claim, assignment,
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hypothecation, interest of another person or encumbrance of any kind
(collectively, "Encumbrance") except those, if any, reflected in such financial
statements (or elsewhere in the Prospectus) or which are not material to the
Company and the Subsidiary taken as a whole. The Company and the Subsidiary hold
their respective leased properties under valid and binding leases.
(o) Neither the Company nor the Subsidiary has taken nor will
either of them take, directly or indirectly, any action designed to or which has
constituted or which might reasonably be expected to cause or result, under the
Exchange Act or otherwise, in stabilization or manipulation of the price of the
Common Stock.
(p) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, and except as contemplated
by or described in the Prospectus, the Company and the Subsidiary, taken as a
whole, have not incurred any material liabilities or obligations, direct or
contingent, nor entered into any material transactions not in the ordinary
course of business and there has not been any material adverse change in their
condition (financial or otherwise), business, assets, results of operations or
prospects nor any material change in their capital stock, short-term debt or
long-term debt. Except as disclosed in a writing to the Representatives and
their legal counsel prior to the date hereof, neither the Company nor the
Subsidiary has received notice (either formally or informally) of an adverse
change in or termination of, the Company's business relationship with any
insurance company or with any broker or sales agents associated with any
insurance agency, financial institution or brokerage or other business which
sells or markets insurance products which the Company reinsures, which change(s)
or termination(s), individually or in the aggregate, would or could reasonably
be expected to have a Material Adverse Effect.
(q) There is no material document of a character required to be
described in the Registration Statement or the Prospectus or to be filed with
the Commission as an exhibit to the Registration Statement which is not
described or filed as required and there is no material document of a character
required to be filed as an exhibit to any exhibit to the Registration Statement
incorporated by reference which is not filed with the Commission as required.
(r) The Company together with the Subsidiary owns and possesses
all right, title and interest in and to, or has duly licensed from third parties
a valid, enforceable right to use, all patents, patent rights, trade secrets,
inventions, know-how, trademarks, trade names, copyrights, service marks and
other proprietary rights ("Trade Rights") material to the business of the
Company and the Subsidiary taken as a whole. Neither the Company nor the
Subsidiary has received any notice of infringement, misappropriation or conflict
from any third party as to such material Trade Rights which has not been
resolved or disposed of and neither the Company nor the Subsidiary has
infringed, misappropriated or otherwise conflicted with material Trade Rights of
any third parties, which infringement(s), misappropriation(s) or conflict(s),
individually or in the aggregate, would or could reasonably be expected to have
a Material Adverse Effect.
(s) The conduct of the business of the Company and the Subsidiary
is in compliance in all respects with applicable federal, state, local and
foreign Regulations, except where the failure(s) to be in compliance,
individually or in the aggregate, would not or could not reasonably be expected
to have a Material Adverse Effect.
(t) All offers, sales, transfers, issuances and grants of the
Company's and the Subsidiary's securities by either the Company or the
Subsidiary prior to the date hereof were at all relevant times exempt from the
registration requirements of the 1933 Act or where registered in accordance with
the provisions of the 1933 Act and were duly registered with or the subject of
an available exemption from the registration requirements of the applicable
state and foreign securities laws and insurance company laws.
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(u) The Company and the Subsidiary have filed all necessary
foreign, federal, state and local tax returns (whether related to income,
profits, receipts, premium, franchise, value-added, sales, use, property, ad
valorem, severance, occupation, service, lease, valuation, transfer, excise,
custom duties, employment, employee welfare or retirement, social security,
withholding and payroll) and paid all taxes shown as due thereon (except in the
case where (i) adequate reserves have been provided for, (ii) the Company or the
Subsidiary, as applicable has obtained an extension with respect to such filing
or payment or is contesting, in good faith, such filing or payment and (iii) in
the case of the Company or the Subsidiary contesting such filing or payment, the
same has been disclosed in writing to the Representatives) and there is no tax
deficiency that has been, or to the knowledge of the Company might be, asserted
against the Company, the Subsidiary or any of their respective properties or
assets that would or could reasonably be expected to have a Material Adverse
Effect.
(v) A registration statement relating to the Common Stock has been
declared effective by the Commission pursuant to the Exchange Act and the Common
Stock is duly registered thereunder and, except for a final prospectus filed
pursuant to Rule 424(b), no amendment to such registration is or will be
required upon the consummation of the transactions contemplated hereby. The
Company has filed an application to list the Shares on the Nasdaq National
Market, and has received notification that the listing has been approved,
subject to notice of issuance or sale of the Shares, as the case may be.
(w) The Company and the Subsidiary are not, and do not intend to
conduct their respective businesses in a manner in which any of them would
become, an "investment company" as defined in Section 3(a) of the Investment
Company Act of 1940, as amended ("Investment Company Act").
(x) Neither the Company nor the Subsidiary does any business with
the government of Cuba or with any person or affiliate located in Cuba within
the meaning of Section 517.075 of the Florida Statutes.
(y) Except as disclosed in the Prospectus, (i) the Company is not
currently prohibited, directly or indirectly, from paying any dividends to its
stockholders, from making any other distribution on its capital stock, from
repaying to any lender or third-party extending credit any loans or advances to
it or from transferring any of its property or assets and to the Company's
knowledge no such prohibition is threatened or proposed and (ii) the Subsidiary
is not currently prohibited, directly or indirectly, from paying any dividends
to the Company, from making any other distribution on its capital stock, from
repaying to the Company any loans or advances to it from the Company or from
transferring any of its property or assets to the Company and to the Company's
and the Subsidiary's knowledge no such prohibition is threatened or proposed.
Except as disclosed in the Prospectus, no currency exchange control laws or
withholding taxes of Bermuda or elsewhere apply to the payment of dividends by
the Subsidiary to the Company.
(z) The Company has duly and irrevocably appointed
________________, as its agent to receive service of process with respect to
actions arising out of or in connection with violations of United States federal
securities laws relating to offers and sales of the Shares. The Subsidiary has
complied with all insurance Regulations requiring the appointment of an agent
for service of process in those jurisdictions where it reinsures business
written by ceding insurers.
(aa) The Subsidiary has been duly registered by the Bermuda
Minister of Finance as a long-term insurer under the Insurance Xxx 0000 of
Bermuda (the "Insurance Act") and is in compliance with the requirements of the
Insurance Act and any applicable rules and regulations thereunder and has filed
all statutory financial returns, reports, documents and other information
required to be filed thereunder, except where the failure to comply or to file
would not reasonably be expected to have a Material Adverse Effect. The Company
is a holding company and is not subject to Bermuda insurance regulations. The
Company and the Subsidiary are in compliance with all other insurance laws and
regulations of the
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jurisdictions that apply to them, including laws that relate to companies that
control insurance companies, except where the failure to comply would not and
could not reasonably be expect to, individually or in the aggregate, have a
Material Adverse Effect. Neither the Company nor the Subsidiary has received any
formal notification (whether actual, constructive, written, oral or otherwise)
from any Governmental Authority in Bermuda, the United States or elsewhere to
the effect that the Company or the Subsidiary is not in compliance with any
insurance law or regulation; and, to the knowledge of the Company, no such
notification is threatened.
(bb) During the six months immediately preceding the date hereof,
neither the Company nor any person acting on behalf of the Company has offered,
sold, contracted to sell, pledged, granted any option to purchase, made any
short sales or otherwise issued, transferred or disposed of any Common Stock or
Common Stock Equivalents (hereinafter defined) or entered into or established
any arrangement constituting a "put equivalent position," as defined by Rule
16a-1(h) promulgated under the Exchange Act, other than the Shares and other
than offers and sales under restrictions and other circumstances reasonably
designed to prevent such offers and sales from becoming integrated into the
offer and sale of the Shares contemplated by this Agreement in the United States
and to United States persons so as to cause such offer and sale of the Shares
contemplated by this Agreement not to be in compliance with the registration
provisions of the 1933 Act.
(cc) Each of the Company and the Subsidiary has obtained all
licenses, permits, certificates, authorizations, approvals or consents
(collectively, the "Licenses") issued by the appropriate Bermuda, U.S. federal,
state or foreign Governmental Authority required by any Governmental Authority
to legally operate or conduct the business in which it is engaged on the date
hereof and which are necessary for the conduct of its business as conducted and
described in the Prospectus. Each such License has been duly obtained, is valid
and in full force and effect, is renewable by its terms or in the ordinary
course of business without the need to comply with any special qualifications or
procedures or to pay any amount other than routine filing fees. Except where
taking or failing to take such actions would not and could not be expected to,
individually or in the aggregate, have a Material Adverse Effect, neither the
Company nor the Subsidiary (i) is subject to any pending or, to the Company's
knowledge, threatened administrative or judicial proceeding to revoke, cancel or
declare any License granted to it invalid in any respect, (ii) is acting outside
the scope and authority granted to it pursuant to any such License, or otherwise
is in default or in violation with respect to any such License, and no event has
occurred which constitutes, or with due notice or lapse of time or both may
constitute, a default by it or a violation of, any License and (iii) has
permitted any Licenses granted to it to lapse since its original effective date.
The Company and its subsidiaries have completed and submitted, on a timely
basis, all reports and filings associated with their businesses as are required
by any Governmental Authority.
(dd) Neither the Company nor the Subsidiary is required to be
licensed or admitted as an insurance holding company, an insurer or reinsurer,
as applicable, or to otherwise comply with the insurance laws and regulations of
any jurisdictions within the United States in order to conduct their respective
current as described in the Prospectus.
(ee) Except as disclosed in the Prospectus, no relationship, direct
or indirect, exists between or among the Company or the Subsidiary on the one
hand, and the directors, officers, promoters, affiliates or stockholders of the
Company or the Subsidiary on the other hand, that is required to be described in
the Registration Statement or the Prospectus.
(ff) Except as disclosed in the Prospectus, to the knowledge of the
Company, no change in any insurance law or regulation is pending that would, or
could reasonably be expected to, have, individually or in the aggregate, a
Material Adverse Effect.
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(gg) The Subsidiary has received from the Bermuda Minister of
Finance and Assurance under the Exempted Undertakings Tax Protection Act of 1966
of Bermuda to the effect set forth in the Prospectus.
(hh) The Bermuda Monetary Authority has designated the Subsidiary
as nonresident for exchange control purposes. The Subsidiary is an "exempted
company" under Bermuda law and both the Company and the Subsidiary have not (i)
acquired and do not hold any land in Bermuda, other than that held by way of
lease or tenancy for terms of not more than 50 years or with the consent of the
Minister of Finance, and by way of lease or tenancy for a term not exceeding 21
years in order to provide accommodations or recreational facilities for its
officers and employees, without the express authorization of the Bermuda
legislature, (ii) taken mortgages on land in Bermuda to secure an amount in
excess of $50,000 without the consent of the Bermuda Minister of Finance, (iii)
acquired any bonds or debentures secured by any land in Bermuda (other than
certain types of Bermuda government securities) or (iv) conducted its business
in a manner that is prohibited for "exempted companies" under Bermuda law. The
Subsidiary has not received notification from the Bermuda Monetary Authority or
any other Bermuda Governmental Authority of proceedings relating to the
modification or revocation of its designation as nonresident for exchange
control purposes, its permission to issue and transfer the Shares, or its status
as an "exempted company".
(ii) The Company has not offered, or caused the Underwriters to
offer, any securities to any person pursuant to the Directed Shares Program with
the specific intent to unlawfully influence (i) a customer, vendor, strategic
partner or supplier of the Company to alter such party's level or type of
business with the Company or (ii) a trade journalist or publication to write or
publish favorable information about the Company or its products.
SECTION 3. PURCHASE, SALE AND DELIVERY OF SHARES. On the basis of the
representations, warranties, covenants and agreements set forth herein, but
subject to the terms and conditions herein set forth, the Company agrees to sell
to the Underwriters named in Schedule A hereto, and the Underwriters agree,
severally and not jointly, to purchase from the Company the Firm Shares from the
Company at the price per share set forth in the Pricing Agreement. The
obligation of each Underwriter to the Company shall be to purchase from the
Company that number of full shares set forth opposite the name of such
Underwriter in Schedule A hereto. The public offering price and the purchase
price shall be set forth in the Pricing Agreement.
At 9:00 A.M., Chicago Time, on the fourth business day, if permitted
under Rule 15c6-1 under the Exchange Act, (or the third business day if required
under Rule 15c6-1 under the Exchange Act or unless postponed in accordance with
the provisions of Section 10 of this Agreement) following the date the
Registration Statement becomes effective (or, if the Company has elected to rely
upon Rule 430A, the fourth business day, if permitted under Rule 15c6-1 under
the Exchange Act, (or the third business day if required under Rule 15c6-1 under
the Exchange Act) after execution of the Pricing Agreement), or such other time
not later than ten business days after such date as shall be agreed upon by the
Representatives and the Company, the Company will deliver to you at the offices
of counsel for the Underwriters or through the facilities of The Depository
Trust Company for the accounts of the several Underwriters, certificates
representing the Firm Shares to be sold by the Company against payment of the
purchase price therefor by delivery of federal or other immediately available
funds, by wire transfer or otherwise, to the Company. Such time of delivery and
payment is herein referred to as the "First Closing Date." The certificates for
the Firm Shares so to be delivered will be in such denominations and registered
in such names as you request by notice to the Company prior to 10:00 A.M.,
Chicago Time, on the second full business day preceding the First Closing Date,
and will be made available at the Company's expense for checking and packaging
by the Representatives at 10:00 A.M., Chicago Time, on the business day
preceding the First Closing Date. Payment for the Firm Shares so to be delivered
shall be made at the time and in the manner described above at the offices of
counsel for the Underwriters.
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In addition, on the basis of the representations, warranties, covenants
and agreements herein contained, but subject to the terms and conditions herein
set forth, the Company hereby grants an option to the several Underwriters to
purchase, severally and not jointly, up to an aggregate of the total number of
Option Shares set forth in Section 1 hereof at the same purchase price per share
to be paid for the Firm Shares, for use solely in covering any overallotments
made by the Underwriters in the sale and distribution of the Firm Shares. The
option granted hereunder may be exercised at any time (but not more than once)
within 30 days after the date of the initial public offering upon notice by you
to the Company setting forth the aggregate number of Option Shares as to which
the Underwriters are exercising the option, the names and denominations in which
the certificates for such shares are to be registered and the time and place at
which such certificates will be delivered. Such time of delivery (which may not
be earlier than the First Closing Date), being herein referred to as the "Second
Closing Date," shall be determined by you, but if at any time other than the
First Closing Date, shall not be earlier than three nor later than 10 full
business days after delivery of such notice of exercise. The number of Option
Shares to be purchased by each Underwriter shall be determined by multiplying
the number of Option Shares to be sold by a fraction, the numerator of which is
the number of Firm Shares to be purchased by such Underwriter as set forth
opposite its name in Schedule A and the denominator of which is the total number
of Firm Shares (subject to such adjustments to eliminate any fractional share
purchases as you in your absolute discretion may make). Certificates for the
Option Shares will be made available at the Company's expense for checking and
packaging at 10:00 A.M., Chicago Time, on the first full business day preceding
the Second Closing Date. The manner of payment for and delivery of the Option
Shares shall be the same as for the Firm Shares as specified in the preceding
paragraph.
You have advised the Company that each Underwriter has authorized you
to accept delivery of its Shares, to make payment and accept receipt therefor.
You, individually and not as the Representative of the Underwriters, may make
payment for any Shares to be purchased by any Underwriter whose funds shall not
have been received by you by the First Closing Date or the Second Closing Date,
as the case may be, for the account of such Underwriter, but any such payment
shall not relieve such Underwriter from any obligation hereunder.
SECTION 4. COVENANTS OF THE COMPANY. The Company covenants and agrees
that:
(a) The Company will advise you promptly of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of the institution of any proceedings for that purpose, or of any
notification of the suspension of qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceedings for that
purpose, and will also advise you promptly of any request of the Commission for
amendment or supplement of the Registration Statement, of any preliminary
prospectus or of the Prospectus, or for additional information.
(b) The Company will give you notice of its intention to file or
prepare any amendment to the Registration Statement (including any
post-effective amendment) or any Rule 462(b) Registration Statement or any
amendment or supplement to the Prospectus (including any revised prospectus
which the Company proposes for use by the Underwriters in connection with the
offering of the Shares which differs from the prospectus on file at the
Commission at the time the Registration Statement became or becomes effective,
whether or not such revised prospectus is required to be filed pursuant to Rule
424(b) and any term sheet as contemplated by Rule 434) and will furnish you with
copies of any such amendment or supplement a reasonable amount of time prior to
such proposed filing or use, as the case may be, and will not file any such
amendment or supplement or use any such prospectus to which you or counsel for
the Underwriters shall reasonably object.
(c) If the Company elects to rely on Rule 434 of the 1933 Act, the
Company will prepare a term sheet that complies with the requirements of Rule
434. If the Company elects not to rely on Rule 434, the Company will provide the
Underwriters with copies of the form of prospectus, in such numbers
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as the Underwriters may reasonably request, and file with the Commission such
prospectus in accordance with Rule 424(b) of the 1933 Act by the close of
business in New York City on the second business day immediately succeeding the
date of the Pricing Agreement. If the Company elects to rely on Rule 434, the
Company will provide the Underwriters with copies of the form of Rule 434
Prospectus, in such numbers as the Underwriters may reasonably request, by the
close of business in New York on the business day immediately succeeding the
date of the Pricing Agreement.
(d) If at any time when a prospectus relating to the Shares is
required to be delivered under the 1933 Act any event occurs as a result of
which the Prospectus, including any amendments or supplements, would include an
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 were made, not misleading, or if it is
necessary at any time to amend or supplement the Prospectus, including any
amendments or supplements thereto and including any revised prospectus which the
Company proposes for use by the Underwriters in connection with the offering of
the Shares which differs from the prospectus on file with the Commission at the
time of effectiveness of the Registration Statement, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) to comply with the
1933 Act, the Company promptly will advise you thereof and will promptly prepare
and file with the Commission an amendment or supplement (in form and substance
satisfactory to counsel for the Representatives) which will correct such
statement or omission or an amendment or supplement which will effect such
compliance; and, in case any Underwriter is required to deliver a prospectus
nine months or more after the effective date of the Registration Statement, the
Company upon request, but at the expense of such Underwriter, will prepare
promptly such prospectus or prospectuses as may be necessary to permit
compliance with the requirements of Section 10(a)(3) of the 1933 Act.
(e) Neither the Company nor the Subsidiary will, prior to the
earlier of the Second Closing Date or termination or expiration of the option
relating to the Option Shares, take any actions or fail to take any action where
such action or failure would or could reasonably be expect to result in the a
liability or obligation of the Company or the Subsidiary, direct or contingent,
or enter into any material transaction, other than in the ordinary course of
business, except as contemplated by the Prospectus.
(f) Neither the Company nor the Subsidiary will acquire any
capital stock of the Company prior to the earlier of the Second Closing Date or
termination or expiration of the option relating to the Option Shares nor will
the Company declare or pay any dividend or make any other distribution upon the
Common Stock payable to stockholders of record on a date prior to the earlier of
the Second Closing Date or termination or expiration of the option relating to
the Option Shares, except in either case as contemplated by the Prospectus.
(g) As soon as practicable, but in any event not later than 15
months after the effective date of the Registration Statement, the Company will
make generally available to its security holders an earnings statement (which
need not be audited) covering a period of at least 12 months beginning after the
effective date of the Registration Statement, which will satisfy the provisions
of the last paragraph of Section 11(a) of the 1933 Act.
(h) During such period as a prospectus is required by law to be
delivered in connection with offers and sales of the Shares by an underwriter or
dealer, the Company will furnish to you at its expense, subject to the
provisions of subsection (d) of Section 4 of this Agreement, copies of the
Registration Statement, the Prospectus, each preliminary prospectus and all
amendments and supplements to any such documents in each case as soon as
available and in such quantities as you may reasonably request, for the purposes
contemplated by the 1933 Act.
(i) The Company will cooperate with the Underwriters in qualifying
or registering the Shares for sale under the state and foreign securities laws
and blue sky laws of such jurisdictions as you
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designate, and will continue such qualifications in effect so long as reasonably
required for the distribution of the Shares. In connection with such
qualification or registration of the Shares, the Company shall not be required
to qualify as a foreign corporation or to file a general consent to service of
process in any such jurisdiction where it is not currently qualified or where it
would be subject to taxation as a foreign corporation.
(j) During the period of five years hereafter, the Company will
furnish you and each of the other Underwriters with a copy (i) as soon as
practicable after the filing thereof, of each report filed by the Company with
the Commission, any securities exchange, any national securities association or
the NASD; (ii) as soon as practicable after the release thereof, of each
material press release in respect of the Company; (iii) as soon as available, of
each report of the Company mailed to stockholders; and (iv) any additional
information of a public nature concerning the Company or its business that you
may reasonably request.
(k) The Company will use the net proceeds received by it from the
sale of the Shares being sold by it in the manner specified in the Prospectus.
(l) If, at the time of effectiveness of the Registration
Statement, any information shall have been omitted therefrom in reliance upon
Rule 430A and/or Rule 434, then immediately following the execution of the
Pricing Agreement, the Company will prepare, and file or transmit for filing
with the Commission in accordance with such Rule 430A, Rule 424(b) and/or Rule
434, copies of an amended Prospectus, or, if required by such Rule 430A and/or
Rule 434, a post-effective amendment to the Registration Statement (including an
amended Prospectus), containing all information so omitted. If required, the
Company will prepare and file, or transmit for filing, a Rule 462(b)
Registration Statement not later than the date of the execution of the Pricing
Agreement. If a Rule 462(b) Registration Statement is filed, the Company shall
make payment of, or arrange for payment of, the additional registration fee
owing to the Commission required by Rule 111.
(m) The Company will comply with all registration, filing and
reporting requirements of the Exchange Act and the National Association of
Securities Dealers Automated Quotation ("Nasdaq") National Market System which
from time to time may be applicable to the Company and will file with the
Commission such information on Form 10-Q or From 10-K as may be required by Rule
463.
(n) The Company agrees not to offer, sell, contract to sell,
transfer, assign, encumber, pledge, grant any option to purchase, make any short
sale or otherwise dispose of any Common Stock or Preferred Stock or other
securities with rights and preferences the same or similar to Common Stock or
any securities exercisable for or convertible into Common Stock or such
Preferred Stock or securities (collectively, "Common Stock Equivalents") or
enter into or establish any arrangement constituting a "put equivalent
position," as defined by Rule 16a-1(h) promulgated under the Exchange Act with
respect to the Common Stock, except Common Stock issued pursuant to currently
outstanding options, warrants or convertible securities and, as described in the
Prospectus, Common Stock issued pursuant to warrants and other and other forms
of equity securities used to incentivize independent marketing organizations,
or to announce an intent to do any of the foregoing, for a period of 180 days
after the date of the Underwriting Agreement without the prior written consent
of Xxxxxxx Xxxxx & Company, L.L.C. The Company has obtained similar agreements
in the form attached hereto as Exhibit B from each of its officers, directors
stockholders who "beneficially own," within the meaning of Rule 13d-3
promulgated under the Exchange Act, more than five percent of the Common Stock
outstanding as of the date the Agreement becomes effective and stockholders who,
in the aggregate, hold at least 80% of the Common Stock issued and outstanding
at the time the Registration Statement becomes effective.
(o) Within the period commencing on the date hereof and ending six
months immediately succeeding the later to occur of the 30th day immediately
succeeding the date hereof and the 30th day
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immediately succeeding the Second Closing Date, neither the Company nor any
person acting on behalf of the Company will offer to sell to any person any
Common Stock or Common Stock Equivalents other than the Shares and other than
offers and sales under restrictions and other circumstances reasonably designed
to prevent such offers and sales from becoming integrated into the offer and
sale of the Shares contemplated by this Agreement in the United States and to
United States persons so as to cause such offer and sale of the Shares
contemplated by this Agreement not to be in compliance with the registration
provisions of the 1933 Act.
(p) The Company agrees to furnish to its stockholders as soon as
practicable after the end of each fiscal year an annual report (including a
balance sheet and statement of income, stockholders' equity and cash flows of
the Company and its consolidated subsidiaries certified by independent public
accountants) and, as soon as practicable after the end of each of the first
three quarters of each fiscal year (beginning with the fiscal quarter ending
after the effective date of the Registration Statement), to make available to
its stockholders consolidated summary financial information of the Company and
its subsidiaries for such quarter in reasonable detail.
(q) The Company will list the Shares on the Nasdaq National Market
and the Company will promptly deliver to the Underwriters copies of all
correspondence to and from, and all documents issued to and by, the Commission
in connection with the registration of the Shares under the 1933 Act and listing
of the Shares on the Nasdaq National Market.
(r) Following the date of the Pricing agreement and prior to the
First Closing Date, the Company will issue no press release or other
communication to the public, directly or indirectly, with respect to the Company
or the Subsidiary or with respect to the financial condition, results of
operations, business, properties, assets or liabilities of any of them, or the
offering of the Shares, without your prior consent, which consent shall not be
unreasonably withheld.
(s) In connection with the Directed Shares Program, the Company
will place stop transfer orders on any Directed Shares that have been sold to
Participants subject to the three month restriction on sale, transfer,
assignment, pledge or hypothecation imposed by NASD Regulation, Inc. under its
Interpretative Material 2110-1 on "free-riding and withholding" to the extent
necessary to ensure compliance with the three month restrictions.
(t) The Company shall comply with all applicable securities and
other applicable laws, rules and regulations in each foreign jurisdiction in
which the Directed Shares are offered in connection with the Directed Shares
Program.
SECTION 5. PAYMENT OF EXPENSES. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective as to
all of its provisions or is terminated, the Company agrees to pay (i) all costs,
fees and expenses (other than legal fees and disbursements of counsel for the
Underwriters and the expenses incurred by the Underwriters) incurred in
connection with the performance of the Company's obligations hereunder,
including without limiting the generality of the foregoing, all fees and
expenses of legal counsel for the Company and of the Company's independent
accountants, all costs and expenses incurred in connection with the preparation,
printing, filing and distribution of the Registration Statement, each
preliminary prospectus and the Prospectus (including all incorporated documents,
exhibits and financial statements) and all amendments and supplements provided
for herein, this Agreement, the Pricing Agreement and the blue sky memorandum,
(ii) all costs, fees and expenses (including legal fees not to exceed
$__________ and disbursements of counsel for the Underwriters) incurred by the
Underwriters in connection with qualifying or registering all or any part of the
Shares for offer and sale under applicable state and foreign securities laws,
blue sky laws and insurance company securities solicitation laws, including the
preparation of a blue sky memorandum relating to the Shares and clearance of
such offering with the NASD, (iii) all fees and expenses of the
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Company's transfer agent, printing of the certificates for the Shares and all
transfer taxes, if any, with respect to the sale and delivery of the Shares to
the several Underwriters, (iv) all fees and expenses in connection with
qualification and inclusion of the Shares and the other then outstanding shares
of Common Stock on the Nasdaq National Market, (v) all costs, fees, expenses and
disbursement of counsel incurred by the Underwriters in connection with the
Directed Shares Program, the seeking of an exemption granted by the NASD
Regulation, Inc. with respect to NASD Interpretative Material 2110-1 on "free
riding and withholding" and stamp duties, similar taxes or duties or other
taxes, if any, incurred by the Underwriters in connection with the Directed
Shares Program and (vi) the cost of printing or producing any agreement among
underwriters, this Agreement, closing documents (including compilations thereof)
and any other documents in connection with the offering, purchase, sale and
delivery of the Shares.
SECTION 6. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters to purchase and pay for the Firm Shares
on the First Closing Date and, to the extent the Underwriter have elected to
purchase the Option Shares but only to the extent of such election, the Option
Shares on the Second Closing Date, shall be subject to the accuracy of the
representations and warranties on the part of the Company herein set forth as of
the date hereof and as of the First Closing Date or the Second Closing Date, as
the case may be, to the accuracy of the statements of officers of the Company
made pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective either
prior to the execution of this Agreement or not later than 1:00 P.M., Chicago
Time, on the first full business day after the date of this Agreement, or such
later time as shall have been consented to by you but in no event later than
1:00 P.M., Chicago Time, on the third full business day following the date
hereof; and prior to the First Closing Date or the Second Closing Date, as the
case may be, no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been instituted or shall be pending or, to the knowledge of the Company or you,
shall be contemplated by the Commission. If the Company has elected to rely upon
Rule 430A and/or Rule 434, the information concerning the initial public
offering price of the Shares and price-related information shall have been
transmitted to the Commission for filing pursuant to Rule 424(b) within the
prescribed period and the Company will provide evidence satisfactory to the
Representatives of such timely filing (or a post-effective amendment providing
such information shall have been filed and declared effective in accordance with
the requirements of Rules 430A and 424(b)). If a Rule 462(b) Registration
Statement is required, such Registration Statement shall have been transmitted
to the Commission for filing and become effective within the prescribed time
period and, prior to the First Closing Date, the Company shall have provided
evidence of such filing and effectiveness in accordance with Rule 462(b).
(b) The Shares shall have been qualified for sale under state and
foreign securities laws and the blue sky laws of such jurisdictions as shall
have been specified by the Representatives.
(c) The legality and sufficiency of the authorization, issuance
and sale or transfer and sale of the Shares hereunder, the validity and form of
the certificates representing the Shares, the execution and delivery of this
Agreement and the Pricing Agreement, and all corporate proceedings and other
legal matters incident thereto, and the form of the Registration Statement and
the Prospectus (except financial statements) shall have been approved by counsel
for the Underwriters exercising their reasonable judgment.
(d) You shall not have advised the Company that the Registration
Statement or the Prospectus or any amendment or supplement thereto, contains an
untrue statement of fact, which, in the opinion of counsel for the Underwriters,
is material or omits to state a fact which, in the opinion of such
-14-
counsel, is material and is required to be stated therein or necessary to make
the statements therein not misleading.
(e) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred any change, or any development involving a
prospective change, in or affecting particularly the business or properties of
the Company or the Subsidiary, whether or not arising in the ordinary course of
business, which, in the judgment of the Representatives, makes it impractical or
inadvisable to proceed with the public offering or purchase of the Shares as
contemplated hereby.
(f) There shall have been furnished to you, as Representatives of
the Underwriters, on the First Closing Date or the Second Closing Date, as the
case may be, except as otherwise expressly provided below:
(i) An opinion of Xxxxxx, Xxxxxxx & Xxxxxx, L.L.P.,
counsel for the Company addressed to the Underwriters and dated the First
Closing Date or the Second Closing Date, as the case may be, to the effect that:
(1) the Company has been duly incorporated and
is validly existing as a corporation in good standing under the laws of
the State of Delaware with corporate power and authority to own its
properties and conduct its business as described in the Prospectus; and
the Company has been duly qualified to do business as a foreign
corporation under the corporation law of, and is in good standing as
such in, every jurisdiction where the ownership or leasing of property,
or the conduct of its business requires such qualification except where
the failure so to qualify would not have a Material Adverse Effect upon
the condition (financial or otherwise) or results of operations of the
Company and the Subsidiary taken as a whole;
(2) an opinion to the same general effect as
clause (1) of this subparagraph (i) in respect of the Subsidiary of the
Company;
(3) the authorized capital stock of the Company,
of which there is outstanding the amount set forth in the Registration
Statement and Prospectus (except for subsequent issuances, if any,
pursuant to stock options or other rights referred to in the
Prospectus) and which consists of (i) 10,000,000 shares of Preferred
Stock, which may be designated in series with such rights, preferences
and obligations as determined by resolution of the Company's board of
directors of which no shares were issued and outstanding as of the date
hereof and (ii) 50,000,000 shares of Common Stock of which __________
shares were issued and outstanding as of the date hereof; such
authorized capital stock of the Company conforms as to legal matters in
all material respects to the description thereof in the Registration
Statement and Prospectus; and the issued and outstanding capital stock
of the Company has been duly authorized and validly issued and is fully
paid and nonassessable and free of statutory preemptive rights;
(4) all of the issued and outstanding share
capital of the Subsidiary has been duly authorized, validly issued and
is fully paid and nonassessable, and the Company owns directly 100
percent of the outstanding share capital of the Subsidiary, and to the
best knowledge of such counsel, after due inquiry and investigation,
such stock is owned free and clear of any claims, liens, encumbrances
or security interests;
(5) the certificates for the Shares to be
delivered hereunder are in due and proper form, and when duly
countersigned by the Company's transfer agent and delivered to you or
upon your order against payment of the agreed consideration therefor in
accordance with the provisions of this Agreement and the Pricing
Agreement, the Shares represented thereby will be
-15-
duly authorized and validly issued, fully paid and nonassessable and
(i) will be free of any Encumbrance, preemptive rights, rights of first
refusal, rights of co-sale or similar rights with respect to any of the
Shares, or the issuance or sale thereof, whether pursuant to the
Company's Charter Documents, contract or otherwise, (ii) will not be
subject to any voting trust arrangements and (iii) the Shares to be
sold hereunder have been duly and validly authorized and qualified for
inclusion on the Nasdaq National Market, subject to notice of issuance;
(6) the Registration Statement has become
effective under the 1933 Act, and, to the best knowledge of such
counsel, after due inquiry and investigation, 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
contemplated under the 1933 Act, and the Registration Statement
(including the information deemed to be part of the Registration
Statement at the time of effectiveness pursuant to Rule 430A(b) and/or
Rule 434, if applicable), the Prospectus and each amendment or
supplement thereto (except for the financial statements and other
statistical or financial data included therein as to which such counsel
need express no opinion) comply as to form in all material respects
with the requirements of the 1933 Act; such counsel have no reason to
believe that either the Registration Statement (including the
information deemed to be part of the Registration Statement at the time
of effectiveness pursuant to Rule 430A(b) and/or Rule 434, if
applicable) or the Prospectus, or the Registration Statement or the
Prospectus as amended or supplemented (except for the financial
statements and other statistical or financial data included therein as
to which such counsel need express no opinion), as of their respective
effective or issue dates, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectus as amended or supplemented, if applicable, as of the First
Closing Date or the Second Closing Date, as the case may be, contained
any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements therein not misleading
in light of the circumstances under which they were made; the
statements in the Registration Statement and the Prospectus summarizing
Orders, Regulations and Contracts are accurate and fairly and correctly
present the information disclosed therein or required to be presented
by the 1933 Act or the rules and regulations thereunder, in all
material respects and such counsel does not know, after due inquiry and
investigation, of any Regulations required to be described or referred
to in the Registration Statement or the Prospectus that are not
described or referred to therein as required; and such counsel does not
know, after due inquiry and investigation, of any legal or Governmental
Authority proceedings pending or threatened required to be described in
the Prospectus which are not described as required, Contract or Order
of a character required to be described in the Registration Statement
or Prospectus or to be filed as exhibits to the Registration Statement
which is not described or filed, as required, or relationship, direct
or indirect, exists between or among the Company on the one hand, and
the directors, officers, promoters, affiliates or stockholders of the
Company on the other hand, that is required to be described in the
Registration Statement or the Prospectus which is not so described;
(7) the statements under the captions "Use of
Proceeds," "Management's Discussion and Analysis of Financial Condition
and Results of Operations-Liquidity and Capital Resources,"
"Business-Regulation of Global Preferred Re," "Management," "Certain
Transactions," "Description of Capital Stock," "Shares Eligible for
Future Sale" and "Underwriting" in the Prospectus, insofar as such
statements constitute a summary of documents referred to therein or
matters of law, are accurate summaries and fairly and correctly
present, in all material respects, the information disclosed or
required to be disclosed with respect to such documents and matters by
the 1933 Act and the rules and regulations thereunder (provided that
such counsel need express no opinion as to the financial statements or
other financial or statistical data contained in such document);
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(8) this Agreement and the Pricing Agreement and
the performance of the Company's obligations hereunder and thereunder
have been duly authorized by all necessary corporate action and this
Agreement and the Pricing Agreement have been duly executed and
delivered by and on behalf of the Company, and are legal, valid and
binding agreements of the Company, except as enforceability of the same
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights and by the exercise of
judicial discretion in accordance with general principles applicable to
equitable and similar remedies and except as to those provisions
relating to indemnities for liabilities arising under the 1933 Act as
to which no opinion need be expressed; and no approval, authorization
or consent of any Governmental Authority is necessary in connection
with the execution, delivery, performance and enforcement of this
Agreement and the Pricing Agreement or the consummation by the Company
of the transactions contemplated hereby or thereby (other than under
the 1933 Act, applicable state securities laws and blue sky laws and
the rules of the NASD);
(9) the execution, delivery and performance of
this Agreement, the issuance and sale of the Shares and the
consummation of the transactions contemplated hereby will not (i)
violate or contravene any of the provisions of, or result in a breach
of or default under, any agreement, contract, franchise, license,
indenture, mortgage, deed of trust or other instrument known to such
counsel, after due inquiry and investigation, of the Company or by
which the property of the Company is bound except where such
violations, contravention, breaches or defaults would not be material
to the Company and the Subsidiary taken as a whole or prevent or impair
the consummation of the transactions contemplated hereby, (ii) violate
or contravene any of the provisions of the Company's Charter Documents,
(iii) or so far as is known to such counsel, violate any Order or
Regulation of any Governmental Authority having jurisdiction over the
Company, the Subsidiary or either of their properties;
(10) the Company is not (i) in violation or
contravention of its Charter Documents, (ii) in violation,
contravention, breach of, in default under (nor has any event occurred
which, with notice, lapse of time or both would constitute a breach of,
or default under) any agreement, contract, franchise, license,
indenture, mortgage, deed of trust or other instrument known to such
counsel, after due inquiry and investigation, to which the Company is a
party or by which the Company or its properties may be bound or
affected or (iii) in violation of any Order or Regulation of any
Governmental Authority having jurisdiction over the Company, the
Subsidiary or either of their properties, where such violation,
contravention, breach or default, individually or in the aggregate,
would have a Material Adverse Effect;
(11) other than as set forth in the Prospectus,
there are no legal or governmental proceedings pending to which the
Company or the Subsidiary is a party or of which any property of the
Company or the Subsidiary is subject which, if determined adversely to
the Company or the Subsidiary, would individually or in the aggregate
have a Material Adverse Effect; and to such counsel's knowledge no such
proceedings are threatened or contemplated by governmental authorities
or third-parties;
(12) except as disclosed in the Prospectus, no
person has the right, contractual or otherwise, to cause the Company or
the Subsidiary to issue or register pursuant to the 1933 Act, any
shares of capital stock of the Company or the Subsidiary, upon the
issue and sale of the Shares to be sold by the Company to the
Underwriters pursuant to this Agreement;
(13) the Company has obtained all Licenses
required by any Governmental Authority to properly and legally operate
or conduct the businesses in which it is engaged on the Closing Date
and which are necessary or desirable for the conduct of its business as
it is conducted and proposed to be conducted, and each such License has
been duly obtained, is valid
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and in full force and effect, and is renewable by its terms or in the
ordinary course of business without the need to comply with any special
qualification procedures or to pay any amount other than routine filing
fees; and, except where such failure to obtain or maintain such
license, proceeding or actions would not have a Material Adverse
Effect, the Company (a) is not subject to any pending or threatened
administrative or judicial proceeding to revoke, cancel or declare any
License granted to it invalid in any respect, (b) is not acting outside
the scope and authority granted to it pursuant to any such License, or
otherwise is in default or in violation with respect to any such
License, and no event has occurred which constitutes, or with due
notice or lapse of time or both may constitute, a default by it or a
violation of, any License and (c) has not permitted any Licenses
granted to it to lapse since its original effective date, except where
such lapses did not, individually or in the aggregate, have a Material
Adverse Effect;
(14) the Company is not required to be licensed
or admitted as an insurance holding company, insurer or reinsurer in
the United States in order to conduct its current business as described
in the Prospectus, except where such failure to be licensed or admitted
would not, individually or in the aggregate, have a Material Adverse
Effect;
(15) all offers and sales of the Company's and
the Subsidiary's securities prior to the date hereof were at all
relevant times either exempt from the registration requirements of the
1933 Act or registered under the provisions thereof and were duly
registered in accordance with, or the subject of an available exemption
from the registration requirements of, the applicable state and foreign
securities laws, blue sky laws and insurance company securities
solicitation laws;
(16) the Company is not, and, assuming the
application of the Company's proceeds as described under the caption
"Use of Proceeds" in the Prospectus, upon consummation of the
transactions contemplated hereby will not be, an "investment company"
or a person "controlled by" an "investment company" within the meaning
of the Investment Company Act;
In rendering such opinion, such counsel may state that they are relying
upon the certificate of American Stock Transfer & Trust, the transfer agent for
the Common Stock, as to the number of shares of Common Stock at any time or
times outstanding, and that insofar as their opinion under clause (6) above
relates to the accuracy and completeness of the Prospectus and Registration
Statement, it is based upon a general review with the Company's representatives
and independent accountants of the information contained therein, without
independent verification by such counsel of the accuracy or completeness of such
information. Such counsel may also rely upon the opinions of competent local or
foreign counsel, satisfactory to counsel to the Underwriters as to local or
foreign matters in jurisdictions other than in which they are licensed to
practice and, as to factual matters, on certificates of officers of the Company
and of state officials, in which case their opinion is to state that they are so
doing and copies of such opinions or certificates are to be attached to the
opinion unless such opinions or certificates (or, in the case of certificates,
the information therein) have been otherwise previously furnished to the
Representatives and accurately identified in such opinion.
(ii) An opinion of , Bermuda Counsel for the Company
addressed to the Underwriters and dated the First Closing Date or the Second
Closing Date, as the case may be, except as otherwise provided below:
(1) the Subsidiary has been duly incorporated,
is validly existing and in good standing (meaning that it has not
failed to make any filing with any Bermuda Governmental Authority or to
pay any Bermuda government fee or tax which might make it liable to be
struck off the Register of Companies and thereby cease to exist under
the laws of Bermuda) under the laws of Bermuda;
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(2) the Subsidiary has the necessary corporate
power and authority, pursuant to its Charter Documents, to carry on
insurance and reinsurance business as described in the Prospectus, was
registered as an insurer in terms of the Insurance Act, effective as of
___________________, and is authorized to carry on business in that
capacity as described in the Prospectus, subject to the provisions of
the Insurance Act and the regulations promulgated thereunder;
(3) the authorized share capital of the
Subsidiary established under its Charter Documents is U.S.
$_________________, divided into _______________ shares, par value U.S.
$____________________ per share; the Subsidiary has issued
________________ shares, par value U.S $_________________ per share, to
the Company and all such shares have been duly authorized and validly
issued, are fully paid and nonassessable (meaning that no further sums
are payable with respect to the holding of shares now or in the future)
and are registered in the name of the Company;
(4) this Agreement has been duly executed and
delivered by and on behalf of the Subsidiary, and is legal, valid and
binding agreement of the Subsidiary, except as enforceability of the
same may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights and by the
exercise of judicial discretion in accordance with general principles
applicable to equitable and similar remedies and except as to those
provisions relating to indemnities for liabilities arising under the
1933 Act as to which no opinion need be expressed; and no approval,
authorization or consent of any Governmental Authority is necessary in
connection with the issue or sale of the Shares pursuant to this
Agreement (other than under the 1933 Act, applicable state securities
laws and blue sky laws and the rules of the NASD) or the consummation
by the Company of any other transactions contemplated hereby;
(5) the execution, delivery and performance of
this Agreement, the issuance and sale of the Shares and the
consummation of the transactions contemplated hereby will not
contravene any of the provisions of, or result in a default under, any
Contract known, after due inquiry and investigation, to such counsel,
of the Subsidiary or by which the property of the Subsidiary is bound
and which contravention or default would be material to the Subsidiary
taken as a whole; or violate any of the provisions of the Charter
Documents or any charter, bylaws, or other organization documents of
the Subsidiary or, so far as is known to such counsel, violate any
Order or Regulation of any Governmental Authority having jurisdiction
over the Subsidiary or its properties;
(6) to the best of such counsel's knowledge
after due inquiry and investigation, the Subsidiary is not in violation
of its Charter Documents or is in breach of, in default under (nor has
any event occurred which, with notice, lapse of time or both would
constitute a breach of, or default under) any Contract to which the
Subsidiary is a party or by which the Subsidiary or its properties may
be bound are affected or in violation of any Order or Regulation of any
Governmental Authority having jurisdiction over the Subsidiary or its
properties, where such violation or breach or default, individually or
in the aggregate, could have a Material Adverse Effect;
(7) no order, consent, approval, license,
authorization validation of or exemption by any Bermuda Governmental
Authority is required to authorize or is required in connection with
the execution, deliver, performance and enforcement of this Agreement
and the Pricing Agreement and the consummation by the Subsidiary of the
transactions contemplated hereby and thereby, except such as have been
duly obtained in accordance with Bermuda law;
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(8) to the best of such counsel's knowledge
after due inquiry and investigation, the Subsidiary has obtained all
Licenses required by any Governmental Authority to properly and legally
operate or conduct the businesses in which it is engaged on the Closing
Date and which are necessary or desirable for the successful conduct of
its business as it is conducted and proposed to be conducted, and each
such License has been duly obtained, is valid and in full force and
effect, and is renewable by its terms or in the ordinary course of
business without the need to comply with any special qualification
procedures or to pay any amount other than routine filing fees. To the
best of such counsel's knowledge after due inquiry and investigation,
the Subsidiary (a) is not subject to any pending or threatened
administrative or judicial proceeding to revoke, cancel or declare any
License granted to it invalid in any respect, (b) is not acting outside
the scope and authority granted to it pursuant to any such License, or
otherwise is in default or in violation with respect to any such
License, and no event has occurred which constitutes, or with due
notice or lapse of time or both may constitute, a default by it or a
violation of, any License and (c) has not permitted any Licenses
granted to it to lapse since its original effective date, except where
such lapses did not, individually or in the aggregate, have a Material
Adverse Effect;
(9) the Subsidiary is not required to be
licensed or admitted as an insurance company in the United States in
order to conduct its business as described in the Prospectus;
(10) it is not necessary or desirable to ensure
the enforceability in Bermuda of this Agreement and the Pricing
Agreement that they be registered in any register kept by, or filed
with, any governmental authority or regulatory body in Bermuda;
(11) there are no Bermuda stamp, transfer or
similar taxes payable in respect of the issuance and delivery of the
Shares to the Underwriters; this Agreement will not be subject to ad
valorem stamp duty in Bermuda, and no registration, documentary,
recording, transfer or other similar tax, fee or charge by any Bermuda
Governmental Authority is payable in connection with the execution,
delivery, filing, registration or performance of this Agreement;
(12) except as disclosed in the Prospectus, no
currency exchange control laws or withholding taxes of Bermuda or
elsewhere apply to the payment of dividends by the Subsidiary to the
Company; and except as disclosed in the Prospectus, the Subsidiary is
not currently prohibited by any Bermuda law or governmental authority,
directly or indirectly, from paying any dividends to the Company, from
making any other distributions on its capital stock, from repaying to
the Company any loans or advances to it from the Company or from
transferring any of its property or assets to the Company;
(13) at the date hereof, there is no Bermuda
income, corporate or profits tax, withholding tax, capital gains tax,
capital transfer tax, estate duty or inheritance tax payable by the
Company and the Subsidiary or by the Underwriters. The Subsidiary has
received, pursuant to the Exempted Undertakings Tax Protection Act of
1966, an assurance from the Minister of Finance of Bermuda that, in the
event of there being enacted in Bermuda any legislation imposing tax
computed on profits or income, or computed on any capital asset, gain
or appreciation, or any tax in the nature of estate duty or inheritance
tax, such tax shall not be applicable to it or to any of its operations
or the shares, debentures of other obligations of it except insofar as
such tax applies to persons ordinarily resident in Bermuda holding such
shares, debentures or other obligations of it or any land leased or let
to it, which assurance shall be in effect and apply to it until
__________________;
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(14) based solely on a search of the Register of
Charges, maintained by the Registrar of Companies pursuant to Section
55 of the Companies Act of 1981, conducted at _____ on _______, there
are no registered charges registered against the Subsidiary;
(15) based solely upon a search of the Cause Book
of the Supreme Court of Bermuda conducted at ______ on ______, there
are no judgments, nor legal or governmental proceedings pending in
Bermuda to which the Subsidiary is an party;
(16) the Underwriters will not be deemed to be
resident, domiciled or carrying on business in Bermuda by reason only
of the execution, performance and enforcement of this Agreement and the
Pricing Agreement;
(17) the Underwriters have standing to bring an
action or proceedings before the appropriate courts in Bermuda for the
enforcement of this Agreement and the Pricing Agreement; it is not
necessary or advisable in order for Underwriters to enforce its rights
under this Agreement and the Pricing Agreement, including the exercise
of remedies thereunder, that it be licensed, qualified or otherwise
entitled to carry on business in Bermuda;
(18) the statements set forth under the headings
________________________ in the Prospectus, insofar as such statements
constitutes a summary of provisions of Bermuda law or the Company's
Memorandum of Association and Bye-Laws, provide a fair summary of such
legal matters of the Memorandum of Association and Bye-Laws;
(19) the Subsidiary has validly and irrevocably
submitted to the jurisdiction of any federal or state court sitting in
the City of Chicago, Illinois; has validly and irrevocably waived, to
the fullest extent permitted by law, any objections that it may now or
hereafter have to the laying of venue of any such suit, action or
proceeding brought in any such court based on or arising under this
Agreement or any claims that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum,
and has validly appointed __________ as its authorized agent to receive
service of process in any such suit, action or proceeding; and the
choice of the law of Illinois as the governing law of this Agreement is
a valid and effective choice of law;
(20) the courts of Bermuda would recognize as a
valid judgment, a final and conclusive judgment in personam obtained in
any federal or state court sitting in the State of Illinois against the
Company or the Subsidiary based upon this Agreement and would give a
judgment based thereon provided that (i) such courts had proper
jurisdiction over the parties subject to such judgment, (ii) such
courts did not contravene the rules of natural justice of Bermuda,
(iii) such judgment was not obtained by frauds, (iv) the enforcement of
the judgment would not be contrary to the public policy of Bermuda, (v)
no new admissible evidence relevant to the action is submitted prior to
the rendering of the judgment by the courts of Bermuda and (vi) the due
compliance with the correct procedures under the laws of Bermuda; and
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deem proper, on certificates of responsible
officers of the Company, the Subsidiary and public officials.
(iii) Such opinion or opinions of Xxxxxxxxxxxx Xxxx &
Xxxxxxxxx, counsel for the Underwriters, dated the First Closing Date or the
Second Closing Date, as the case may be, with respect to the incorporation of
the Company, the validity of the Shares, the Registration Statement and the
Prospectus and other related matters as you may reasonably require, and the
Company shall have
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furnished to such counsel such documents and shall have exhibited to them such
papers and records as they request for the purpose of enabling them to pass upon
such matters.
(iv) A certificate of the chief executive officer and the
principal financial officer of each of the Company and the Subsidiary, dated the
First Closing Date or the Second Closing Date, as the case may be, to the effect
that:
(1) the representations and warranties of the
Company or the Subsidiary, as applicable, set forth in Section 2 of
this Agreement are true and correct as of the date of this Agreement
and as of the First Closing Date or the Second Closing Date, as the
case may be, and the Company or the Subsidiary, as applicable, has
complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to such Closing Date;
and
(2) the Commission has not issued an order
preventing or suspending the use of the Prospectus or any preliminary
prospectus filed as a part of the Registration Statement or any
amendment thereto; no stop order suspending the effectiveness of the
Registration Statement has been issued; and to the best knowledge of
the respective signers, no proceedings for that purpose have been
instituted or are pending or contemplated under the 1933 Act.
The delivery of the certificate provided for in this subparagraph shall be and
constitute a representation and warranty of the Company and the Subsidiary,
jointly and severally, as to the facts required in the immediately foregoing
clauses (1) and (2) of this subparagraph to be set forth in such certificate.
(v) At the time the Pricing Agreement is executed and
also on the First Closing Date or the Second Closing Date, as the case may be,
there shall be delivered to you a letter addressed to you, as Representatives of
the Underwriters, from KPMG, LLP, independent accountants, the first one to be
dated the date of the Pricing Agreement, the second one to be dated the First
Closing Date and the third one (in the event of a second closing) to be dated
the Second Closing Date, to the effect set forth in Schedule B. There shall not
have been any change or decrease specified in the letters referred to in this
subparagraph which makes it impractical or inadvisable in the judgment of the
Representatives to proceed with the public offering or purchase of the Shares as
contemplated hereby.
(vi) At or before the time the Pricing Agreement is
executed, there shall be delivered to you a letter substantially in the form of
Exhibit B hereto from each of the Company's officers, directors stockholders who
"beneficially own," within the meaning of Rule 13d-3 promulgated under the
Exchange Act, more than five percent of the Common Stock outstanding as of the
date the Agreement becomes effective and stockholders who, in the aggregate,
hold at least 80% of the Common Stock issued and outstanding at the time the
Registration Statement becomes effective.
(vii) Such further certificates and documents as you may
reasonably request.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you and
to Xxxxxxxxxxxx Xxxx & Xxxxxxxxx, counsel for the Underwriters, which approval
shall not be unreasonably withheld. The Company shall furnish you with such
manually signed or conformed copies of such opinions, certificates, letters and
documents as you request.
If any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at the First Closing Date is not so satisfied, this
Agreement at your election will terminate upon notification to the Company
without liability on the part of any Underwriter or the Company, except for the
expenses to be paid or reimbursed by the Company pursuant to Sections 5 and 7
hereof and except to the extent provided in Section 9 hereof.
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SECTION 7. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the sale to the
Underwriters of the Shares on the First Closing Date is not consummated because
any condition of the Underwriters' obligations hereunder is not satisfied or
because of any refusal, inability or failure on the part of the Company to
perform any of its agreements herein or to comply with any provision hereof,
unless such failure to satisfy such condition or to comply with any provision
hereof is due to the default or omission of any Underwriter, the Company agrees
to reimburse you and the other Underwriters upon demand for all out-of-pocket
expenses (including reasonable fees and disbursements of counsel) that shall
have been reasonably incurred by you and them in connection with the proposed
purchase and the sale of the Shares. Any such termination shall be without
liability of any party to any other party except that the provisions of this
Section, Section 5 and Section 9 shall at all times be effective and shall
apply.
SECTION 8. EFFECTIVENESS OF REGISTRATION STATEMENT. You and the Company
will use your and its best efforts to cause the Registration Statement to become
effective, if it has not yet become effective, and to prevent the issuance of
any stop order suspending the effectiveness of the Registration Statement and,
if such stop order be issued, to obtain as soon as possible the lifting thereof.
SECTION 9. 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 the 1933 Act or the Exchange Act against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter or such controlling
person may become subject under the 1933 Act, the Exchange Act or other foreign,
federal or state statutory law or regulation, at common law or otherwise
(including in settlement of any litigation if such settlement is effected with
the written consent of the Company), insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, including the information deemed to be part of the
Registration Statement at the time of effectiveness pursuant to Rule 430A and/or
Rule 434, if applicable, any preliminary prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; and will
reimburse each Underwriter and each such controlling person for any legal or
other expenses reasonably incurred by such Underwriter or such controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement,
any preliminary prospectus, the Prospectus or any amendment or supplement
thereto in reliance upon and in conformity with information contained in a
writing signed by an Underwriter furnished to the Company by or on behalf of any
such Underwriter through the Representatives, specifically for use in the
preparation thereof. In addition to its other obligations under this Section
9(a), the Company agrees that, as an interim measure during the pendency of any
claim, action, investigation, inquiry or other proceeding arising out of or
based upon any statement or omission, or any alleged statement or omission,
described in this Section 9(a), it will reimburse the Underwriters on a monthly
basis for all reasonable legal and other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Company's obligation to reimburse the
Underwriters for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
The Company agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of the 1933
Act or the Exchange Act, from and against any and all losses, claims, damages
and liability (including, without limitation, any legal or other
-23-
expenses reasonably incurred in connection with defending or investigation any
such action or claim), joint or several, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
material prepared by or with the consent of the Company for distribution to
Participants in connection with the Directed Shares Program or arising out of or
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; (ii) arising out of or based upon the failure of any Participant to
pay for and accept delivery of Directed Shares that the Participants agreed to
purchase; or (iii) related to, arising out of, or in connection with the
Directed Shares Program, other than losses, claims, damages or liabilities (or
expenses relating thereto) that are finally judicially determined to have
resulted from the bad faith, willful misconduct or gross negligence of any such
Underwriter.
(b) Each Underwriter will severally indemnify and hold harmless
the Company, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of the 1933 Act or the Exchange Act, against any losses, claims,
damages or liabilities to which the Company, or any such director, officer or
controlling person may become subject under the 1933 Act, the Exchange Act or
other federal or state statutory law or regulation, at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of such Underwriter), insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue or alleged untrue statement of any material fact contained in
the Registration Statement, any preliminary prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the Registration
Statement, any preliminary prospectus, the Prospectus, or any amendment or
supplement thereto in reliance upon and in conformity with information contained
in a writing signed by such Underwriter furnished to the Company by such
Underwriter through the Representatives specifically for use in the preparation
thereof; and will reimburse any legal or other expenses reasonably incurred by
the Company, or any such director, officer or controlling person in connection
with investigating or defending any such loss, claim, damage, liability or
action. This indemnity agreement will be in addition to any liability which such
Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section 9, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party except to the extent
that the indemnifying party was prejudiced by such failure to notify. In case
any such action is brought against any indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
all other indemnifying parties similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, or the indemnified and indemnifying parties
may have conflicting interests which would make it inappropriate for the same
counsel to represent both of them, the indemnified party or parties shall have
the right to select separate counsel to assume such legal defense and otherwise
to participate in the defense of such action on behalf of such indemnified party
or parties. Upon receipt of notice from the indemnifying party to such
indemnified party of its election so to assume the defense of such action and
approval by the indemnified party of counsel, the indemnifying party will not be
liable to such indemnified party under this Section 9 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof unless (i) the indemnified party shall have
-24-
employed such counsel in connection with the assumption of legal defense in
accordance with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel (in addition to local counsel), approved by the
Representatives in the case of paragraph (a) representing all indemnified
parties not having different or additional defenses or potential conflicting
interest among themselves who are parties to such action), (ii) the indemnifying
party shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability arising out of such proceeding.
(d) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under paragraphs (a) or (b) hereof in
respect of any losses, claims, damages or liabilities referred to therein, then
each applicable indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Underwriters from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Underwriters in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The respective relative benefits received by the
Company and the Underwriters shall be deemed to be in the same proportion in the
case of the Company as the total price paid to the Company for the Shares by the
Underwriters (net of underwriting discount but before deducting expenses), and
in the case of the Underwriters as the underwriting discount received by them
bears to the total of such amounts paid to the Company and received by the
Underwriters as underwriting discount in each case as contemplated by the
Prospectus. The relative fault of the Company and the Underwriters shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Company or by the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages and liabilities referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 9, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares 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 0000 Xxx) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 9 are several in proportion to their respective underwriting commitments
and not joint.
(e) The provisions of this Section 9 shall survive any termination
of this Agreement.
-25-
SECTION 10. DEFAULT OF UNDERWRITERS. It shall be a condition to the
agreement and obligation of the Company to sell and deliver the Shares
hereunder, and of each Underwriter to purchase the Shares hereunder, that,
except as hereinafter in this paragraph provided, each of the Underwriters shall
purchase and pay for all Shares agreed to be purchased by such Underwriter
hereunder upon tender to the Representatives of all such Shares in accordance
with the terms hereof. If any Underwriter or Underwriters default in their
obligations to purchase Shares hereunder on the First Closing Date and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed 10 percent of the total number of
Shares which the Underwriters are obligated to purchase on the First Closing
Date, the Representatives may make arrangements satisfactory to the Company for
the purchase of such Shares by other persons, including any of the Underwriters,
but if no such arrangements are made by such date the nondefaulting Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the Shares which such defaulting Underwriters agreed but
failed to purchase on such date. If any Underwriter or Underwriters so default
and the aggregate number of Shares with respect to which such default or
defaults occur is more than the above percentage and arrangements satisfactory
to the Representatives and the Company for the purchase of such Shares by other
persons are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any nondefaulting Underwriter or the
Company, except for the expenses to be paid by the Company pursuant to Section 5
hereof and except to the extent provided in Section 9 hereof.
In the event that Shares to which a default relates are to be purchased by the
nondefaulting Underwriters or by another party or parties, the Representatives
or the Company shall have the right to postpone the First Closing Date for not
more than seven business days in order that the necessary changes in the
Registration Statement, Prospectus and any other documents, as well as any other
arrangements, may be effected. As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section 10.
Nothing herein will relieve a defaulting Underwriter from liability for its
default.
SECTION 11. EFFECTIVE DATE. This Agreement shall become effective
immediately as to Sections 5, 7, 9 and 12 and as to all other provisions at
10:00 A.M., Chicago Time, on the day following the date upon which the Pricing
Agreement is executed and delivered, unless such a day is a Saturday, Sunday or
holiday (and in that event this Agreement shall become effective at such hour on
the business day next succeeding such Saturday, Sunday or holiday), unless prior
to such time you shall have given notice to the Company that you elect that such
other provisions of this Agreement shall not become effective; but this
Agreement shall nevertheless become effective at such earlier time after the
Pricing Agreement is executed and delivered as you may determine on and by
notice to the Company or by release of any Shares for sale to the public. For
the purposes of this Section 11, the Shares shall be deemed to have been so
released upon the release for publication of any newspaper advertisement
relating to the Shares or upon the release by you of telegrams (i) advising
Underwriters that the Shares are released for public offering, or (ii) offering
the Shares for sale to securities dealers, whichever may occur first.
SECTION 12. TERMINATION. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice to
you or by you by notice to the Company at any time prior to the time this
Agreement shall become effective as to all its provisions, and any such
termination shall be without liability on the part of the Company to any
Underwriter (except for the expenses to be paid or reimbursed pursuant to
Section 5 hereof and except to the extent provided in Section 9 hereof) or of
any Underwriter to the Company.
(b) This Agreement may also be terminated by you prior to the
First Closing Date, and the option referred to in Section 3, if exercised, may
be cancelled at any time prior to the Second Closing
-26-
Date, if (i) trading in securities on the New York Stock Exchange or the Nasdaq
National Market shall have been suspended or minimum prices shall have been
established on such exchanges, or (ii) a banking moratorium shall have been
declared by Illinois, New York, United States or Bermuda authorities, or (iii)
there shall have been any change in financial markets or in political, economic
or financial conditions which, in the reasonable opinion of the Representatives,
either renders it impracticable or inadvisable to proceed with the offering and
sale of the Shares on the terms set forth in the Prospectus or materially and
adversely affects the market for the Shares, or (iv) there shall have been an
outbreak of major armed hostilities between the United States and any foreign
power which in the reasonable opinion of the Representatives makes it
impractical or inadvisable to offer or sell the Shares. Any termination pursuant
to this paragraph (b) shall be without liability on the part of any Underwriter
to the Company or on the part of the Company to any Underwriter (except for
expenses to be paid or reimbursed pursuant to Section 5 hereof and except to the
extent provided in Section 9 hereof).
SECTION 13. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers and of the several Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter
or the Company or any of its or their partners, principals, members, officers or
directors or any controlling person, as the case may be, and will survive
delivery of and payment for the Shares sold hereunder.
SECTION 14. NOTICES. All communications hereunder will be in writing and,
if sent to the Underwriters will be mailed, delivered or telegraphed and
confirmed to you c/o Xxxxxxx Xxxxx & Company, L.L.C., 000 Xxxx Xxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000, with a copy to Xxxx Xxxxxxxxxx, Xxxxxxxxxxxx Xxxx &
Xxxxxxxxx, 000 Xxxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000; and if sent to the
Company or the Subsidiary will be mailed, delivered or telegraphed and confirmed
to the Company or the Subsidiary at the corporate headquarters, Attn: Xxxxxx X.
XxXxxxxx, 00000 Xxxxx Xxxxx Xxxxxxx, Xxxxxx, Xxxxxxx 00000, with a copy to Ward
S. Bondurant, Morris, Xxxxxxx & Xxxxxx, L.L.P., 0000 Xxxxxxxxx Xxxx, X.X.,
Xxxxxxx, Xxxxxxx 00000.
SECTION 15. SUCCESSORS. This Agreement and the Pricing Agreement will
inure to the benefit of and be binding upon the parties hereto and their
respective successors, personal representatives and assigns, and to the benefit
of the officers and directors and controlling persons referred to in Section 9,
and no other person will have any right or obligation hereunder. The term
"successors" shall not include any purchaser of the Shares as such from any of
the Underwriters merely by reason of such purchase.
SECTION 16. REPRESENTATION OF UNDERWRITERS. You will act as
Representatives for the several Underwriters in connection with this financing,
and any action under or in respect of this Agreement taken by you will be
binding upon all the Underwriters.
SECTION 17. PARTIAL UNENFORCEABILITY. If any section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph or provision hereof.
SECTION 18. APPLICABLE LAW. This Agreement and the Pricing Agreement shall
be governed by and construed in accordance with the laws of the State of
Illinois, without giving effect to any provisions relating to conflicts of laws.
SECTION 19. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. All judicial
proceedings arising out of or relating to this Agreement and the Pricing
Agreement may be brought in any state or federal court of competent jurisdiction
in the State of Illinois, and by execution and delivery of this Agreement, the
Company and its Subsidiary accept for themselves and in connection with their
properties, generally and unconditionally, the nonexclusive jurisdiction of the
aforesaid courts and waive any defense of forum non
-27-
conveniens and irrevocably agree to be bound by any final judgment rendered
thereby in connection with this Agreement. The Company and its Subsidiary
designate and appoint __________________, and such other persons as may
hereafter be selected by the Company and its Subsidiary irrevocably agreeing in
writing to so serve, as their agent to receive on their behalf service of all
process in any such proceedings in any such court, such service being hereby
acknowledged by the Company and its Subsidiary to be effective and binding
service in every respect. A copy of any such process to serviced shall be mailed
by registered mail to the Company or its Subsidiary at the addresses provided in
Section 14 hereof; provided, however, that, unless otherwise provided by
applicable law, any failure to mail such copy shall not affect the validity of
service of such process. If any agent appointed by the Company or its Subsidiary
refuses to accept service, the Company and its Subsidiary hereby agree that
service of process sufficient for personal jurisdiction in any action against
the Company and its Subsidiary in the State of Illinois may be made by
registered or certified mail, return receipt requested to the Company and its
Subsidiary at the address provided in Section 14 hereof, and the Company and its
Subsidiary hereby acknowledge that such service shall be effective and binding
in every respect. Nothing herein shall affect to right to serve process in any
other manner permitted by law or shall limit the right of any Underwriter to
bring proceeding against the Company and its Subsidiary in the courts of nay
other jurisdiction.
SECTION 20. INTERPRETATION OF CERTAIN TERMS. Any words herein used in the
singular shall denote the plural as the context so requires and, when used
herein in the plural shall denote the singular as the context so requires.
Pronouns used herein, whether masculine, feminine, or neuter, shall be
interpreted as the context so requires. The word "including" shall mean
"including, without limitation," and thus indicate part of a larger whole; but
shall not be interpreted as indicating the stated limits or extremes. Any
reference to any federal, state, or local law shall be deemed also to refer to
all rules and regulations promulgated thereunder, unless the context requires
otherwise.
SECTION 21. COUNTERPARTS. This Agreement may be executed in one or any
number of counterparts, each of which, once so executed, shall be deemed to be
an original, and such counterparts together shall constitute and be one and the
same instrument binding on all the parties hereto. This Agreement may be
executed by facsimile signature and a facsimile signature shall constitute an
original signature for all purposes.
***REMAINDER OF PAGE INTENTIONALLY LEFT BLANK***
-28-
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return this Underwriting Agreement to us, whereupon
it will become a binding agreement among the Company and the several
Underwriters including you, all in accordance with its terms.
Very truly yours,
GLOBAL PREFERRED HOLDINGS, INC.
By:
-------------------------------------------------
Name:
Title:
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
ACTING AS REPRESENTATIVES OF THE SEVERAL
UNDERWRITERS NAMED IN SCHEDULE A.
XXXXXXX XXXXX & COMPANY, L.L.C.
By:
--------------------------------------------------
Name:
Title:
XXXXXXX XXXXX & ASSOCIATES, INC.
By:
--------------------------------------------------
Name:
Title:
XXXXXXX, XXXXXXX SECURITIES LLC
By:
--------------------------------------------------
Name:
Title:
-29-
SCHEDULE A
NUMBER OF FIRM SHARES
UNDERWRITER TO BE PURCHASED
----------- ---------------
Xxxxxxx Xxxxx & Company, L.L.C............................
Xxxxxxx Xxxxx & Associates, Inc...........................
Xxxxxxx, Xxxxxxx Securities LLC...........................
Total................................................
SCHEDULE B
COMFORT LETTER FOR GLOBAL PREFERRED HOLDINGS, INC.
TO BE DELIVERED BY KPMG, LLP
(1) They are independent public accountants with respect to the
Company and the Subsidiary within the meaning of the 1933 Act.
(2) In their opinion the consolidated financial statements and
schedules of the Company and the Subsidiary included or incorporated by
reference in the Registration Statement and the consolidated financial
statements of the Company from which the information presented under the
captions "Summary Financial Data" and "Selected Financial Data" has been derived
which are stated therein to have been examined by them comply as to form in all
material respects with the applicable accounting requirements of the 1933 Act
and the Exchange Act.
(3) On the basis of specified procedures (but not an examination
in accordance with generally accepted auditing standards), including inquiries
of certain officers of the Company and the Subsidiary responsible for financial
and accounting matters as to transactions and events subsequent to ____________,
____, a reading of minutes of meetings of the stockholders and directors of the
Company and the Subsidiary since ____________, ____, a reading of the latest
available interim unaudited consolidated financial statements of the Company and
the Subsidiary (with an indication of the date thereof) and other procedures as
specified in such letter, nothing came to their attention which caused them to
believe that (i) the unaudited consolidated financial statements of the Company
and the Subsidiary included or incorporated by reference in the Registration
Statement do not comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the Exchange Act or that such
unaudited financial statements are not fairly presented in accordance with
generally accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in the
Registration Statement, (ii) the amounts in "Summary Financial Data" and
"Selected Financial Data" included in the Prospectus do not agree with or are
not derivable from the corresponding amounts in the audited consolidated
financial statements or unaudited consolidated financial statements (as
applicable) from which such amounts were derived and (iii) at a specified date
not more than five days prior to the date thereof in the case of the first
letter and not more than two business days prior to the date thereof in the case
of the second and third letters, there was any change in the capital stock or
long-term debt or short-term debt (other than normal payments) of the Company
and the Subsidiary on a consolidated basis or any decrease (increase) in
consolidated net current assets (total current liabilities) or any decrease in
total stockholders' equity as compared with amounts shown on the latest
unaudited balance sheet of the Company included in the Registration
Statement or for the period from the date of such balance sheet to a date not
more than five days prior to the date thereof in the case of the first letter
and not more than two business days prior to the date thereof in the case of the
second and third letters, there were any decreases, as compared with the
corresponding period of the prior year, in consolidated net sales, consolidated
income before income taxes or in the total or per share amounts of consolidated
net income except, in all instances, for changes or decreases which the
Prospectus discloses have occurred or may occur or which are set forth in such
letter.
(4) They have carried out specified procedures, which have been
agreed to by the Representatives, with respect to certain information in the
Prospectus specified by the Representatives, and on the basis of such
procedures, they have found such information to be in agreement with the general
accounting records of the Company and the Subsidiary.
-2-
EXHIBIT A
GLOBAL PREFERRED HOLDINGS, INC.
___________ Shares Common Stock
(Plus an Option to Acquire Up to ___________ Shares to Cover Overallotments)
PRICING AGREEMENT
____________, ___, 2002
Xxxxxxx Xxxxx & Company, L.L.C.
Xxxxxxx Xxxxx & Associates, Inc.
Xxxxxxx, Xxxxxxx Securities LLC
As Representatives of the Several
Underwriters Named in Schedule A
c/o Xxxxxxx Xxxxx & Company, L.L.C.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement dated ____________,
2002 (the "Underwriting Agreement") relating to the sale by the Company and the
purchase by the several Underwriters for whom Xxxxxxx Xxxxx & Company, L.L.C.,
Xxxxxxx Xxxxx & Associates, Inc. and Xxxxxxx, Xxxxxxx Securities LLC acting as
representatives (the "Representatives"), of the above Shares. All terms herein
shall have the definitions contained in the Underwriting Agreement except as
otherwise defined herein.
Pursuant to Section 3 of the Underwriting Agreement, the Company agrees
with the Representatives as follows:
1. The initial public offering price per share for the Shares
shall be $__________.
2. The purchase price per share for the Shares 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.
***SIGNATURE PAGE FOLLOWS***
If the forgoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters, including you, all in accordance with its terms.
Very truly yours,
GLOBAL PREFERRED HOLDINGS, INC.
By:
-------------------------------------------------
Name:
Title:
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
XXXXXXX XXXXX & COMPANY, L.L.C.
XXXXXXX XXXXX & ASSOCIATES, INC.
XXXXXXX, XXXXXXX SECURITIES LLC
Acting as Representatives of the
Several Underwriters
By: Xxxxxxx Xxxxx & Company, L.L.C.
By:
------------------------------------------------
Name:
Title:
EXHIBIT B
GLOBAL PREFERRED HOLDINGS, INC.
LOCK-UP AGREEMENT
The undersigned understands that Xxxxxxx Xxxxx & Company, L.L.C.
("Xxxxxxx Xxxxx"), Xxxxxxx Xxxxx & Associates, Inc. and Xxxxxxx, Xxxxxxx
Securities LLC, as representatives of the underwriters to be named therein (the
"Underwriters"), propose to enter into an Underwriting Agreement (the
"Underwriting Agreement") with Global Preferred Holdings, Inc., a Delaware
corporation (the "Company"), providing for a public offering of the Common Stock
of the Company (the "Offered Shares") pursuant to a Registration Statement on
Form S-1 that has been filed with the Securities and Exchange Commission (the
"SEC").
To induce the Underwriters to enter into the Underwriting Agreement and
in consideration of the agreement by the Underwriters to offer and sell the
Offered Shares and in recognition of the benefit that such an offering will
confer upon the undersigned, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the undersigned agrees
that,
(a) with respect to 25% of the Lock-up Shares (as defined below)
held by the undersigned as of the date hereof and for a period
beginning from the date of the final Prospectus covering the
public offering of the Offered Shares and continuing to and
including the date 180 days after the date of such final
Prospectus,
(b) with respect to 25% of the Lock-up Shares held by the
undersigned as of the date hereof and for a period beginning
from the date of the final Prospectus covering the public
offering of the Offered Shares and continuing to and including
the date 270 days after the date of such final Prospectus,
(c) with respect to 25% of the Lock-up Shares held by the
undersigned as of the date hereof and for a period beginning
from the date of the final Prospectus covering the public
offering of the Offered Shares and continuing to and including
the date 360 days after the date of such final Prospectus, and
(d) with respect to 25% of the Lock-up Shares held by the
undersigned as of the date hereof and for a period beginning
from the date of the final Prospectus covering the public
offering of the Offered Shares and continuing to and including
the date 450 days after the date of such final Prospectus,
(each of the time periods set forth in paragraphs (a), (b),
(c) and (d) hereof being a "Lock-up Period", and collectively,
the "Lock-up Periods")
the undersigned will not, without the prior written consent of Xxxxxxx
Xxxxx, directly or indirectly, (i) offer, sell, contract to sell, assign,
transfer, encumber, pledge, grant any option to purchase, make any short sale or
otherwise dispose of any shares of the Company's Common Stock ("Common Stock"),
or any options or warrants to purchase any shares of Common Stock of the Company
or any securities convertible into, exchangeable for or that represent the right
to receive shares of Common Stock of the Company (collectively, "Common Stock
Equivalents"), owned directly by the undersigned (including holding as a
custodian) or with respect to which the undersigned has beneficial ownership
within the rules and regulations of the SEC (collectively the "Lock-up Shares"),
(ii) enter into or establish any arrangement constituting a "put equivalent
position," as defined by Rule 16a-1(h) promulgated under the Securities Exchange
Act of 1934, as amended, (iii) enter into any swap or other arrangement that
transfers all or a portion of the economic consequences associated with the
ownership of the Lock-up Shares, (iv) exercise any registration rights with
respect to any Common Stock or Common Stock Equivalents or (v) announce an
intent to do any of the forgoing.
The foregoing restriction is expressly agreed to preclude the
undersigned from engaging in any hedging or other transaction which is designed
to or which reasonably could be expected to lead to or result in a sale or
disposition of the Lock-up Shares even if the Lock-up Shares would be disposed
of by someone other than the undersigned. Such prohibited hedging or other
transactions would include without limitation any short sale or any purchase,
sale or grant of any right (including without limitation any put or call option)
with respect to any of the Lock-up Shares or with respect to any security that
includes, relates to, or derives any significant part of its value from such of
the Lock-up Shares.
Notwithstanding the foregoing, the undersigned may transfer any or all
Lock-up Shares (i) as a bona fide gift or gifts, provided that the donee or
donees thereof agree to be bound in writing by the restrictions set forth
herein, (ii) to any trust, partnership, limited liability company or other legal
entity commonly used for estate planning purposes which
is established for the direct or indirect benefit of the undersigned or the
immediate family of the undersigned, provided that the trustee, general partner,
manager or other administrator as the case may be agrees to be bound in writing
by the restrictions set forth herein, and provided further that any such
transfer shall not involve a disposition for value, or (iii) with the prior
written consent of Xxxxxxx Xxxxx & Company, L.L.C. on behalf of the
Underwriters. For purposes of this letter agreement, "immediate family" shall
mean any relationship by blood, marriage or adoption, not more remote than first
cousin. In addition, notwithstanding the foregoing, if the undersigned is a
corporation, the corporation may transfer the capital stock of the Company to
any wholly-owned subsidiary of such corporation; provided, however, that in any
such case, it shall be a condition to the transfer that the transferee execute
an agreement stating that the transferee is receiving and holding such capital
stock subject to the provisions of this Agreement and there shall be no further
transfer of such capital stock except in accordance with this Agreement, and
provided further that any such transfer shall not involve a disposition for
value. The undersigned now has, and, except as contemplated by clause (i), (ii)
or (iii) of this paragraph, for the duration of this letter agreement will have,
good and marketable title to the Lock-up Shares, free and clear of all liens,
encumbrances, and claims whatsoever. The undersigned also agrees and consents to
the entry of stop transfer instructions with the Company's transfer agent and
registrar against the transfer of the Lock-up Shares except in compliance with
the foregoing restrictions. Following expiration of the each of the respective
Lock-up Periods, it is understood and agreed that the undersigned may dispose of
the respective percentage of Lock-up Shares free of any contractual obligation
hereunder.
The undersigned understands that the Company and the Underwriters are
relying upon this letter agreement in proceeding toward consummation of the
offering. The undersigned further understands that this letter agreement is
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors, and assigns; provided, however, it is understood
that if the Underwriting Agreement is not executed by July 31, 2002 or if the
Underwriting Agreement shall terminate or be terminated prior to payment for and
delivery of the Offered Shares, the Underwriters will release the undersigned
from the obligations of this letter agreement.
