EXHIBIT 1.1
MEADOWBROOK INSURANCE GROUP, INC.
SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
________________, 2002
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
XXXXXX, XXXXX XXXXX INC.
ADVEST GROUP, INC.
as Representatives of the several Underwriters
c/o Friedman, Billings, Xxxxxx & Co., Inc.
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
Meadowbrook Insurance Group, Inc., a Michigan corporation (the
"Company"), confirms its agreement with each of the Underwriters listed on
Schedule I hereto (collectively, the "Underwriters"), for whom Friedman,
Billings, Xxxxxx & Co., Inc., Xxxxxx, Xxxxx Xxxxx Inc. and Advest Group, Inc.
are acting as representatives (in such capacity, the "Representatives"), with
respect to (i) the sale by the Company of 18,500,000 shares (the "Initial
Shares") of Common Stock, stated value $.01 per share, of the Company ("Common
Stock"), and the purchase by the Underwriters, acting severally and not jointly,
of the respective number of shares of Common Stock set forth opposite the names
of the Underwriters in Schedule I hereto, and (ii) the grant of the option
described in Section 1(b) hereof to purchase all or any part of 2,775,000
additional shares of Common Stock to cover overallotments (the "Option Shares"),
if any, from the Company to the Underwriters, acting severally and not jointly,
in the respective numbers of shares of Common Stock set forth opposite the names
of the Underwriters in Schedule I hereto. The 18,500,000 shares of Common Stock
to be purchased by the Underwriters and all or any part of the 2,775,000 shares
of Common Stock subject to the option described in Section l(b) hereof are
hereinafter called, collectively, the "Shares".
The Company understands that the Underwriters propose to make an public
offering of the Shares as soon as the Underwriters deem advisable after this
Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
Commission"), a registration statement on Form S-2 (No. 333-86548) and a related
preliminary prospectus for the registration of the Shares under the Securities
Act of 1933, as amended (the "Securities Act"), and the rules and regulations
thereunder (the "Securities Act Regulations"). The Company has prepared and
filed such amendments thereto, if any, and such amended preliminary
prospectuses, if any, as may have been required to the date hereof, and will
file such additional amendments thereto and such amended prospectuses as may
hereafter be required. The registration statement has been
declared effective under the Securities Act by the Commission. The registration
statement as amended at the time it became effective (including all information
deemed (whether by incorporation by reference or otherwise) to be a part of the
registration statement at the time it became effective pursuant to Rule 430A(b)
of the Securities Act Regulations) is hereinafter called the "Registration
Statement," except that, if the Company files a post-effective amendment to such
registration statement which becomes effective prior to the Closing Time (as
defined below), "Registration Statement" shall refer to such registration
statement as so amended. Any registration statement filed pursuant to Rule
462(b) of the Securities Act Regulations is hereinafter called the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the 462(b) Registration Statement. Each prospectus included in the
registration statement, or amendments thereof or supplements thereto, before it
became effective under the Securities Act and any prospectus filed with the
Commission by the Company with the consent of the Underwriters pursuant to Rule
424(a) of the Securities Act Regulations is hereinafter called the "Preliminary
Prospectus." The term "Prospectus" means the final prospectus, as first filed
with the Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the
Securities Act Regulations, and any amendments thereof or supplements thereto.
Any reference herein to any Preliminary Prospectus or Prospectus shall be deemed
to refer to and include the documents incorporated by reference therein pursuant
to Form S-2 under the Act, as of the date of such Preliminary Prospectus or
Prospectus, as the case may be. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus.
The Company and the Underwriters agree as follows:
1. Sale and Purchase:
a) Initial Shares. Upon the basis of the warranties and representations
and other terms and conditions herein set forth, at the purchase price per share
of $________, the Company agrees to sell each of to the Underwriters the number
of Initial Shares set forth in Schedule I opposite its name, and each
Underwriter agrees, severally and not jointly, to purchase from the Company the
number of Initial Shares set forth in Schedule I opposite such Underwriter's
name, plus any additional number of Initial Shares which such Underwriter may
become obligated to purchase pursuant to the provisions of Section 8 hereof,
subject in each case, to such adjustments among the Underwriters as the
Representatives in their sole discretion shall make to eliminate any sales or
purchases of fractional shares.
b) Option Shares. In addition, upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per share set forth in paragraph (a), the Company hereby grants an option
to each of the Underwriters, acting severally and not jointly, to purchase the
respective number of Option Shares set forth in Schedule I opposite its name,
and each Underwriter agrees, severally and not jointly, to purchase from the
Company the number of Option Shares set forth in Schedule I opposite such
Underwriter's name, plus any additional number of Option Shares which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 8 hereof. The option hereby granted will expire 30 days after the
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date hereof and may be exercised in whole or in part from time to time only for
the purpose of covering over-allotments which may be made in connection with the
offering and distribution of the Initial Shares upon notice by the
Representatives to the Company setting forth the number of Option Shares as to
which the several Underwriters are then exercising the option and the time and
date of payment and delivery for such Option Shares. Any such time and date of
delivery (a "Date of Delivery") shall be determined by the Representatives, but
shall not be later than three full business days (or earlier, without the
consent of the Company, than two full business days) after the exercise of said
option, nor in any event prior to the Closing Time, as hereinafter defined. If
the option is exercised as to all or any portion of the Option Shares, the
Company will sell the Option Shares then being purchased and each of the
Underwriters, acting severally and not jointly, will purchase that proportion of
the total number of Option Shares then being purchased which the number of
Initial Shares set forth in Schedule I opposite the name of such Underwriter
bears to the total number of Initial Shares, subject in each case to such
adjustments among the Underwriters as the Representatives in their sole
discretion shall make to eliminate any sales or purchases of fractional shares.
The Underwriters may from time to time increase or decrease the public offering
price of the Option Shares after the initial public offering to such extent as
the Underwriters may determine.
2. Payment and Delivery:
a) Initial Shares and Warrants. Delivery to the Underwriters of Initial
Shares shall be made in book-entry form through the facilities of the Depository
Trust Company ("DTC") against payment therefor by wire or other immediately
available funds at 9:30 a.m. New York City time, on the third full business day
(fourth, if pricing occurs after 4:30 p.m. New York City time) following the
date hereof (the time and date of the closing being referred to as the "Closing
Time"). The closing shall take place at the offices of Lord, Bissell & Brook,
000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, or such other place as the
Company and the Representatives may agree. A warrant for the purchase of 300,000
shares of Common Stock, in a form previously agreed to by the Company and FBR,
shall be delivered to FBR at the closing.
b) Option Shares. Delivery to the Underwriters of any Option Shares to
be purchased by the several Underwriters shall be made in book-entry form
through the facilities of DTC against payment therefor by wire or other
immediately available funds at such time on such date (the "Option Closing
Time"). The option closing shall take place at the offices of Lord, Bissell &
Brook, 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, or such other place as
the Company and the Representatives may agree.
c) Manner of Delivery. Unless the Representatives request otherwise,
the Initial Shares shall be delivered in global form and shall be deposited
with, or on behalf of, DTC and registered in the name of DTC's nominee. If at
the request of the Representatives the Initial Shares or the Option Shares are
delivered in definitive form, certificates for such Shares shall be registered
in such names and in such denominations as the Representatives shall request
upon at least 48 hours prior notice to the Company preceding the Closing Time or
the Option Closing Time, as the case may be. Such
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certificates shall be made available to the Representatives for inspection and
packaging not later than at least 24 hours prior to the Closing Time or the
Option Closing Time, as the case may be.
3. Representations and Warranties of the Company: The Company
represents and warrants to the Underwriters that:
a) the Company has an authorized and outstanding capitalization as set
forth in the Prospectus under the caption "Capitalization;" the outstanding
shares of capital stock of the Company and its Subsidiaries have been duly and
validly authorized and issued and are fully paid and non-assessable, and all of
the outstanding shares of capital stock of the Subsidiaries are directly or
indirectly owned of record and beneficially by the Company; except as disclosed
in the Prospectus, there are no outstanding (i) securities or obligations of the
Company or any of its Subsidiaries convertible into or exchangeable for any
capital stock of the Company or any such Subsidiary, (ii) warrants, rights or
options to subscribe for or purchase from the Company or any such Subsidiary any
such capital stock or any such convertible or exchangeable securities or
obligations, or (iii) obligations of the Company or any such Subsidiary to issue
any shares of capital stock, any such convertible or exchangeable securities or
obligation, or any such warrants, rights or options;
b) the Company and the Company's Subsidiaries (all of which are named
in an exhibit to the Registration Statement) each has been duly incorporated and
is validly existing as a corporation in good standing under the laws of its
respective jurisdiction of incorporation with full corporate power and authority
to own its respective properties and to conduct its respective business as
described in the Registration Statement and Prospectus and, in the case of the
Company, to execute and deliver this Agreement and to consummate the
transactions contemplated hereby;
c) the Company and each of its Subsidiaries is duly qualified or
licensed by each jurisdiction in which it conducts its respective businesses and
in which the failure, individually or in the aggregate, to be so qualified or
licensed could have a material adverse effect on the assets, business,
operations, earnings, prospects, properties or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole; the Company and
each of its Subsidiaries is duly qualified, and is in good standing, in each
jurisdiction in which it owns or leases real property or maintains an office and
in which such qualification is necessary, except where the failure to be so
qualified and in good standing would not have a material adverse effect on the
assets, business, operations, earnings, prospects, properties or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole;
each Subsidiary of the Company engaged in the insurance business holds such
licenses, certificates, permits and other authorizations from governmental
authorities necessary for qualification as an insurer in each jurisdiction in
which the regular conduct of its business requires such qualification and
necessary to carry on their businesses as presently conducted, except where the
failure to so qualify would not have a material adverse effect on the assets,
business, operations, earnings, prospects, properties or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole; each such
license, certificate, permit,
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consent, order, approval and authorization is valid and in full force and
effect; neither the Company nor any its Subsidiaries have received any notice of
proceedings related to revocation or modification of any such licenses,
certificates, permits, consents, orders, approvals or authorizations; except as
disclosed in the Prospectus, the authority of each Subsidiary of the Company
engaged in the insurance business to write the classes and lines of insurance
authorized by such licenses, certificates, permits and other authorizations
material to the Company and its Subsidiaries taken as a whole and described in
the Prospectus is unrestricted and neither the Company nor any of its
Subsidiaries is a party to any agreement, formal or informal, with any
regulatory official or other person limiting the ability of any Subsidiary of
the Company engaged in the insurance business from making full use of the
licenses, certificates, permits and other authorizations issued to it; except as
disclosed in the Prospectus, no Subsidiary is prohibited or restricted, directly
or indirectly, from paying dividends to the Company, or from making any other
distribution with respect to such Subsidiary's capital stock or from repaying to
the Company or any other Subsidiary any amounts which may from time to time
become due under any loans or advances to such Subsidiary from the Company or
such other Subsidiary; other than as disclosed in the Prospectus, the Company
does not own, directly or indirectly, any capital stock or other equity
securities of any other corporation or any ownership interest in any
partnership, joint venture or other association;
d) the Company and each of its Subsidiaries is in compliance in all
material respects with all applicable laws, rules, regulations, orders, decrees
and judgments, including those relating to transactions with affiliates;
e) neither the Company nor any of its Subsidiaries is in breach of or
in default under (nor has any event occurred which with notice, lapse of time,
or both would constitute a breach of, or default under), its respective articles
of incorporation or charter or by-laws, or in the performance or observance of
any obligation, agreement, covenant or condition contained in any license,
indenture, mortgage, deed of trust, loan or credit agreement or other agreement
or instrument to which the Company or any of its Subsidiaries is a party or by
which any of them or their respective properties is bound, except for such
breaches or defaults which would not have a material adverse effect on the
assets, business, operations, earnings, prospects, properties or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole,
and the execution, delivery and performance of this Agreement, and consummation
of the transactions contemplated hereby will not conflict with, or result in any
breach of, or constitute a default under (nor constitute any event which with
notice, lapse of time, or both would constitute a breach of, or default under),
(i) any provision of the articles of incorporation or charter or bylaws of the
Company or any of its Subsidiaries, or (ii) any provision of any license,
indenture, mortgage, deed of trust, loan or credit agreement or other agreement
or instrument to which the Company or any of its Subsidiaries is a party or by
which any of them or their respective properties may be bound or affected, or
under any federal, state, local or foreign law, regulation or rule or any
decree, judgment or order applicable to the Company or any of its Subsidiaries;
or (iii) result in the creation or imposition of any lien, charge, claim or
encumbrance upon any property or asset of the Company or its Subsidiaries,
except in the case of clause (ii) and (iii) for such breaches,
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defaults, liens, charges, claims or encumbrances which would not have a material
adverse effect on the assets, business, operations, earnings, prospects,
properties or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole;
f) this Agreement has been duly authorized by all necessary corporate
action, executed and delivered by the Company and is a legal, valid and binding
agreement of the Company enforceable in accordance with its terms, except as may
be limited by bankruptcy, insolvency, fraudulent conveyances, reorganization,
moratorium or similar laws affecting creditors' rights generally, and by general
principles equity, and except to the extent that the indemnification and
contribution provisions of Section 9 hereof may be limited by federal or state
securities laws and public policy considerations in respect thereof;
g) no approval, authorization, consent or order of or filing with any
federal, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the Company's execution,
delivery and performance of this Agreement, its consummation of the transaction
contemplated hereby, and its sale and delivery of the Shares, other than (A)
such as have been obtained, or will have been obtained at the Closing Time or
the relevant Date of Delivery, as the case may be, under the Securities Act, (B)
such approvals as have been obtained in connection with the approval of the
listing of the Shares on the New York Stock Exchange and (C) any necessary
qualification under the securities or blue sky laws of the various jurisdictions
in which the Shares are being offered by the Underwriters;
h) the Company and each of its Subsidiaries has all necessary
authorizations, consents and approvals and has made all necessary filings with
appropriate governmental agencies or bodies required under any federal, state or
local law, regulation or rule, and has obtained all necessary authorizations,
consents and approvals from other persons, required in order to conduct their
respective businesses as described in the Prospectus, except to the extent that
any failure to have any such licenses, authorizations, consents or approvals, to
make any such filings or to obtain any such authorizations, consents or
approvals would not, individually or in the aggregate, have a material adverse
effect on the assets, business, operations, earnings, prospects, properties or
condition (financial or otherwise) of the Company and its Subsidiaries taken as
a whole; neither the Company nor any of its Subsidiaries is in violation of, in
default under, or has received any notice regarding a possible violation,
default or revocation of any such license, authorization, consent or approval or
any federal, state, local or foreign law, regulation or rule or any decree,
order or judgment applicable to the Company or any of its Subsidiaries the
effect of which could be material and adverse to the assets, business,
operations, earnings, prospects, properties or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole; and no such
license, authorization, consent or approval contains a materially burdensome
restriction that is not adequately disclosed in the Registration Statement and
the Prospectus;
i) each of the Registration Statement and any Rule 462(b) Registration
Statement has become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement
6
has been issued under the Securities Act and no proceedings for that purpose
have been instituted or are pending or, to the knowledge of the Company, are
threatened by the Commission, and any request on the part of the Commission for
additional information has been complied with;
j) the Preliminary Prospectus and the Registration Statement comply and
the Prospectus and any further amendments or supplements thereto will, when they
have become effective or are filed with the Commission, as the case may be,
comply in all material respects with the requirements of the Securities Act and
the Securities Act Regulations; the Registration Statement did not, and any
amendment thereto will not, in each case as of the applicable effective date,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; and
the Preliminary Prospectus does not, and the Prospectus or any amendment or
supplement thereto will not, as of the applicable filing date and at the Closing
Time and on each Date of Delivery (if any), contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Company
makes no warranty or representation with respect to any statement contained in
the Registration Statement or the Prospectus in reliance upon and in conformity
with the information concerning the Underwriters and furnished in writing by or
on behalf of the Underwriters through the Representatives to the Company
expressly for use in the Registration Statement or the Prospectus (that
information being limited to that described in the last sentence of the first
paragraph of Section 9(c) hereof);
k) the Preliminary Prospectus was and the Prospectus delivered to the
Underwriters for use in connection with this offering will be identical to the
versions of the Preliminary Prospectus and Prospectus created to be transmitted
to the Commission for filing via the Electronic Data Gathering Analysis and
Retrieval System ("XXXXX"), except to the extent permitted by Regulation S-T;
l) all legal or governmental proceedings, contracts or documents of a
character required to be filed as exhibits to the Registration Statement or to
be summarized or described in the Prospectus have been so filed, summarized or
described as required;
m) there is no action, suit, proceeding, inquiry or investigation
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries or any of their respective officers and directors or to
which the properties, assets or rights of any such entity or person are subject,
at law or in equity, before or by any federal, state. local or foreign
governmental or regulatory commission, board, body, authority, arbitral panel or
agency which could result in a judgment, decree, award or order having a
material adverse effect on the assets, business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the Company and
its Subsidiaries taken as a whole;
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n) the financial statements, including the notes thereto, included in
the Registration Statement and the Prospectus present fairly the consolidated
financial position of the entities to which such financial statements relate
(the "Covered Entities") as of the dates indicated and the consolidated results
of operations and changes in financial position and cash flows of the Covered
Entities for the periods specified; such financial statements have been prepared
in conformity with generally accepted accounting principles applied on a
consistent basis during the periods involved and in accordance with Regulation
S-X promulgated by the Commission; the financial statement schedules included in
the Registration Statement and the amounts in the Prospectus under the captions
"Prospectus Summary - Summary Financial Information" and "Selected Financial
Information" fairly present the information shown therein and have been compiled
on a basis consistent with the financial statements included in the Registration
Statement and the Prospectus;
o) PricewaterhouseCoopers LLP, whose reports on the consolidated
financial statements of the Company and its Subsidiaries are filed with the
Commission as part of the Registration Statement and Prospectus, is and was, to
the Company's knowledge, during the periods covered by their reports,
independent public accountants as required by the Securities Act and the
Securities Act Regulations;
p) subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, and except as may be otherwise
stated in the Registration Statement or Prospectus, there has not been (A) any
material adverse change in the assets, business, operations, earnings,
prospects, properties or condition (financial or otherwise), of the Company and
its Subsidiaries taken as a whole, whether or not arising in the ordinary course
of business, (B) any transaction, which is material to the Company and its
Subsidiaries taken as a whole, contemplated or entered into by the Company or
any of its Subsidiaries, (C) any obligation, contingent or otherwise, directly
or indirectly incurred by the Company or any of its Subsidiaries, which is
material to the Company and its Subsidiaries taken as a whole or (D) any
dividend or distribution of any kind declared, paid or made by the Company on
any class of its capital stock;
q) the Shares conform in all material respects to the description
thereof contained in the Registration Statement and the Prospectus;
r) there are no persons with registration or other similar rights to
have any equity securities, including securities which are convertible into or
exchangeable for equity securities, registered pursuant to the Registration
Statement or otherwise registered by the Company under the Securities Act;
s) the Shares have been duly authorized and, when issued and duly
delivered against payment therefor as contemplated by this Agreement, will be
validly issued, fully paid and nonassessable, free and clear of any pledge,
lien, encumbrance, security interest or other claim, and the issuance and sale
of the Shares by the Company is not subject to preemptive or other similar
rights arising by operation of law, under the articles of incorporation or
by-laws of the Company, under any agreement to which the Company or any of its
Subsidiaries is a party or otherwise;
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t) the Company has not taken, and will not take, directly or
indirectly, any action which is designed to or which has constituted or which
might reasonably be expected to cause or result in stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Shares;
u) neither the Company nor any of its affiliates (i) is required to
register as a "broker" or "dealer" in accordance with the provisions of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or the rules
and regulations thereunder, or (ii) directly, or indirectly through one or more
intermediaries, controls or has any other association with (within the meaning
of Article I of the By-laws of the National Association of Securities Dealers,
Inc. (the "NASD")) any member firm of the NASD;
v) except for the "blue sky" compliance, the Company has not relied
upon the Representatives or legal counsel for the Representatives for any legal,
tax or accounting advice in connection with the offering and sale of the Shares;
w) any certificate signed by any officer of the Company or any
Subsidiary delivered to the Representatives or to counsel for the Underwriters
pursuant to or in connection with this Agreement shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby;
x) the form of certificate used to evidence the Common Stock complies
in all material respects with all applicable statutory requirements, with any
applicable requirements of the articles of incorporation and by-laws of the
Company and the requirements of the New York Stock Exchange;
y) the Company and each of its Subsidiaries has good and marketable
title in fee simple to all real property, if any, and good title to all personal
property owned by it, in each case free and clear of all liens, security
interests, pledges, charges, encumbrances, mortgages and defects, except such as
are disclosed in the Prospectus or such as do not materially and adversely
affect the value of such property and do not interfere in any material respect
with the use made or proposed to be made of such property by the Company or the
Subsidiary; and any real property and buildings held under lease by the Company
or any Subsidiary are held under valid, existing and enforceable leases, with
such exceptions as are disclosed in the Prospectus or are not material and do
not interfere in any material respect with the use made or proposed to be made
of such property and buildings by the Company or such Subsidiary;
z) the descriptions in the Registration Statement and the Prospectus of
the contracts, leases and other legal documents therein described present fairly
the information required to be shown, and there are no contracts, leases, or
other documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement which are not described or filed as required;
aa) the Company and each Subsidiary owns, possesses or can acquire on
reasonable terms adequate licenses or other rights to use all patents,
trademarks, service
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marks, trade names, copyrights, software and design licenses, trade secrets,
manufacturing processes, other intangible property rights and know-how
(collectively "Intangibles") necessary to entitle the Company and the
Subsidiaries to conduct their business as described in the Prospectus, and
neither the Company, nor any Subsidiary, has received notice of infringement of
or conflict with (and the Company knows of no such infringement of or conflict
with) asserted rights of others with respect to any Intangibles which could
materially and adversely affect the business, prospects, properties, assets,
results of operations or condition (financial or otherwise) of the Company and
its Subsidiaries taken as a whole;
bb) the Company and each of its Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences;
cc) the Company and each of its Subsidiaries has filed on a timely
basis all necessary federal, state, local and foreign income and franchise tax
returns required to be filed through the date hereof and has paid all taxes
shown as due thereon; and no tax deficiency has been asserted against any such
entity, nor does any such entity know of any tax deficiency which is likely to
be asserted against any such entity which if determined adversely to any such
entity, could materially adversely affect the business, prospects, properties,
assets, results of operations or condition (financial or otherwise) of any such
entity, respectively; and all tax liabilities are adequately provided for on the
respective books of such entity;
dd) the Company and each of its Subsidiaries maintains insurance
(issued by insurers of recognized financial responsibility) of the types and in
the amounts generally deemed adequate for their respective businesses and
consistent with insurance coverage maintained by similar companies in similar
businesses, including, but not limited to, insurance covering real and personal
property owned or leased by the Company and its Subsidiaries against theft,
damage, destruction, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect;
ee) to its knowledge, neither the Company nor any of its Subsidiaries
has violated, or received notice of any violation with respect to, any
applicable environmental, safety or similar law applicable to the business of
the Company or any of its Subsidiaries, nor any federal or state law relating to
discrimination in the hiring, promotion or pay of employees, nor any applicable
federal or state wages and hours law, nor any provisions of the Employee
Retirement Income Security Act or the rules and regulations promulgated
thereunder, nor any state law precluding the denial of credit due to the
neighborhood in which a property is situated, the violation of any of which
could have a material adverse effect on the business, operations, earnings,
prospects, properties
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or condition (financial or otherwise) of the Company and its Subsidiaries, taken
as a whole;
ff) neither the Company nor any of its Subsidiaries nor any officer or
director purporting to act on behalf of the Company or any of its Subsidiaries
has at any time (i) made any unlawful contributions to any candidate for
political office, or failed to disclose fully any such contributions, in
violation of law, (ii) made any payment to any state, federal or foreign
governmental officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or allowed by applicable law,
(iii) made any unlawful payment outside the ordinary course of business to any
investment officer or loan broker or person charged with similar duties of any
entity to which the Company or any of its Subsidiaries sells or from which the
Company or any of its Subsidiaries buys loans or servicing arrangements for the
purpose of influencing such agent, officer, broker or person to buy loans or
servicing arrangements from or sell loans to the Company or any of its
Subsidiaries, or (iv) engaged in any transactions, maintained any bank account
or used any corporate funds except for transactions, bank accounts and funds
which have been and are reflected in the normally maintained books and records
of the Company and its Subsidiaries;
gg) except as otherwise disclosed in the Prospectus, there are no
material outstanding loans or advances or material guarantees of indebtedness by
the Company or any of its Subsidiaries to or for the benefit of any of the
officers or directors of the Company or any of its Subsidiaries or any of the
members of the families of any of them;
hh) all securities issued by the Company, any of its Subsidiaries or
any trusts established by the Company or any Subsidiary, have been issued and
sold in compliance in all material respects with (i) all applicable federal and
state securities laws, (ii) the laws of the applicable jurisdiction of
incorporation of the issuing entity and, (iii) to the extent applicable to the
issuing entity, the requirements of the New York Stock Exchange;
ii) in connection with this offering, the Company has not offered and
will not offer its Common Stock or any other securities convertible into or
exchangeable or exercisable for Common stock in a manner in violation of the
Securities Act. The Company has not distributed and will not distribute any
Prospectus or other offering material in connection with the offer and sale of
the Shares;
jj) the Company has complied and will comply with all the provisions of
Florida Statutes, Section 517.075 (Chapter 92-198, Laws of Florida). Neither the
Company nor any of its Subsidiaries or affiliates does business with the
government of Cuba or with any person or affiliate located in Cuba;
kk) the Company has not incurred any liability for any finder's fees or
similar payments in connection with the transactions herein contemplated other
than pursuant to this Agreement;
11
ll) neither the Company nor any of the Subsidiaries is and, after
giving effect to the offering and sale of the Shares, will be an "investment
company" or an entity "controlled" by and "investment company", as such terms
are defined in the Investment Company Act of 1940, as amended (the "Investment
Company Act");
mm) there are no existing or, to the knowledge of the Company,
threatened labor disputes with the employees of the Company or any of its
Subsidiaries which are likely to have individually or in the aggregate a
material adverse effect on assets, business, operations, earnings, prospects,
properties or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole; and
4. Certain Covenants: The Company hereby agrees with each Underwriter:
a) to furnish such information as may be required and otherwise to
cooperate in qualifying the Shares for offering and sale under the securities or
blue sky laws of such states as the Representatives may designate and to
maintain such qualifications in effect as long as required for the distribution
of the Shares, provided that the Company shall not be required to qualify as a
foreign corporation or to consent to the service of process under the laws of
any such state (except service of process with respect to the offering and sale
of the Shares);
b) to prepare the Prospectus in a form approved by the Underwriters and
file such Prospectus with the Commission pursuant to Rule 424(b) within the time
period prescribed by the Securities Act and the Securities Act Regulations, and
to furnish promptly to the Underwriters as many copies of the Prospectus (or of
the Prospectus as amended or supplemented if the Company shall have made any
amendments or supplements thereto after the effective date of the Registration
Statement) as the Underwriters may reasonably request for the purposes
contemplated by the Securities Act Regulations, which Prospectus and any
amendments or supplements thereto furnished to the Underwriters will be
identical to the version created to be transmitted to the Commission for filing
via XXXXX, except to the extent permitted by Regulation S-T;
c) to advise the Representatives promptly and (if requested by the
Representative) to confirm such advice in writing, when the Registration
Statement has become effective and when any post-effective amendment thereto
becomes effective under the Securities Act Regulations;
d) to advise the Representatives immediately, and if requested by the
Representatives, to confirm such advice in writing, of (i) the receipt of any
comments from, or any request by, the Commission for amendments or supplements
to the Registration Statement or Prospectus or for additional information with
respect thereto, or (ii) the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any Preliminary Prospectus or the
Prospectus, or of the suspension of the qualification of the Shares for offering
or sale in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes and, if the Commission or any other
government agency or authority should issue any such order, to make every
reasonable effort to
12
obtain the lifting or removal of such order as soon as possible; to advise the
Representatives promptly of any proposal to amend or supplement the Registration
Statement or Prospectus and to file no such amendment or supplement to which the
Representatives shall reasonably object in writing;
e) to furnish to the Representatives for a period of five years from
the date of this Agreement (i) as soon as available, copies of all annual,
quarterly and current reports or other communications supplied to holders of
shares of Common Stock, (ii) as soon as practicable after the filing thereof,
copies of all reports filed by the Company with the Commission, the NYSE or any
securities exchange and (iii) such other information as the Representatives may
reasonably request regarding the Company and its Subsidiaries; provided,
however, that any information that is deemed by the Company to be confidential
will be subject to the execution and delivery of non-disclosure agreements
acceptable to the Company.
f) to advise the Representatives promptly of the happening of any event
known to the Company within the time during which a Prospectus relating to the
Shares is required to be delivered under the Securities Act Regulations which,
in the judgment of the Company, would require the making of any change in the
Prospectus then being used so that the Prospectus would not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and, during such time,
to prepare and furnish, at the Company's expense, to the Representatives
promptly such amendments or Supplements to such Prospectus as may be necessary
to reflect any such change and to furnish to the Representatives a copy of such
proposed amendment or supplement before filing any such amendment or supplement
with the Commission;
g) to furnish promptly to each Representative a signed copy of the
Registration Statement, as initially filed with the Commission, and of all
amendments or supplements thereto (including all exhibits filed therewith or
incorporated by reference therein) and such number of conformed copies of the
foregoing as the Representative may reasonably request;
h) to furnish to each Representative, not less than two business days
before filing with the Commission subsequent to the effective date of the
Prospectus and during any period of time in which a prospectus relating to the
Shares is required to be delivered under the Securities Act Regulations, a copy
of any document proposed to be filed with the Commission pursuant to Section 13,
14, or 15(d) of the Exchange Act;
i) to apply the net proceeds of the sale of the Shares in accordance in
all material respects with its statements under the caption "Use of Proceeds" in
the Prospectus;
j) to make generally available to its security holders as soon as
practicable, but in any event not later than the end of the fiscal quarter first
occurring after the first anniversary of the effective date of the Registration
Statement an earnings statement
13
complying with the provisions of Section 11(a) of the Securities Act (in form,
at the option of the Company, complying with the provisions of Rule 158 of the
Securities Act Regulations,) covering a period of 12 months beginning after the
effective date of the Registration Statement;
k) to use its best efforts to effect and maintain the listing of the
Shares on the New York Stock Exchange and to file with the New York Stock
Exchange all documents and notices required by the New York Stock Exchange of
companies that have securities that are traded on and quotations for which are
reported by the New York Stock Exchange;
l) to engage and maintain, at its expense, a registrar and transfer
agent for the Shares;
m) to refrain during a period of 180 days from the date of the
Prospectus, without the prior written consent of the Representative, from (i)
offering, pledging, selling, contracting to sell, selling any option or contract
to purchase, purchasing any option or contract to sell, granting any option for
the sale of, or otherwise disposing of or transferring, directly or indirectly,
any share of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, or filing any registration statement under the
Securities Act with respect to any of the foregoing, or (ii) entering into any
swap or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to (A)
the Shares to be sold hereunder, or (B) any shares of Common Stock issued by the
Company upon the exercise of an option outstanding on the date hereof and
referred to in the Prospectus;
n) to not itself and to use its best efforts to cause its officers,
directors and affiliates not to, (i) take, directly or indirectly prior to
termination of the underwriting syndicate contemplated by this Agreement, any
action designed to stabilize or manipulate the price of any security of the
Company, or which may cause or result in, or which might in the future
reasonably be expected to cause or result in, the stabilization or manipulation
of the price of any security of the Company, to facilitate the sale or resale of
any of the Shares, (ii) sell, bid for, purchase or pay anyone any compensation
for soliciting purchases of the Shares or (iii) pay or agree to pay to any
person any compensation for soliciting any order to purchase any other
securities of the Company;
o) that the provisions of Sections 2, 3, 4, 5, 6 and 9 through 19 of
the letter agreement dated March 16, 2002 between the Company and the
Representatives shall survive the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby; and
p) if at any time during the 30-day period after the Registration
Statement becomes effective, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in the reasonable opinion
of the Representatives the
14
market price of the Common Stock has been or is likely to be materially affected
(regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus) and after written notice from the
Representatives advising the Company to the effect set forth above, to forthwith
prepare, consult with the Representatives concerning the substance of, and
disseminate a press release or other public statement, reasonably satisfactory
to the Representatives, responding to or commenting on such rumor, publication
or event.
5. Payment of Expenses:
a) The Company agrees to pay all reasonable costs and expenses incident
to the performance of its obligations under this Agreement, whether or not the
transactions contemplated hereunder are consummated or this Agreement is
terminated, including expenses, fees and taxes in connection with (i) the
preparation and filing of the Registration Statement, each Preliminary
Prospectus, the Prospectus, and any amendments or supplements thereto, and the
printing and furnishing of copies of each thereof to the Underwriters and to
dealers (including costs of mailing and shipment), (ii) the preparation,
issuance and delivery of the certificates for the Shares to the Underwriters,
including any stock or other transfer taxes or duties payable upon the sale of
the Shares to the Underwriters, (iii) the printing of this Agreement and any
dealer agreements and furnishing of copies of each to the Underwriters and to
dealers (including costs of mailing and shipment), (iv) the qualification of the
Shares for offering and sale under state laws that the Company and the
Representatives have mutually agreed are appropriate and the determination of
their eligibility for investment under state law as aforesaid (including the
legal fees and filing fees and other disbursements of counsel for the
Underwriters) and the printing and furnishing of copies of any blue sky surveys
or legal investment surveys to the Underwriters and to dealers, (v) filing for
review of the public offering of the Shares by the NASD (including the legal
fees and filing fees and other disbursements of counsel for the Underwriters
relating thereto), (vi) the fees and expenses of any transfer agent or registrar
for the Shares and miscellaneous expenses referred to in the Registration
Statement, (vii) the fees and expenses incurred in connection with the inclusion
of the Shares on the New York Stock Exchange, (viii) making road show
presentations with respect to the offering of the Shares, (ix) preparing and
distributing bound volumes of transaction documents for the Representatives and
its legal counsel and (x) the performance of the Company's other obligations
hereunder. Upon the request of the Representative, the Company will provide
funds in advance for filing fees.
b) The Company agrees to reimburse the Representatives for its
reasonable out-of-pocket expenses in connection with the performance of its
activities under this Agreement, including, but not limited to, costs such as
printing, facsimile, courier service, direct computer expenses, accommodations
and travel and the fees and expenses of the Underwriters' outside legal counsel.
6. Conditions of the Underwriters' Obligations: The obligations of the
Underwriters hereunder to purchase Shares at the Closing Time or on the Date of
Delivery, as applicable, are subject to the accuracy of the representations and
warranties
15
on the part of the Company in all material respects on the date hereof and at
the Closing Time and on each Date of Delivery, as applicable, the performance by
the Company of its obligations hereunder in all material respects and to the
satisfaction of the following further conditions at the Closing Time or on the
Date of Delivery, as applicable:
a) The Company shall furnish to the Underwriters at the Closing Time
and on each Date of Delivery an opinion of Xxxxxxx X. Xxxxxxxx, General Counsel
for the Company, addressed to the Underwriters and dated the Closing Time and
each Date of Delivery and in form and substance satisfactory to Lord, Bissell &
Brook, counsel for the Underwriters, stating that:
(i) the Company has an authorized and outstanding capitalization as set
forth in the Prospectus under the caption "Capitalization"; the outstanding
shares of capital stock of the Company and its Subsidiaries have been duly and
validly authorized and issued and are fully paid and non-assessable, and all of
the outstanding shares of capital stock of the Subsidiaries are directly or
indirectly owned of record and beneficially by the Company; except as disclosed
in the Prospectus, there are no outstanding (i) securities or obligations of the
Company or any of its Subsidiaries convertible into or exchangeable for any
capital stock of the Company or any such Subsidiary, (ii) warrants, rights or
options to subscribe for or purchase from the Company or any such Subsidiary any
such capital stock or any such convertible or exchangeable securities or
obligations, or (iii) obligations of the Company or any such Subsidiary to issue
any shares of capital stock, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or options;
(ii) the Company and its Subsidiaries (all of which are named in an
exhibit to the Registration Statement) each has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
respective jurisdiction of incorporation with full corporate power and authority
to own its respective properties and to conduct its respective business as
described in the Registration Statement and Prospectus and, in the case of the
Company, to execute and deliver this Agreement and to consummate the
transactions described in this Agreement;
(iii) the Company and its Subsidiaries are duly qualified or licensed
by each jurisdiction in which they conduct their respective businesses and in
which the failure, individually or in the aggregate, to be so licensed could
have a material adverse effect on the assets, business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the Company and
its Subsidiaries taken as a whole, and the Company and its Subsidiaries are duly
qualified, and are in good standing, in each jurisdiction in which they own or
lease real property or maintain an office and in which such qualification is
necessary except where the failure to be so qualified and in good standing would
not have a material adverse effect on the assets, business, operations,
earnings, prospects, properties or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole; except as disclosed in the
Prospectus, no Subsidiary is prohibited or restricted, directly or indirectly,
from paying dividends to the Company, or from making any other distribution with
respect to such Subsidiary's capital stock or from repaying to the Company or
any other Subsidiary, any amounts which may from time to time become
16
due under any loans or advances to such Subsidiary from the Company or such
other Subsidiary; other than as disclosed in the Prospectus, the Company does
not own, directly or indirectly, any capital stock or other equity securities of
any other corporation or any ownership interest in any partnership, joint
venture or other association;
(iv) to such counsel's knowledge, the Company and its Subsidiaries are
in compliance in all material respects with all applicable laws, orders, rules,
regulations and orders, including those relating to transactions with
affiliates;
(v) to such counsel's knowledge, neither the Company nor any of its
Subsidiaries is in breach of, or in default under (nor has any event occurred
which with notice, lapse of time, or both would constitute a breach of, or
default under), any license, indenture, mortgage, deed of trust, loan or credit
agreement or any other agreement or instrument to which the Company or any of
its Subsidiaries is a party or by which any of them or their respective
properties may be bound or affected or under any law, regulation or rule or any
decree, judgment or order applicable to the Company or any of its Subsidiaries,
except such breaches or defaults which would not have a material adverse effect
on the assets, business, operations, earnings, prospects, properties or
condition (financial or otherwise) of the Company and its Subsidiaries taken as
a whole;
(vi) the execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated by
this Agreement do not and will not (A) conflict with, or result in any breach
of, or constitute a default under (nor constitute any event which with notice,
lapse of time, or both would constitute a breach of or default under), (i) any
provisions of the articles of incorporation, charter or by-laws of the Company
or any Subsidiary, (ii) any provision of any material license, indenture,
mortgage, deed of trust, loan, credit or other agreement or instrument known by
such counsel and to which the Company or any Subsidiary is a party or by which
any of them or their respective properties or assets may be bound or affected,
(iii) any law or regulation binding upon or applicable to the Company or any
Subsidiary or any of their respective properties or assets, or (iv) any decree,
judgment or order known to such counsel to be applicable to the Company or any
Subsidiary; or (B) result in the creation or imposition of any lien, charge,
claim or encumbrance upon any property or assets of the Company or its
Subsidiaries;
(vii) no approval, authorization, consent or order of or filing with
any federal or state governmental or regulatory commission, board, body,
authority or agency is required in connection with the execution, delivery and
performance of this Agreement, the consummation of the transaction contemplated
hereby, and the sale and delivery of the Shares by the Company as contemplated
hereby, other than such as have been obtained or made under the Securities Act
and the Securities Act Regulations, and except that such counsel need express no
opinion as to any necessary qualification under the state securities or blue sky
laws of the various jurisdictions in which the Shares are being offered by the
Underwriters or any approval of the underwriting terms and arrangements by the
National Association of Securities Dealers, Inc.;
(viii) to such counsel's knowledge, each of the Company and its
Subsidiaries
17
has all necessary licenses, authorizations, consents and approvals and has made
all necessary filings required under any federal, state or local law, regulation
or rule, and has obtained all necessary authorizations, consents and approvals
from other persons, required to conduct their respective businesses, as
described in the Prospectus, except to the extent that any failure to have any
such authorizations, consents or approvals would not, individually or in the
aggregate, have a material adverse effect on the assets, business, operations,
earnings, prospects, properties or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole; to such counsel's knowledge
neither the Company nor any Subsidiaries is in violation of, in default under,
or has received any notice regarding a possible violation, default or revocation
of any such license, authorization, consent or approval or any federal, state,
local or foreign law, regulation or decree, order or judgment applicable to the
Company or any of its Subsidiaries, except any such violation, default or
revocation which would not, individually or in the aggregate, have a material
adverse effect on the assets, business, operations, earnings, prospects,
properties or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole; and
(ix) the statements under the captions "Capitalization" and
"Regulation" in the Registration Statement and the Prospectus, insofar as such
statements constitute a summary of the legal matters referred to therein,
constitute accurate summaries thereof in all material respects.
b) The Company shall furnish to the Underwriters at the Closing Time
and on each Date of Delivery an opinion by Xxxxxx & Xxxxxx Attorneys, P.C.,
counsel for the Company, addressed to the Underwriters and dated the Closing
Time and each Date of Delivery and in form and substance satisfactory to Lord,
Bissell & Brook, counsel for the Underwriters, stating that:
(i) the Shares have been duly authorized and when the Shares have been
issued and duly delivered against payment therefor as contemplated by this
Agreement, the Shares will be validly issued, fully paid and nonassessable, and
the Underwriters will acquire the good and marketable title to the Shares, free
and clear of any pledge, lien, encumbrance, security interest, or other claim;
(ii) the issuance and sale of the Shares by the Company is not subject
to preemptive or other similar rights arising by operation of law, under the
articles of incorporation, charter or by-laws of the Company, or under any
agreement known to such counsel to which the Company or any of its Subsidiaries
is a party or, to such counsel's knowledge, otherwise;
(iii) this Agreement has been duly authorized, executed and delivered
by the Company and is a legal, valid and binding agreement of the Company
enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, fraudulent conveyances, reorganization, moratorium or
similar laws affecting creditors' rights generally, and by general principles of
equity, and except that enforceability of the indemnification and contribution
provisions set forth in Section 9 of this Agreement may be limited by the
federal or state securities laws of the United States or public policy
18
underlying such laws;
(iv) no approval, authorization, consent or order of or filing with any
federal or state governmental or regulatory commission, board, body, authority
or agency is required in connection with the execution, delivery and performance
of this Agreement, the consummation of the transaction contemplated hereby, and
the sale and delivery of the Shares by the Company as contemplated hereby, other
than such as have been obtained or made under the Securities Act and the
Securities Act Regulations, and except that such counsel need express no opinion
as to any necessary qualification under the state securities or blue sky laws of
the various jurisdictions in which the Shares are being offered by the
Underwriters or any approval of the underwriting terms and arrangements by the
National Association of Securities Dealers, Inc.;
(v) the Shares conform in all material respects to the descriptions
thereof contained in the Registration Statement and Prospectus;
(vi) the form of certificate used to evidence the Common Stock complies
in all material respects with all applicable statutory requirements, with any
applicable requirements of the articles of incorporation and by-laws of the
Company and the requirements of the New York Stock Exchange;
(vii) the Registration Statement has become effective under the
Securities Act and no stop order suspending the effectiveness of the
Registration Statement has been issued and, to such counsel's knowledge, no
proceedings with respect thereto have been commenced or threatened;
(viii) as of the effective date of the Registration Statement, the
Registration Statement and the Prospectus (except as to the financial statements
and other financial and statistical data contained therein, as to which such
counsel need express no opinion) complied as to form in all material respects
with the requirements of the Securities Act and the Securities Act Regulations;
(ix) the statements under the captions "Description of Capital Stock"
in the Registration Statement and the Prospectus, insofar as such statements
constitute a summary of the legal matters referred to therein, constitute
accurate summaries thereof in all material respects;
(x) to such counsel's knowledge, there are no actions, suits or
proceedings, inquiries, or investigations pending or threatened against the
Company or any of its Subsidiaries or any of their respective officers and
directors or to which the properties, assets or rights of any such entity are
subject, at law or in equity, before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority, arbitral panel or
agency which are required to be described in the Prospectus but are not so
described; and
(xi) to such counsel's knowledge, there are no contracts or documents
of a character which are required to be filed as exhibits to the Registration
Statement or required to be described or summarized in the Prospectus which have
not been so filed,
19
summarized or described, and all such summaries and descriptions, in all
material respects, fairly and accurately set forth the material provisions of
such contracts and documents.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company, independent
public accountants of the Company, and representatives of the Representatives,
at which the contents of the Registration Statement and Prospectus were
discussed and, although such counsel is not passing upon and does not assume
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or Prospectus (except as and to the
extent stated in subparagraphs (xii), (xvi), and (xiii) above), they have no
reason to believe that the Registration Statement, the Preliminary Prospectus or
the Prospectus, as of their respective effective or issue date, and as of the
date of such counsel's opinion, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being understood
that, in each case, such counsel need express no view with respect to the
financial statements and other financial and statistical data included in the
Registration Statement, Preliminary Prospectus or Prospectus).
c) The Representatives shall have received from PricewaterhouseCoopers
LLP, letters dated, respectively, as of the date of this Agreement, the Closing
Time and each Date of Delivery, as the case may be, addressed to the
Representatives, in form and substance satisfactory to the Representatives, to
the effect set forth in Schedule II.
d) The Representatives shall have received at the Closing Time and on
each Date of Delivery the favorable opinion of Lord, Bissell & Brook, dated the
Closing Time or such Date of Delivery, addressed to the Representatives and in
form and substance satisfactory to the Representatives.
e) No amendment or supplement to the Registration Statement or
Prospectus shall have been filed to which the Underwriters shall have objected
in writing.
f) Prior to the Closing Time and each Date of Delivery (i) no stop
order suspending the effectiveness of the Registration Statement or any order
preventing or suspending the use of any Preliminary Prospectus or Prospectus has
been issued, and no proceedings for such purpose shall have been initiated or
threatened, by the Commission, and no suspension of the qualification of the
Shares for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes, has occurred; and (ii)
the Registration Statement and the Prospectus shall not contain an untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
g) Between the time of execution of this Agreement and the Closing Time
or the relevant Date of Delivery (i) no material and unfavorable change in the
assets, business, operations, earnings, prospects, properties or condition
(financial or otherwise)
20
of the Company and its Subsidiaries taken as a whole shall occur or become known
(whether or not arising in the ordinary course of business), and (ii) no
transaction which is material and unfavorable to the Company shall have been
entered into by the Company or any of its Subsidiaries.
h) At the Closing Time, the Shares shall have been approved for
inclusion on the New York Stock Exchange.
i) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
j) The Representatives shall have received lock-up agreements from each
executive officer and director of the Company, in the form of Exhibit A attached
hereto, and such letter agreements shall be in full force and effect.
k) The Company will, at the Closing Time and on each Date of Delivery,
deliver to the Underwriters a certificate of its Chairman and Chief Executive
Officer, its President and Chief Operating Officer, and its Executive Vice
President and Chief Financial Officer, to the effect that, to each of such
officer's knowledge, the representations and warranties of the Company set forth
in this Agreement are true and correct and the conditions set forth in
paragraphs (f), (g), and (i) have been satisfied, in each case as of such date.
l) The Company shall have furnished to the Underwriters such other
documents and certificates as to the accuracy and completeness of any statement
in the Registration Statement and the Prospectus, the representations,
warranties and statement of the Company contained herein, and the performance by
the Company of its covenants contained herein, and the fulfillment of any
conditions contained herein, as of the Closing Time or any Date of Delivery as
the Underwriters may reasonably request.
m) The Company shall have performed such of its obligations under this
Agreement as are to be performed by the terms hereof at or before the Closing
Time or the relevant Date of Delivery.
7. Termination: The obligations of the several Underwriters hereunder
shall be subject to termination in the absolute discretion of the
Representatives, at any time prior to the Closing Time or any Date of Delivery,
(i) if any of the conditions specified in Section 6 shall not have been
fulfilled when and as required by this Agreement to be fulfilled, or (ii) if
there has been since the respective dates as of which information is given in
the Registration Statement, any material adverse change, in or affecting the
assets, business, operations, earnings, prospects, properties, condition
(financial or otherwise) or management of the Company or any Subsidiary, whether
or not arising in the ordinary course of business, or (iii) if there has
occurred outbreak or escalation of hostilities, terrorist acts or other national
or international calamity or crisis or change in economic, political or other
conditions the effect of which on the financial markets of the United States is
such as to make it, in the judgment of the Representatives, impracticable to
market the Shares or enforce contracts for the sale of the Shares, or (iv) if
trading in
21
any securities of the Company has been suspended by the Commission or by the New
York Stock Exchange, or if trading generally on the New York Stock Exchange or
in the Nasdaq over-the-counter market has been suspended (including automatic
halt in trading pursuant to market-decline triggers other than those in which
solely program trading is temporarily halted), or limitations on prices for
trading (other than limitations on hours or numbers of days of trading) have
been fixed, or maximum ranges for prices for securities have been required, by
such exchange or the NASD or Nasdaq or by order of the Commission or any other
governmental authority, or (v) any federal or state statute, regulation, rule or
order of any court or other governmental authority has been enacted, published,
decreed or otherwise promulgated which in the reasonable opinion of the
Representatives materially adversely affects or will materially adversely affect
the business or operations of the Company, or (vi) any action has been taken by
any federal, state or local government or agency in respect of its monetary or
fiscal affairs which in the reasonable opinion of the Representatives has a
material adverse effect on the securities markets in the United States.
If the Representatives elect to terminate this Agreement as provided in
this Section 7, the Company and the Underwriters shall be notified promptly by
telephone, promptly confirmed by facsimile.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply in all material respects with any of the terms of this
Agreement, the Company shall not be under any obligation or liability under this
Agreement (except to the extent provided in Sections 5 and 9 hereof) and the
Underwriters shall be under no obligation or liability to the Company under this
Agreement (except to the extent provided in Section 9 hereof) or to one another
hereunder.
8. Increase in Underwriters' Commitments: If any Underwriter shall
default at the Closing Time or on a Date of Delivery in its obligation to take
up and pay for the Shares to be purchased by it under this Agreement, on such
date the Representatives shall have the right, within 36 hours after such
default, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Shares which such Underwriter shall have agreed but failed to take up and
pay for (the "Defaulted Shares"). Absent the completion of such arrangements
within such 36 hour period, (i) if the total number of Defaulted Shares does not
exceed 10% of the total number of Shares to be purchased on such date, each
non-defaulting Underwriter shall take up and pay for (in addition to the number
of Shares which it is otherwise obligated to purchase on such date pursuant to
this Agreement) the portion of the total number of Shares agreed to be purchased
by the defaulting Underwriter on such date in the proportion that its
underwriting obligations hereunder bears to the underwriting obligations of all
non-defaulting Underwriters; and (ii) if the total number of Defaulted Shares
exceeds 10% of such total, the Representatives may terminate this Agreement by
notice to the Company, without liability to any non-defaulting Underwriter.
22
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that it will
not sell any Shares hereunder on such date unless all of the Shares to be
purchased on such date are purchased on such date by the Underwriters (or by
substituted Underwriters selected by the Representatives with the approval of
the Company or selected by the Company with the approval of the
Representatives).
If a new Underwriter or Underwriters are substituted for a defaulting
Underwriter in accordance with the foregoing provision, the Company or the
non-defaulting Underwriters shall have the right to postpone the Closing Time or
the relevant Date of Delivery for a period not exceeding five business days in
order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
The term Underwriter as used in this Agreement shall refer to
and include any Underwriter substituted under this Section 8 with the like
effect as, if such substituted Underwriter had originally been named in this
Agreement.
9. Indemnity and Contribution by the Company and the Underwriters:
a) The Company agrees to indemnify, defend and hold harmless each
Underwriter and any person who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any loss, expense, liability, damage or claim (including the reasonable
cost of investigation) which, jointly or severally, any such Underwriter or
controlling person may incur under the Securities Act, the Exchange Act or
otherwise, insofar as such loss, expense, liability, damage or claim arises out
of or is based upon (A) any breach of any representation, warranty or covenant
of the Company contained herein, (B) any failure on the part of the Company to
comply with any applicable law, rule or regulation relating to the offering of
securities being made pursuant to the Prospectus, or (C) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof by the Company) or in a Prospectus (the term Prospectus for
the purpose of this Section 9 being deemed to include any Preliminary
Prospectus, the Prospectus and the Prospectus as amended or supplemented by the
Company), or arises out of or is based upon any omission or alleged omission to
state a material fact required to be stated in either such Registration
Statement or Prospectus or necessary to make the statements made therein, in the
light of the circumstances under which they were made, not misleading, except
insofar as any such loss, expense, liability, damage or claim arises out of or
is based upon any untrue statement or alleged untrue statement or omission or
alleged omission of a material fact contained in and in conformity with
information furnished in writing by the Underwriters through the Representatives
to the Company expressly for use in such Registration Statement or such
Prospectus, provided, however, that the indemnity agreement contained in this
subsection (a)(i) with respect to the Preliminary Prospectus or the Prospectus
shall not inure to the benefit of an Underwriter (or to the benefit of any
person controlling such Underwriter) with respect to any person asserting any
such loss, expense, liability, damage or claim which is the subject thereof if
the Prospectus or any
23
supplement thereto prepared with the consent of the Representatives and
furnished to the Underwriters prior to the Closing Time corrected any such
alleged untrue statement or omission and if such Underwriter failed to send or
give a copy of the Prospectus or supplement thereto to such person at or prior
to the written confirmation of the sale of Shares to such person, unless such
failure resulted from noncompliance by the Company with Section 4(b) above).
b) If any action is brought against an Underwriter or controlling
person in respect of which indemnity may be sought against the Company pursuant
to subsection (a) above, such Underwriter shall promptly notify the Company in
writing of the institution of such action, and the Company shall assume the
defense of such action, including the employment of counsel and payment of
expenses, provided, however, that any failure or delay to so notify the Company
will not relieve the Company of any obligation hereunder, except to the extent
that its ability to defend is actually impaired by such failure or delay. Such
Underwriter or controlling person shall have the right to employ its or their
own counsel in any such case, but the fees and expenses of such counsel shall be
at the expense of such Underwriter or such controlling person unless the
employment of such counsel shall have been authorized in writing by the Company
in connection with the defense of such action, or the Company shall not have
employed counsel to have charge of the defense of such action within a
reasonable time or such indemnified party or parties shall have reasonably
concluded (based on the advice of counsel) that there may be defenses available
to it or them which are different from or additional to those available to the
Company (in which case the Company shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses shall be borne by the Company and paid as
incurred (it being understood, however, that the Company shall not be liable for
the expenses of more than one separate firm of attorneys for the Underwriters or
controlling persons in any one action or series of related actions in the same
jurisdiction (other than local counsel in any such jurisdiction) representing
the indemnified parties who are parties to such action). Anything in this
paragraph to the contrary notwithstanding, the Company shall not be liable for
any settlement of any such claim or action effected without the its written
consent.
c) Each Underwriter agrees, severally and not jointly, to indemnify,
defend and hold harmless the Company, the Company's directors, the Company's
officers that signed the Registration Statement, and any person who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, from and against any loss, expense, liability, damage or claim
(including the reasonable cost of investigation) which, jointly or severally,
the Company, or any such person may incur under the Securities Act, the Exchange
Act or otherwise, but only insofar as such loss, expense, liability, damage or
claim arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact contained in and in conformity with information
furnished in writing by such Underwriter through the Representatives to the
Company expressly for use in the Registration Statement (or in the Registration
Statement as amended by any posteffective amendment thereof by the Company) or
in a Prospectus, or arises out of or is based upon any omission or alleged
omission to state a material fact in connection with such information required
to be stated either in such
24
Registration Statement or Prospectus or necessary to make such information, in
the light of the circumstances under which made, not misleading. The statements
set forth (i) in the last paragraph on the cover page and (ii) under the caption
"Underwriting of the Common Stock" in the Preliminary Prospectus and the
Prospectus (to the extent such statements relate to the Underwriters) constitute
the only information furnished by or on behalf of any Underwriter through the
Representatives to the Company for purposes of Section 3(j) and this Section 9.
If any action is brought against the Company, or any such person in
respect of which indemnity may be sought against any Underwriter pursuant to the
foregoing paragraph, the Company, or such person shall promptly notify the
Representatives in writing of the institution of such action and the
Representatives, on behalf of the Underwriters, shall assume the defense of such
action, including the employment of counsel and payment of expenses. The
Company, or such person shall have the right to employ its own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
the Company, or such person unless the employment of such counsel shall have
been authorized in writing by the Representatives in connection with the defense
of such action or the Representatives shall not have employed counsel to have
charge of the defense of such action within a reasonable time or such
indemnified party or parties shall have reasonably concluded (based on the
advice of counsel) that there may be defenses available to it or them which are
different from or additional to those available to the Underwriters (in which
case the Representatives shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by such Underwriter and paid as incurred
(it being understood, however, that the Underwriters shall not be liable for the
expenses of more than one separate firm of attorneys in any one action or series
of related actions in the same jurisdiction (other than local counsel in any
such jurisdiction) representing the indemnified parties who are parties to such
action). Anything in this paragraph to the contrary notwithstanding, no
Underwriter shall be liable for any settlement of any such claim or action
effected without the written consent of the Representatives.
d) If the indemnification provided for in this Section 9 is unavailable
to an indemnified party under subsections (a), (b) and (c) of this Section 9 in
respect of any losses, expenses, liabilities, damages or claims referred to
therein, then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, expenses, liabilities, damages or
claims (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 (but only 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 of the Underwriters in connection with the statements
or omissions which resulted in such losses, expenses, liabilities, damages or
claims, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Underwriters shall be deemed to be in
the same proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses)
25
received by the Company bear to the underwriting discounts and commissions
received by the Underwriters. The relative fault of the Company, and of the
Underwriters shall be determined by reference to, among other things, whether
the untrue statement or alleged untrue statement of a material fact or omission
or alleged omission relates to information supplied by the Company or by the
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 claim or action.
e) 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 (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in subsection (d)(i) and, if applicable
(ii), above. Notwithstanding the provisions of this Section 9, no Underwriter
shall be required to contribute any amount in excess of the underwriting
discounts and commissions applicable to the Shares purchased by such
Underwriter. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 9 are several in proportion to their respective underwriting commitments
and not joint.
10. Survival: The indemnity and contribution agreements contained in
Section 9 and the covenants, warranties and representations of the Company
contained in Sections 3, 4 and 5 of this Agreement shall remain in full force
and effect regardless of any investigation made by or on behalf of any
Underwriter, or any person who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, or by or on
behalf of the Company, its directors and officers, or any person who controls
the Company within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, and shall survive any termination of this Agreement or the
sale and delivery of the Shares. The Company and each Underwriter agree promptly
to notify the others of the commencement of any litigation or proceeding against
it and, in the case of the Company, against any of the Company's officers and
directors, in connection with the sale and delivery of the Shares, or in
connection with the Registration Statement or Prospectus.
11. Notices: Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing or by telegram and, if to
the Underwriters, shall be sufficient in all respects if delivered to Friedman,
Billings, Xxxxxx & Co., Inc., 0000 00xx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000,
Attention: Syndicate Department; and if to the Company, shall be sufficient in
all respects if delivered to the Company at the offices of the Company at 00000
Xxxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxxx,
General Counsel.
26
12. Governing Law; Headings: THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES. The section headings in this Agreement have
been inserted as a matter of convenience of reference and are not a part of this
Agreement.
13. Parties at Interest: The Agreement herein set forth has been and is
made solely for the benefit of the Underwriters, the Company, and the
controlling persons, directors and officers referred to in Sections 9 and 10
hereof, and their respective successors, assigns, executors and administrators.
No other person, partnership, association or corporation (including a purchaser,
as such purchaser, from any of the Underwriters) shall acquire or have any right
under or by virtue of this Agreement.
14. Counterparts and Facsimile Signatures: This Agreement may be signed
by the parties in counterparts which together shall constitute one and the same
agreement among the parties. A facsimile signature shall constitute an original
signature for all purposes.
27
If the foregoing correctly sets forth the understanding among the
Company and the Underwriters, please so indicate in the space provided below for
the purpose, whereupon this Agreement shall constitute a binding agreement among
the Company and the Underwriters.
Very truly yours,
MEADOWBROOK INSURANCE GROUP, INC.
By:_____________________________
By: Xxxxxx X. Xxxxxx
Title: President and Chief Executive
Officer
Accepted and agreed to as
of the date first above written:
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
XXXXXX, XXXXX XXXXX INC.
ADVEST GROUP, INC.
Acting as Representatives of the other
Underwriters named on Schedule I hereto.
By: FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
By: _______________________________
Title: ______________________________
28
SCHEDULE I
Number of Number of
Underwriter Initial Shares to be Option Shares to be
Purchased Purchased
----------------------------------------------------------------------------------------------------------------------
Friedman, Billings, Xxxxxx & Co., Inc. [_]
Xxxxxx, Xxxxx Xxxxx Inc. [_]
Advest Group, Inc. [_]
Total......................................................... X,XXX,XXX
=========
S-1
SCHEDULE II
Comfort Letter of PricewaterhouseCoopers LLP
(1) They are independent public accountants with respect to the Company
and its subsidiaries within the meaning of the Securities Act.
(2) In their opinion the consolidated financial statements and
schedules of the Company and its subsidiaries included in the Registration
Statement and the consolidated and combined financial statements of the Company
from which the information presented under the caption "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 Securities 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 its subsidiaries responsible for financial
and accounting matters as to transactions and events subsequent to December 31,
2002, a reading of minutes of meetings of the stockholders and directors of the
Company and its subsidiaries since December 31, 2002, a reading of the latest
available interim unaudited consolidated financial statements of the Company and
its subsidiaries (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 its subsidiaries included in the Registration Statement do not
comply as to form in all material respects with the applicable accounting
requirements of the Securities 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 pro forma
financial data of the Company included in the Registration Statement does not
comply as to form with the applicable accounting requirements of the Securities
Act, or that the pro forma adjustments have not been properly applied to the
historical amounts for the periods to which they relate 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 its subsidiaries on a consolidated basis or any decrease in consolidated net
current assets or consolidated 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 day 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 (or, with respect to
losses, increases), as compared with the corresponding period of the prior year,
in consolidated total revenue, 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 its subsidiaries.
EXHIBIT A
FORM OF LOCK-UP LETTER
_____________, 2002
Friedman, Billings, Xxxxxx & Company, Inc.
Xxxxxx, Xxxxx Xxxxx Inc.
Advest Group, Inc.
0000 00xx Xxxxxx Xxxxx
00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
The undersigned understands that Friedman, Billings, Xxxxxx & Company, Inc.,
Xxxxxx, Xxxxx Xxxxx Inc. and Advest Group, Inc. (the "Representatives") propose
to enter into an Underwriting Agreement (the "Underwriting Agreement"), as
representatives of several underwriters (the "Underwriters"), with Meadowbrook
Insurance Group, Inc., a Michigan corporation (the "Company"), providing for the
public offering (the "Public Offering") by (inter alia) the Underwriters of
shares (the "Shares") of Common Stock of the Company (the "Common Stock").
To induce the Underwriters to continue its efforts in connection with
the Public Offering, the undersigned hereby agrees that, without the prior
written consent of the Representative, it will not, during the period commencing
on the date hereof and ending on the 180-day anniversary of the date of the
final prospectus relating to the Public Offering (the "Prospectus"), (1) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for any shares of Common Stock (whether such shares or any such
securities are now owned by the undersigned or are hereafter acquired), or (2)
enter into any swap or other arrangement that transfers to another, in whole or
in part, any of the economic consequences of ownership of the Common Stock,
whether any such transaction described in clause (1) or (2) above it is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise. In addition, the undersigned agrees that, without prior written
consent of the Representative, it will not, during the period commencing on the
date hereof and ending on the 180-day anniversary of the date of the Prospectus,
make any demand for or exercise any right with respect to, the registration
under the Securities Act of 1933, as amended (the "Securities Act"), of any
shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock.
Notwithstanding the foregoing, the undersigned shall not be restricted
from distributing any of the Company's securities to the undersigned's equity
holders provided that prior to and as a condition to the effectiveness of any
such distribution such equity holders execute a lock-up agreement substantially
in the form hereof in favor of the Representative.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
agreement between the Company and the Representative. The terms of this Lock-Up
letter shall expire in the event the Public Offering is not consummated on or
before ____________, 2002.
Very truly yours,
-----------------------------
(Printed or Typed Name)
By:_________________________
Title:________________________
_________________________(SEAL)
