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10,000,000 Shares
ARM FINANCIAL GROUP, INC.
CLASS A CONVERTIBLE COMMON STOCK, PAR VALUE $0.01 PER SHARE
FORM OF UNDERWRITING AGREEMENT
[May ___,] 1998
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[May ___,] 1998
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
PaineWebber Incorporated
Xxxxxxxx & Co. Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
PaineWebber International (U.K.) Ltd.
J. Xxxxx Xxxxxxxx & Co. Limited
c/o Morgan Xxxxxxx & Co. International Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
England
Dear Sirs and Mesdames:
Certain shareholders named in Schedule I hereto (the "Selling
Shareholders") of ARM Financial Group, Inc., a Delaware corporation (the
"Company"), severally propose to sell to the several Underwriters (as defined
below) an aggregate of 10,000,000 shares of the Company's Class A Convertible
Common Stock, par value $0.01 per share (the "Firm Shares"), each Selling
Shareholder selling the amount set forth opposite such Selling Shareholder's
name on Schedule I hereto.
It is understood that, subject to the conditions hereinafter stated,
8,000,000 Firm Shares (the "U.S. Firm Shares") will be sold to the several U.S.
Underwriters named in Schedule II hereto (the "U.S. Underwriters") in connection
with the offering and sale of such U.S. Firm Shares in the United States and
Canada to United States and Canadian Persons (as such terms are defined in the
Agreement Between U.S. and International Underwriters of even date herewith),
and 2,000,000 Firm Shares (the "International Shares") will be sold to the
several International Underwriters named in Schedule III hereto (the
"International Underwriters") in connection with the offering and sale of such
International Shares outside the United States and Canada to persons other than
United States and Canadian Persons. Xxxxxx Xxxxxxx & Co. Incorporated ("Xxxxxx
Xxxxxxx"), Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation ("DLJ"),
PaineWebber Incorporated and Xxxxxxxx & Co. Inc., shall act
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as representatives (the "U.S. Representatives") of the several U.S.
Underwriters, and Xxxxxx Xxxxxxx & Co. International Limited, DLJ, PaineWebber
International (U.K.) Ltd. and J. Xxxxx Xxxxxxxx & Co. Limited, shall act as
representatives (the "International Representatives") of the several
International Underwriters. The U.S. Underwriters and the International
Underwriters are hereinafter collectively referred to as the "Underwriters".
The Selling Shareholders also severally propose to sell to the
several U.S. Underwriters, pro rata in proportion to the amount set forth
opposite such Selling Shareholder's name in Schedule I hereto, an aggregate of
not more than an additional 1,500,000 shares of the Company's Class A
Convertible Common Stock, par value $0.01 per share (the "Additional Shares"),
if and to the extent that the U.S. Representatives shall have determined to
exercise, on behalf of the U.S. Underwriters, the right to purchase such shares
of common stock granted to the U.S. Underwriters in Section 4 hereof. The Firm
Shares and the Additional Shares are hereinafter collectively referred to as the
"Shares". The shares of the Class A Convertible Common Stock, par value $0.01
per share, of the Company to be outstanding after giving effect to the sales
contemplated hereby are hereinafter referred to as the "Common Stock".
The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement relating to the Shares on Form S-3,
Registration No. 333-49805. The registration statement contains two prospectuses
to be used in connection with the offering and sale of the Shares: the U.S.
prospectus, to be used in connection with the offering and sale of Shares in the
United States and Canada to United States and Canadian Persons, and the
international prospectus, to be used in connection with the offering and sale of
Shares outside the United States and Canada to persons other than United States
and Canadian Persons. The international prospectus is identical to the U.S.
prospectus except for the outside front cover page. The registration statement
as amended at the time it becomes effective, including the information (if any)
deemed to be part of the registration statement at the time of effectiveness
pursuant to Rule 430A under the Securities Act of 1933, as amended (the
"Securities Act"), is hereinafter referred to as the "Registration Statement"
(including, in the case of all references to the Registration Statement and the
Prospectus, documents incorporated therein by reference); the U.S. prospectus
and the international prospectus in the respective forms first used to confirm
sales of Shares are hereinafter collectively referred to as the "Prospectus". If
the Company has filed an abbreviated registration statement to register
additional shares of Common Stock pursuant to Rule 462(b) under the Securities
Act (the "Rule 462(b) Registration Statement"), then any reference herein to the
term "Registration Statement" shall be deemed to include such Rule 462(b)
Registration Statement.
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1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; if the Company
has elected to rely upon Rule 462(b) under the Securities Act, the Rule
462(b) Registration Statement shall have become effective not later than
the earlier of (i) 10:00 p.m. (New York City time) on the date hereof and
(ii) the time confirmations are sent or given, as specified by Rule 462(b)
under the Securities Act; no stop order suspending the effectiveness of
the Registration Statement is in effect, and no proceedings forsuch
purpose are pending before or, to the knowledge of the Company, threatened
by the Commission.
(b) (i) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) the Registration Statement and the
Prospectus comply and, as amended or supplemented, if applicable, will
comply as to form in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder and (iii)
the Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this paragraph
1(b) do not apply to statements or omissions in the Registration Statement
or the Prospectus or any amendment or supplement thereto based upon
information relating to any Underwriter furnished to the Company in
writing by such Underwriter through you expressly for use therein or upon
information relating to any Selling Shareholder furnished in writing to
the Company by or on behalf of any Selling Shareholder expressly for use
in the Registration Statement.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
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(d) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority
to own its property and to conduct its business as described in the
Prospectus and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to
the extent that the failure to be so qualified or be in good standing
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(e) All of the issued shares of capital stock of each of the
Company's subsidiaries have been duly authorized and validly issued and
are fully paid and non-assessable. All of the outstanding shares of
capital stock of each of the Company's subsidiaries are owned directly or
indirectly by the Company, in each case free of all liens, encumbrances,
security interests and claims, except as set forth in the Prospectus and
except such liens, encumbrances, security interests and claims which,
singly or in the aggregate, would neither (i) have a material adverse
effect on the Company and its subsidiaries, taken as a whole nor (ii)
materially and adversely affect the ability of the Company to consummate
the transactions contemplated by this Agreement.
(f) The Company and each of its subsidiaries holds all such
licenses, authorizations, certificates and permits as are necessary to
conduct its business under the laws of each jurisdiction in which it
conducts its business, except where the failure to have such licenses,
authorizations, certificates or permits would not, individually or in the
aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole; all such licenses, authorizations,
certificates and permits are in full force and effect; and neither the
Company nor any of its subsidiaries has received any notice of any event,
inquiry, investigation or proceeding that would reasonably be expected to
result in the suspension, revocation or limitation of any such license,
authorization, certificate or permit, or otherwise impose any limitation
on the conduct of the business of such subsidiaries, except for such
events, inquiries, investigations or proceedings which would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(g) This Agreement has been duly authorized, executed and delivered
by the Company.
(h) Upon the closing of the offering of the Shares, the authorized,
issued and outstanding capital stock of the Company will be as set forth
in the Prospectus under the caption "Capitalization" in the column
entitled "As Adjusted," and the authorized capital stock of the Company
will conform as to legal matters to the description thereof contained in
the Prospectus.
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(i) The outstanding shares of Common Stock (including the Shares to
be sold by the Selling Shareholders) have been duly authorized and are
validly issued, fully paid and non-assessable.
(j) (i) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement will
not contravene any provision of applicable law or the certificate of
incorporation or by-laws of the Company or any agreement or other
instrument binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, or any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Company or any subsidiary except for such judgments,
orders or decrees, the violation of which would neither (x) have a
material adverse effect on the Company and its subsidiaries, taken as a
whole, nor (y) materially and adversely affect the ability of the Company
to consummate the transactions contemplated by this Agreement and (ii) no
consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the Company
of its obligations under this Agreement, except such as have been obtained
under the Securities Act and any insurance laws and regulations, such as
may be required by the securities or Blue Sky laws of the various states
in connection with the offer and sale of the Shares and such consents,
approvals, authorizations, orders or qualifications, the failure to have
which would neither (x) have a material adverse effect on the Company and
its subsidiaries, taken as a whole nor (y) materially and adversely affect
the ability of the Company to consummate the transactions contemplated by
this Agreement.
(k) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Prospectus.
(l) There are no legal or governmental proceedings pending or, to
the best knowledge of the Company, threatened to which the Company or any
of its subsidiaries is a party or to which any of the properties of the
Company or any of its subsidiaries is subject that are required to be
described in the Registration Statement or the Prospectus and are not so
described or any statutes, regulations, contracts or other documents known
to the Company that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement that are not described, filed or incorporated therein by
reference as required.
(m) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or
filed pursuant to Rule 424 under the Securities Act, complied when so
filed in all material respects with the Securities Act and the applicable
rules and regulations of the Commission thereunder.
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(n) Each document, if any, filed or to be filed pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
incorporated by reference in the Prospectus complied or will comply when
so filed in all material respects with the Exchange Act and the applicable
rules and regulations of the Commission thereunder.
(o) Neither the Company nor any of its subsidiaries (other than SBM
Certificate Company) is, and, after giving effect to the offering and sale
of the Shares and the application of the proceeds thereof as described in
the Prospectus, neither the Company nor any of its subsidiaries (other
than SBM Certificate Company) will be, an "investment company" as such
term is defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act").
(p) There are no holders of securities (debt or equity) of the
Company, or holders of rights, options or warrants to obtain securities of
the Company, who have the right to require the Company to register under
the Securities Act securities held by them or obtainable by them through
the exercise of any right, warrant or option, other than holders who (i)
have waived such rights or will not have such rights for the 90-day period
after the date of the offering of the Shares and (ii) have waived their
rights with respect to the inclusion of their securities in the
Registration Statement.
(q) The 1996 and 1997 statutory annual statements of Integrity Life
Insurance Company ("Integrity") and National Integrity Life Insurance
Company ("National Integrity") and the statutory balance sheets and income
statements included in such statutory annual statements have been prepared
in conformity with statutory accounting principles or practices required
or permitted by the Insurance Department of the states of Ohio and New
York, respectively, and such statutory accounting practices have been
applied on a consistent basis throughout the periods involved, except as
may otherwise be indicated in the notes thereto, and present fairly the
statutory financial position of Integrity and National Integrity as of the
dates thereof, and the statutory basis results of operations of Integrity
and National Integrity for the periods covered thereby.
(r) The Company is not aware of any threatened or pending
downgrading in the ratings assigned by A.M. Best Company, Inc., Standard &
Poor's Corporation, Duff & Xxxxxx or Xxxxx'x Investors Service to
Integrity or National Integrity.
(s) The Company has complied with all provisions of Section 517.075,
Florida Statutes relating to doing business with the Government of Cuba or
with any person or affiliate located in Cuba.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS. Each
of the Selling Shareholders represents and warrants to and agrees with each of
the U.S.
Underwriters that:
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(a) This Agreement has been duly authorized, executed and delivered
by or on behalf of such Selling Shareholder.
(b) The execution and delivery by such Selling Shareholder of, and
the performance by such Selling Shareholder of its obligations under, this
Agreement will not contravene any provision of applicable law, or the
certificate of incorporation or by-laws of such Selling Shareholder (if
such Selling Shareholder is a corporation), or any agreement or other
instrument binding upon such Selling Shareholder or any judgment, order or
decree of any governmental body, agency or court having jurisdiction over
such Selling Shareholder, and no consent, approval, authorization or order
of, or qualification with, any governmental body or agency is required for
the performance by such Selling Shareholder of its obligations under this
Agreement, except such as may be required by the securities or Blue Sky
laws of the various states in connection with the offer and sale of the
Shares.
(c) Such Selling Shareholder has, and on the Closing Date will have,
valid title to the Shares to be sold by such Selling Shareholder and the
legal right and power, and all authorization and approval required by law,
to enter into this Agreement and to sell, transfer and deliver the Shares
to be sold by such Selling Shareholder.
(d) The Shares to be sold by such Selling Shareholder pursuant to
this Agreement have been duly authorized and are validly issued, fully
paid and non-assessable.
(e) Delivery of the Shares to be sold by such Selling Shareholder
pursuant to this Agreement will, upon delivery and payment for such Shares
as contemplated herein, pass title to such Shares free and clear of any
security interests, claims, liens, equities and other encumbrances.
(f) (i) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) the Prospectus does not
contain and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph 2(f) apply only
to statements or omissions relating to such Selling Shareholder in the
Registration Statement or the Prospectus based upon information relating
to such Selling Shareholder furnished in writing to the Company by or on
behalf of such Selling Shareholder expressly for use in the Registration
Statement.
3. REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITERS. Each U.S.
Underwriter hereby makes to and with the Company the representations and
agreements of
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such U.S. Underwriter in the sixth and seventh paragraphs of Article III of the
Agreement Between U.S. and International Underwriters of even date herewith.
Each International Underwriter hereby makes to and with the Company the
representations and agreements of such International Underwriter in the eighth,
ninth and tenth paragraphs of Article III of such Agreement. Copies of such
representations and agreements are attached to this Agreement as Schedule IV.
4. AGREEMENTS TO SELL AND PURCHASE. Each Selling Shareholder,
severally and not jointly, hereby agrees to sell to the several Underwriters,
and each Underwriter, upon the basis of the representations and warranties
herein contained, but subject to the conditions hereinafter stated, agrees,
severally and not jointly, to purchase from such Selling Shareholder at U.S. $[
] a share (the "Purchase Price") the respective numbers of Firm Shares (subject
to such adjustments to eliminate fractional shares as you may determine) that
bears the same proportion to the number of Firm Shares to be sold by such
Selling Shareholder as the number of Firm Shares set forth in Schedules II and
III hereto opposite the name of such Underwriter bears to the total number of
Firm Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Selling Shareholders
agree to sell to the U.S. Underwriters the Additional Shares, and the U.S.
Underwriters shall have a one-time right to purchase, severally and not jointly,
up to 1,500,000 Additional Shares at the Purchase Price. If the U.S.
Representatives, on behalf of the U.S. Underwriters, elect to exercise such
option, the U.S. Representatives shall so notify the Selling Shareholders in
writing not later than 30 days after the date of this Agreement, which notice
shall specify the number of Additional Shares to be purchased by the U.S.
Underwriters and the date on which such shares are to be purchased. Such date
may be the same as the Closing Date (as defined below) but not earlier than the
Closing Date nor later than ten business days after the date of such notice.
Additional Shares may be purchased as provided in Section 6 hereof solely for
the purpose of covering over-allotments made in connection with the offering of
the Firm Shares. If any Additional Shares are to be purchased, each U.S.
Underwriter agrees, severally and not jointly, to purchase the number of
Additional Shares (subject to such adjustments to eliminate fractional shares as
the U.S. Representatives may determine) that bears the same proportion to the
total number of Additional Shares to be purchased as the number of U.S. Firm
Shares set forth in Schedule II hereto opposite the name of such U.S.
Underwriter bears to the total number of U.S. Firm Shares.
Each of the Company and each Selling Shareholder hereby agrees that,
without the prior written consent of the U.S. Representatives on behalf of the
Underwriters (in the case of the Selling Shareholders) or Xxxxxx Xxxxxxx on
behalf of the Underwriters (in the case of the Company), it will not, during the
period ending 90 days after the date of the Prospectus, (i) 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, lend
or otherwise transfer or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock (provided such shares or
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securities are either owned by such Seller on the date of this Agreement or are
thereafter acquired prior to the public offering of the Shares contemplated
hereby) or (ii) 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 (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, (B) the issuance by the Company of shares of the Common Stock
upon the exercise of an option or warrant or the conversion of a security
outstanding on the date hereof (including the conversion of Class A Convertible
Common Stock, par value $0.01 per share, to Class B Convertible Common Stock,
par value $0.01 per share, and vice versa) of which the Underwriters have been
advised in writing or (C) the issuance by the Company of any shares of Common
Stock or other securities or the grant by the Company of any options to purchase
Common Stock or other securities pursuant to employee benefit plans of the
Company, including, without limitation, the ARM Financial Group, Inc. Stock
Option Plan and the 1997 Equity Incentive Plan. In addition, each Selling
Shareholder agrees that, without the prior written consent of the U.S.
Representatives on behalf of the Underwriters, it will not, during the period
ending 90 days after the date of the Prospectus, make any demand for, or
exercise any right with respect to, the registration of any shares of Common
Stock or any security convertible into or exercisable or exchangeable for Common
Stock.
5. TERMS OF PUBLIC OFFERING. The Selling Shareholders are advised by
you that the Underwriters propose to make a public offering of their respective
portions of the Shares as soon after the Registration Statement and this
Agreement have become effective as in your judgment is advisable. The Selling
Shareholders are further advised by you that the Shares are to be offered to the
public initially at U.S. $[ ] a share (the "Public Offering Price") and to
certain dealers selected by you at a price that represents a concession not in
excess of U.S. $[ ] a share under the Public Offering Price, and that any
Underwriter may allow, and such dealers may reallow, a concession, not in excess
of U.S. $[ ] a share, to any Underwriter or to certain other dealers.
6. PAYMENT AND DELIVERY. Payment for the Firm Shares to be sold by
each Selling Shareholder shall be made in Federal or other funds immediately
available in New York City against delivery of such Firm Shares for the
respective accounts of the several Underwriters at 10:00 A.M., New York City
time, on [ __,] 1998, or at such other time on the same or such other date, not
later than [ ___,] 1998, as shall be agreed to by you, the Company and the
Selling Shareholders. The time and date of such payment are hereinafter referred
to as the "Closing Date".
Payment for any Additional Shares shall be made to the Selling
Shareholders in Federal or other funds immediately available in New York City
against delivery of such Additional Shares or the respective accounts of the
several Underwriters at 10:00 A.M., New York City time, on the date specified in
the notice described in Section 4 or at such other time on the same or on such
other date, in any event not later than [ __,] 1998, as shall be agreed
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to by the U.S. Representatives and the Selling Shareholders. The time and date
of such payment are hereinafter referred to as the "Option Closing Date".
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters or the U.S. Underwriters, as the
case may be, with any transfer taxes payable in connection with the transfer of
the Shares to the Underwriters or the U.S. Underwriters, as the case may be,
duly paid, against payment of the Purchase Price therefor.
7. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The obligation of
the Selling Shareholders to sell the Shares to the Underwriters and the several
obligations of the Underwriters to purchase and pay for the Shares on the
Closing Date are subject to the condition that the Registration Statement shall
have become effective not later than the date hereof.
The several obligations of the Underwriters are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading
or of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded to
Integrity, National Integrity or any of the Company's securities by
any "nationally recognized statistical rating organization," as such
term is defined for purposes of Rule 436(g)(2) under the Securities
Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations
of the Company and its subsidiaries, taken as a whole, from that set
forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement) that, in your
judgment, is material and adverse and that makes it, in your
judgment, impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company, acting in such capacity but not personally, to the effect set
forth in clause (a)(i) above and to the
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effect that the representations and warranties of the Company contained in
this Agreement are true and correct as of the Closing Date and that the
Company has complied in all material respects with all of the agreements
and satisfied in all material respects all of the conditions on its part
to be performed or satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely upon
the best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an
opinion of Shearman & Sterling (which opinion shall not be required to
cover any insurance laws, rules, regulations or statutes), outside counsel
for the Company, dated the Closing Date, to the effect that:
(i) the Company is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Delaware,
with corporate power and authority under such laws to own, lease and
operate its property and conduct its business as described in the
Prospectus, except to the extent that the failure to be so qualified
or be in good standing would not have a material adverse effect on
the Company and its subsidiaries, taken as a whole;
(ii) National Integrity is a corporation duly incorporated and
validly existing in good standing under the laws of the State of New
York, with the corporate power and authority under such laws to own,
lease and operate its property and conduct its business as described
in the Prospectus, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole;
(iii) the authorized capital stock of the Company conforms in
all material respects as to legal matters to the description thereof
contained in the Prospectus;
(iv) the outstanding shares of Common Stock (including the
Shares to be sold by the Selling Shareholders) have been duly
authorized and are validly issued, fully paid and non-assessable;
(v) this Agreement has been duly authorized, executed and
delivered by the Company;
(vi) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of the laws of the State of New
York, the General Corporation Law of the State of Delaware or the
Federal laws of the United States or the certificate of
incorporation or by-laws of the Company or, to the
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best of such counsel's knowledge, any agreement or other instrument
binding upon the Company or any of its subsidiaries that is material
to the Company and its subsidiaries, taken as a whole, or, to the
best of such counsel's knowledge, any judgment, order or decree of
any governmental body, agency or court having jurisdiction over the
Company or any subsidiary, and no consent, approval, authorization
or order of, or qualification with, any governmental body, agency or
court of the State of New York[, the State of Delaware] or the
United States is required for the performance by the Company of its
obligations under this Agreement, except such as may be required by
the securities or Blue Sky laws of the various states in connection
with the offer and sale of the Shares by the U.S. Underwriters;
(vii) the statements (A) in the Prospectus under the captions
"Description of Capital Stock," "Shares Eligible for Future Sale"
and "Underwriters" and (B) in the Registration Statement in Item 15,
in each case insofar as such statements constitute summaries of the
legal matters, documents or proceedings referred to therein, fairly
present in all material respects the information summarized therein;
(viii) after due inquiry, such counsel does not know of any legal
or governmental proceedings pending or threatened to which the
Company or any of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is subject that
are required to be described in the Registration Statement or the
Prospectus or incorporated by reference therein and are not so
described or incorporated by reference therein of any statutes,
regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement or incorporated by
reference therein that are not described, filed or incorporated by
reference therein as required;
(ix) neither the Company nor any of its subsidiaries (other
than SBM Certificate Company) is, and, after giving effect to the
offering and sale of the Shares and the application of the proceeds
thereof as described in the Prospectus, neither the Company nor any
of its subsidiaries (other than SBM Certificate Company) will be,
required to register as an "investment company" under the Investment
Company Act;
(x) (i) in such counsel's opinion, each document, if any,
filed pursuant to the Exchange Act and incorporated by reference in
the Registration Statement and the Prospectus (other than the
financial statements and schedules and other financial and
statistical data contained therein or omitted therefrom, as to which
such counsel need express no view) comply as to form in all material
respects with the Exchange Act, and the applicable rules and
regulations of the Commission thereunder; (ii) in such counsel's
opinion, the Registration
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Statement and the Prospectus (other than the financial statements
and schedules and other financial and statistical data contained or
incorporated therein or omitted therefrom, as to which such counsel
need express no view) comply as to form in all material respects
with the requirements of the Securities Act and the applicable rules
and regulations of the Commission thereunder; (iii) no facts came to
such counsel's attention which gave such counsel reason to believe
that (a) the Registration Statement (other than the financial
statements and schedules and other financial and statistical data
contained therein or omitted therefrom, as to which such counsel
need not comment), at the time it became effective, contained an
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading, or (b) the Prospectus (other than
the financial statements and schedules and other financial and
statistical data contained therein or omitted therefrom, as to which
such counsel need not comment), as of its date or the Closing Date,
contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; and (iv) such counsel does not know
of any contract or other document of a character required to be
filed as an exhibit to the Registration Statement or incorporated by
reference therein that is not so filed or incorporated by reference
therein.
(d) The Underwriters shall have received on the Closing Date an
opinion of Xxxxx Xxxxxxxxx, Esq., counsel for the Selling Shareholders,
dated the Closing Date, to the effect that:
(i) this Agreement has been duly authorized, executed and
delivered by or on behalf of each of the Selling Shareholders;
(ii) the execution and delivery by each Selling Shareholder of,
and the performance by such Selling Shareholder of its obligations
under, this Agreement will not contravene any provision of
applicable law, or the certificate of incorporation or by-laws of
such Selling Shareholder (if such Selling Shareholder is a
corporation), or, to the best of such counsel's knowledge, any
agreement or other instrument binding upon such Selling Shareholder
or, to the best of such counsel's knowledge, any judgment, order or
decree of any governmental body, agency or court having jurisdiction
over such Selling Shareholder, and no consent, approval,
authorization or order of, or qualification with, any governmental
body or agency is required for the performance by such Selling
Shareholder of its obligations under this Agreement, except such as
may be required by the securities or Blue Sky laws of the various
states in connection with the offer and sale of the Shares;
(iii) each of the Selling Shareholders has valid title to the
Shares to be sold by such Selling Shareholder and the legal right
and power, and all
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authorization and approval required by law, to enter into this
Agreement and to sell, transfer and deliver the Shares to be sold by
such Selling Shareholder; and
(iv) assuming the purchase and sale of the Shares occurs in the
State of New York, each Underwriter, to the extent that it acquires
Shares from the Selling Shareholders in good faith and without
knowledge of adverse claims, will upon payment for such Shares
acquire its interest in such Shares free of any adverse claim.
(e) You shall have received on the Closing Date an opinion of Xxxxxx
X. Xxxxx, Esq., General Counsel of the Company, dated the Closing Date, to
the effect that:
(i) the Company and each of Integrity Capital Advisors, Inc.,
Integrity Holdings, Inc. and ARM Securities Corporation is a
corporation duly incorporated and validly existing in good standing
under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to carry on its business and to own or
hold under lease its properties as described in the Prospectus and
is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except
to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole;
(ii) all of the outstanding shares of capital stock of each of
the Company's subsidiaries have been duly authorized and validly
issued and are fully paid and non-assessable; all of the outstanding
shares of capital stock of each of the subsidiaries (except ARM
Capital Advisors, LLC of which the Company currently owns only 20%
of the outstanding shares of capital stock), SBM Certificate Company
and National Integrity are owned directly or indirectly by the
Company, in each case free of all liens, encumbrances, security
interests and claims, except as set forth in the Prospectus;
(iii) the Company and each of its subsidiaries holds all
licenses, authorizations, certificates and permits as are required
to conduct its business under the laws of each jurisdiction in which
it conducts business, except where the failure to have such
licenses, authorizations, certificates or permits would not,
individually or in the aggregate, have a material adverse effect on
the Company and its subsidiaries, taken as a whole; all such
licenses, authorizations, certificates and permits are in full force
and effect; and, except as disclosed in the Prospectus, to the best
of such counsel's knowledge, neither the Company nor any of its
subsidiaries has received any notice of any event, inquiry,
investigation or proceeding that would reasonably be expected to
result in the suspension, revocation or limitation of any such
license, authorization,
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certificate or permit or otherwise impose any limitation on the
conduct of the business of the Company or any of its subsidiaries,
except for such events, inquiries, investigations or proceedings
which would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole;
(iv) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law (including any
insurance law, rule or regulation) or the certificate of
incorporation or by-laws of the Company or any of its subsidiaries
or, to the best of such counsel's knowledge, any agreement or other
instrument binding upon the Company or any of its subsidiaries that
is material to the Company and its subsidiaries, considered as one
enterprise, or, to the best of such counsel's knowledge, any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any of its subsidiaries;
(v) the statements (A) in the Prospectus under the captions
"Business -- Legal Proceedings" and (B) in the Registration
Statement in Item 15, in each case insofar as such statements
constitute summaries of the legal matters, documents or proceedings
referred to therein, fairly present the information called for with
respect to such legal matters, documents and proceedings and fairly
summarize the matters referred to therein;
(vi) such counsel does not know of any legal or governmental
proceeding pending or threatened in writing to which the Company or
any of its subsidiaries is a party or to which any of the properties
of the Company or any of its subsidiaries is subject that are
required to be described in the Registration Statement or the
Prospectus and are not so described or of any statutes, regulations,
contracts or other documents applicable to the Company or any of its
subsidiaries that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement or incorporated by reference therein that are
not described, filed or incorporated by reference therein as
required; and
(vii) no facts came to such counsel's attention which gave such
counsel reason to believe that (a) the Registration Statement (other
than the financial statements and schedules and other financial and
statistical data contained therein or omitted therefrom, as to which
such counsel need not comment), at the time it became effective,
contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make
the statements therein not misleading, or (b) the Prospectus (other
than the financial statements and schedules and other financial and
statistical data contained therein or omitted therefrom, as to which
such counsel need not comment), as of its date or the Closing Date,
contained or contains an
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untrue statement of a material fact or omitted or omits to state a
material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(f) The Underwriters shall have received on the Closing Date an
opinion of Xxxxxxx & Xxxxxx, special Ohio counsel for the Company and
Integrity, dated the Closing Date, to the effect that:
(i) Integrity is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Ohio,
has the corporate power and authority to carry on its business and
to own or hold under lease its properties as described in the
Prospectus, and is duly qualified to transact business as a life
insurance company in the jurisdictions specified in an exhibit to
such opinion;
(ii) all outstanding shares of capital stock of Integrity have
been duly authorized by all necessary corporate action, are validly
issued and, except as set forth in the Prospectus, are owned of
record by Integrity Holdings, Inc. free of all adverse claims (as
such term is defined in Article 8 of the Uniform Commercial Code as
adopted in the State of Ohio);
(iii) (1) Title 39, Ohio Revised Code, is the exclusive
statutory authority in the State of Ohio for the grant of licenses,
authorizations, certificates and permits relating to the conduct of
the business of a life insurance company in the State of Ohio, and
for the regulation of such business by the Ohio Department of
Insurance; (2) Integrity has been granted all licenses,
authorizations, certificates and permits (collectively, the "Ohio
Authorizations") as are required to be obtained from the Ohio
Department of Insurance under Title 39, Ohio Revised Code, to
conduct the business of a life insurance company in the State of
Ohio, all of the Ohio Authorizations are in full force and effect
and, to the best knowledge of such counsel based on a search of the
Journal of the Ohio Department of Insurance, there are no
proceedings pending before the Ohio Department of Insurance to
suspend or revoke the Ohio Authorizations; (3) the Ohio
Authorizations constitute all requisite and valid licenses,
authorizations, certificates and permits necessary under Title 39 of
the Ohio Revised Code and the Ohio Department of Insurance's rules,
regulations and written policies of general applicability to enable
Integrity to conduct its business as described in the Registration
Statement and the Prospectus, i.e., to provide fixed and variable
annuities and institutional Guaranteed Investment Contracts in the
State of Ohio, subject only to the ongoing requirements to obtain
appropriate consents, authorizations and approvals from the Ohio
Department of Insurance and to make ongoing filings with the Ohio
Department of Insurance, in each case in the ordinary course of
business; and (4) to the best
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knowledge of such counsel, no proceedings to revoke any of the Ohio
Authorizations are threatened or pending by the Ohio Department of
Insurance.
(g) The Underwriters shall have received on the Closing Date an
opinion of LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P., counsel for the
Underwriters, dated the Closing Date, covering the matters referred to in
subparagraphs (v), (vii) (but only as to the statements in the Prospectus
under "Description of Capital Stock" and "Underwriters") and clauses (ii)
and (iii) of (x) of paragraph (c) above.
With respect to subparagraph (x) of paragraph (c) above, Shearman &
Sterling may state that their opinion and belief are based upon their
participation in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto and documents
incorporated by reference and review and discussion of the contents
thereof, but are without independent check or verification, except as
specified. With respect to clauses (ii) and (iii) of subparagraph (x) of
paragraph (c) above, LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P. may state that
their opinion and belief are based upon their participation in the
preparation of the Registration Statement and Prospectus and any
amendments or supplements thereto (other than the documents incorporated
by reference) and upon review and discussion of the contents thereof
(including documents incorporated by reference), but are without
independent check or verification except as specified. With respect to
paragraph (d) above, Xxxxx Xxxxxxxxx, Esq. may rely upon an opinion or
opinions of counsel for any Selling Shareholders and, with respect to
factual matters and to the extent such counsel deems appropriate, upon the
representations of each Selling Shareholder contained herein and in other
documents and instruments; provided that (A) each such counsel for the
Selling Shareholders is satisfactory to your counsel, (B) a copy of each
opinion so relied upon is delivered to you and is in form and substance
satisfactory to your counsel, (C) copies of such other documents and
instruments shall be delivered to you and shall be in form and substance
satisfactory to your counsel and (D) Xxxxx Xxxxxxxxx, Esq, shall state in
his opinion that he is justified in relying on each such other opinion.
The opinions of Shearman & Sterling, Xxxxx Xxxxxxxxx, Esq., Xxxxxx
X. Xxxxx, Esq. and Xxxxxxx & Xxxxxx described in paragraphs (c), (d),
(e) and (f) above (and any opinions of counsel for any Selling Shareholder
referred to in the immediately preceding paragraph) shall be rendered to
the Underwriters at the request of the Company or one or more of the
Selling Shareholders, as the case may be, and shall so state therein.
(h) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to the
Underwriters, from Ernst & Young LLP, independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
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financial statements and certain financial information contained in or
incorporated by reference into the Registration Statement and the
Prospectus; provided that the letter delivered on the Closing Date shall
use a "cut-off date" not earlier than the date hereof.
(i) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and executive officers and directors of the
Company relating to sales and certain other dispositions of shares of
Common Stock or certain other securities, delivered to you on or before
the date hereof, shall be in full force and effect on the Closing Date,
except as set forth in Schedule V hereto.
(j) Each of the requisite governmental or regulatory approvals and
authorizations which are required in connection with the consummation of
the transactions contemplated by this Agreement shall have been obtained
and shall not contain any conditions or qualifications having in your
reasonable judgment a material adverse effect on the Company and its
subsidiaries, taken as a whole
(k) The Company will maintain the listing of the shares of Common
Stock on the New York Stock Exchange.
The several obligations of the U.S. Underwriters to purchase
Additional Shares hereunder are subject to the delivery to the U.S.
Representatives on the Option Closing Date of such documents as they may
reasonably request with respect to the good standing of the Company, the due
authorization and issuance of the Additional Shares and other matters related to
the issuance of the Additional Shares.
8. COVENANTS OF THE COMPANY. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, nine signed copies of the
Registration Statement (including exhibits thereto and documents
incorporated therein by reference) and for delivery to each other
Underwriter a conformed copy of the Registration Statement (without
exhibits thereto but including documents incorporated therein by
reference); and to furnish to you in New York City, without charge, prior
to 10:00 A.M. New York City time on the business day next succeeding the
date of this Agreement and during the period mentioned in paragraph (c)
below, as many copies of the Prospectus, any documents incorporated by
reference, and any supplements and amendments thereto or to the
Registration Statement as you may reasonably request. The terms
"supplement" and "amendment" or "amend" as used in this Agreement, shall
include all documents subsequently filed by the Company with the Commission
pursuant to the Exchange Act that are deemed to be incorporated by
reference in the Prospectus.
(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment
or supplement
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and not to file any such proposed amendment or supplement to which you
reasonably object, and to file with the Commission within the applicable
period specified in Rule 424(b) under the Securities Act any prospectus
required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with sales
by an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses you will
furnish to the Company) to which Shares may have been sold by you on
behalf of the Underwriters and to any other dealers upon request, either
amendments or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus, as amended or supplemented, will
comply with law.
(d) To cooperate with the Underwriters to qualify the Shares for
offer and sale under the securities or Blue Sky laws of such jurisdictions
as you shall reasonably request; provided, however, that the Company shall
not be obligated to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is
not otherwise so subject.
(e) To make generally available to the Company's security holders
and to you as soon as practicable a consolidated earnings statement of the
Company covering the twelve-month period ending June 30, 1999 that
satisfies the provisions of Section 11(a) of the Securities Act and the
rules and regulations of the Commission thereunder.
(f) Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be
paid all expenses incident to the performance of its obligations under
this Agreement, including: (i) the fees, disbursements and expenses of the
Company's counsel and the Company's accountants in connection with the
registration and delivery of the Shares under the Securities Act and all
other fees or expenses in connection with the preparation and filing of
the Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing
costs associated therewith, and the mailing and delivering of copies
thereof to the Underwriters and dealers, in the quantities hereinabove
specified, (ii) all costs and expenses related to the transfer and
delivery of the Shares to the Underwriters,
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including any transfer or other taxes payable thereon (other than such
transfer or other taxes, if any, payable on the transfer and sale of the
Shares being sold by the Selling Shareholders), (iii) the cost of printing
or producing any Blue Sky or Legal Investment memorandum in connection
with the offer and sale of the Shares under state securities laws and all
expenses in connection with the qualification of the Shares for offer and
sale under state securities laws as provided in Section 8(d) hereof,
including filing fees and the reasonable fees and disbursements of counsel
for the Underwriters in connection with such qualification and in
connection with the Blue Sky or Legal Investment memorandum, (iv) all
filing fees and disbursements of counsel to the Underwriters incurred in
connection with the review and qualification of the offering of the Shares
by the National Association of Securities Dealers, Inc., (v) all costs and
expenses incident to the listing of the Shares on the New York Stock
Exchange, (vi) the cost of printing certificates representing the Shares,
(vii) the costs and charges of any transfer agent, registrar or
depositary, (viii) except as otherwise agreed, the costs and expenses of
the Company relating to investor presentations on any "road show"
undertaken in connection with the marketing of the offering of the Shares,
including, without limitation, expenses associated with the production of
road show slides and graphics, fees and expenses of any consultants
engaged in connection with the road show presentations with the prior
approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and
the cost of any aircraft chartered in connection with the road show, and
(ix) all other costs and expenses incident to the performance of the
obligations of the Company hereunder for which provision is not otherwise
made in this Section. It is understood, however, that except as provided
in this Section, Section 10 entitled "Indemnity and Contribution," and the
last paragraph of Section 12 below, the Underwriters will pay all of their
costs and expenses, including fees and disbursements of their counsel,
stock transfer taxes payable on resale of any of the Shares by them and
any advertising expenses connected with any offers they may make and their
out-of-pocket costs with respect to any "road show" undertaken in
connection with the marketing of the offering of the Shares.
9. EXPENSES OF SELLING SHAREHOLDERS. Each Selling Shareholder,
severally and not jointly, agrees to pay or cause to be paid all transfer or
other taxes, if any, payable on the transfer and sale of the Shares being sold
by such Selling Shareholder.
10. INDEMNITY AND CONTRIBUTION. (a) The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or
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alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to the Company in writing by
such Underwriter through you expressly for use therein; provided, however, that
the foregoing indemnity agreement with respect to any preliminary prospectus
shall not inure to the benefit of any Underwriter from whom the person asserting
any such losses, claims, damages or liabilities purchased Shares, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities.
(b) Each Selling Shareholder agrees, severally and not jointly, to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred by any Underwriter or any such
controlling person in connection with defending or investigating any such action
or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
but only with reference to information relating to such Selling Shareholder
furnished to the Company in writing by or on behalf of such Selling Shareholder
expressly for use in the Registration Statement, any preliminary prospectus or
the Prospectus; provided, however, that the foregoing indemnity agreement with
respect to any preliminary prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages or
liabilities purchased Shares, or any person controlling such Underwriter, if a
copy of the Prospectus (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Underwriter to such person, if required by law so to have
been delivered, at or prior to the written confirmation of the sale of the
Shares to such person, and if the Prospectus (as so amended or supplemented)
would have cured the defect giving rise to such losses, claims, damages or
liabilities. Notwithstanding any other provision of this Section 10, the
liability of each Selling Shareholder to the Underwriters shall not exceed the
net amount received by each such Selling Shareholder (after deducting any
underwriting discount) from the sale of the Shares pursuant to this Agreement.
(c) Each Selling Shareholder agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement
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and each person, if any, who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof, any preliminary prospectus or
the Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only with reference
to information relating to such Selling Shareholder furnished in writing by or
on behalf of such Selling Shareholder to the Company expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto. Notwithstanding any other provision of this
Section 10, the liability of each Selling Shareholder to the Company shall not
exceed the net amount received by each such Selling Shareholder (after deducting
any underwriting discount) from the sale of the Shares pursuant to this
Agreement.
(d) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Selling Shareholders, the directors of the
Company, the officers of the Company who sign the Registration Statement and
each person, if any, who controls the Company or any Selling Shareholder within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
but only with reference to information relating to such Underwriter furnished to
the Company in writing by such Underwriter through you expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
(e) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to paragraph (a), (b), (c), or (d) of this
Section 10, such person (the "indemnified party") shall promptly notify the
person against whom such indemnity may be sought (the "indemnifying party") in
writing and the indemnifying party, upon request of the indemnified party, shall
retain counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the reasonable fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified party shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i) the
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indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them.
Subject to Sections 11(b) and 11(c) hereof, it is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for (i) all Underwriters and
all persons, if any, who control any Underwriter within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, (ii) the
Company, its directors, its officers who sign the Registration Statement and
each person, if any, who controls the Company within the meaning of either such
Section and (iii) all Selling Shareholders and all persons, if any, who control
any Selling Shareholder within the meaning of either such Section, and that all
such fees and expenses shall be reimbursed as they are incurred. In the case of
any such separate firm for the Underwriters and such control persons of the
Underwriters, such firm shall be designated in writing by Xxxxxx Xxxxxxx. In the
case of any such separate firm for the Company, and such directors, officers and
control persons of the Company, such firm shall be designated in writing by the
Company. In the case of any such separate firm for the Selling Shareholders and
such controlling persons of the Selling Shareholders, such firm shall be
designated in writing by Selling Shareholders selling a majority of the amount
of Shares being sold by the Selling Shareholders under this Agreement. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.
(f) To the extent the indemnification provided for in paragraph (a),
(b), (c), or (d) of this Section 10 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits
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25
received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnifying party or parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Selling Shareholders on the one hand and the Underwriters on the other
hand in connection with the offering of the Shares shall be deemed to be in the
same respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by the Company and the Selling Shareholders
and the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover of the
Prospectus, bear to the aggregate Public Offering Price of the Shares. The
relative fault of the Company and the Selling Shareholders on the one hand and
the Underwriters on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Selling Shareholders or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The
Underwriters' respective obligations to contribute pursuant to this Section 10
are several in proportion to the respective number of Shares they have purchased
hereunder, and not joint.
(g) The Company and the Selling Shareholders and the Underwriters
agree that it would not be just or equitable if contribution pursuant to this
Section 10 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
that does not take account of the equitable considerations referred to in
paragraph (f) of this Section 10. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages and liabilities referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 10, (x) no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and (y) no Selling
Shareholder shall be required to contribute any amount in excess of the amount
by which the net amount received by such Selling Shareholder (after deducting
any underwriting discount) exceeds the amount of damages that any such Selling
Shareholder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in this
Section 10 are not exclusive and shall
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26
not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
(h) The indemnity and contribution provisions contained in this
Section 10 and the representations and warranties of the Company and the Selling
Shareholders contained in this Agreement shall remain operative and in full
force and effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, any Selling Shareholder or any person controlling any Selling
Shareholder, or the Company, its officers or directors or any person controlling
the Company and (iii) acceptance of and payment for any of the Shares.
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27
11. TERMINATION. This Agreement shall be subject to termination by
notice given by you to the Company and the Selling Shareholders, if (a) after
the execution and delivery of this Agreement and prior to the Closing Date (i)
trading generally shall have been suspended or materially limited on or by, as
the case may be, any of the New York Stock Exchange, the American Stock Exchange
or the National Association of Securities Dealers, Inc., (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses (a)(i) through (iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable to
market the Shares on the terms and in the manner contemplated in the Prospectus.
12. EFFECTIVENESS; DEFAULTING UNDERWRITERS. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
that it has or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number of
Firm Shares set forth opposite their respective names in Schedule II or Schedule
III bears to the aggregate number of Firm Shares set forth opposite the names of
all such non-defaulting Underwriters, or in such other proportions as you may
specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to this Agreement be increased pursuant to this Section 13 by
an amount in excess of one-ninth of such number of Shares without the written
consent of such Underwriter. If, on the Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Firm Shares and the aggregate
number of Firm Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Firm Shares to be purchased, and
arrangements satisfactory to you, the Company and the Selling Shareholders for
the purchase of such Firm Shares are not made within 36 hours after such
default, this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter, the Company or the Selling Shareholders. In any such
case either you, the Company or the relevant Selling Shareholder shall have the
right to postpone the Closing Date, but in no event for longer than seven days
in order that the required changes, if any, in the Registration Statement and in
the Prospectus or in any other documents or arrangements may be effected. If, on
the Option Closing Date, any U.S. Underwriter or U.S. Underwriters shall fail or
refuse to purchase Additional Shares and the aggregate number of Additional
Shares with respect to which such default occurs is more than one-tenth of the
aggregate number of Additional Shares to be purchased, the non-defaulting U.S.
Underwriters shall have the option to (i) terminate their obligation hereunder
26
28
to purchase Additional Shares or (ii) purchase not less than the number of
Additional Shares that such non-defaulting U.S. Underwriters would have been
obligated to purchase in the absence of such default. Any action taken under
this paragraph shall not relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company or any
Selling Shareholder to comply with the terms or to fulfill any of the conditions
of this Agreement, or if for any reason the Company or any Selling Shareholder
shall be unable to perform its obligations under this Agreement, the Company and
the Selling Shareholders will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
13. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
14. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
15. HEADINGS. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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29
Very truly yours,
ARM FINANCIAL GROUP, INC.
By _____________________
Name: Xxxxxx X. Xxxx
Title: Chief Executive Officer
THE XXXXXX XXXXXXX LEVERAGED
EQUITY FUND II, L.P.
By: Xxxxxx Xxxxxxx Leveraged Equity Fund
II, Inc., its general partner
By _____________________
Name:
Title:
By ___________________
Name:
Title:
XXXXXX XXXXXXX CAPITAL PARTNERS
III, L.P.
By: MSCP III, L.P., its general partner
By: Xxxxxx Xxxxxxx Capital Partners III, Inc.,
its general partner
By _____________________
Name:
Title:
By ______________________
Name:
Title:
30
XXXXXX XXXXXXX CAPITAL
INVESTORS, L.P.
By: MSCP III, L.P., its general partner
By: Xxxxxx Xxxxxxx Capital Partners III, Inc.,
its general partner
By _____________________
Name:
Title:
By _____________________
Name:
Title:
MSCP III 892 INVESTORS, L.P.
By: MSCP III, L.P., its general partner
By: Xxxxxx Xxxxxxx Capital Partners III, Inc.,
its general partner
By _____________________
Name:
Title:
By ______________________
Name:
Title:
31
Accepted as of the date hereof
XXXXXX XXXXXXX & CO. INCORPORATED
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES CORPORATION
PAINEWEBBER INCORPORATED
XXXXXXXX & CO. INC.
Acting severally on behalf of themselves and the several
U.S. Underwriters named in Schedule II hereto.
By: Xxxxxx Xxxxxxx & Co. Incorporated
By ___________________
Name:
Title:
XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES CORPORATION
PAINEWEBBER INTERNATIONAL (U.K.) LTD.
J. XXXXX XXXXXXXX & CO. LIMITED
Acting severally on behalf of themselves and the several International
Underwriters named in Schedule III hereto.
By: Xxxxxx Xxxxxxx & Co. International Limited
By __________________
Name:
Title:
32
Schedule I
Number of
Firm Shares
Selling Shareholder To Be Sold
------------------- ----------
The Xxxxxx Xxxxxxx Leveraged Equity
Fund II, X.X.
Xxxxxx Xxxxxxx Capital Partners III, X.X.
Xxxxxx Xxxxxxx Capital Investors, L.P.
MSCP III 892 Investors, L.P.
Total.............................................
33
Schedule II
U.S. Underwriters
Number of
Firm Shares
Underwriter To Be Purchased
----------- ---------------
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
PaineWebber Incorporated
Xxxxxxxx & Co. Inc.
Total U.S. Firm Shares.............................
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Schedule III
International Underwriters
Number of
Firm Shares
Underwriter To Be Purchased
----------- ---------------
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
PaineWebber International (U.K.) Ltd.
J. Xxxxx Xxxxxxxx & Co. Limited
Total International Firm Shares ..................
35
Schedule IV
Each U.S. Underwriter represents that it has not offered or sold,
and agrees not to offer or sell, any Shares, directly or indirectly, in any
province or territory of Canada or to, or for the benefit of, any resident of
any province or territory of Canada in contravention of the securities laws
thereof and, without limiting the generality of the foregoing, represents that
any offer or sale of Shares in Canada will be made only pursuant to an exemption
from the requirement to file a prospectus in the province or territory of Canada
in which such offer or sale is made. Each U.S. Underwriter further agrees to
send to any dealer who purchases from it any of the Shares a notice stating in
substance that, by purchasing such Shares, such dealer represents and agrees
that it has not offered or sold, and will not offer or sell, directly or
indirectly, any of such Shares in any province or territory of Canada or to, or
for the benefit of, any resident of any province or territory of Canada in
contravention of the securities laws thereof and that any offer or sale of
Shares in Canada will be made only pursuant to an exemption from the requirement
to file a prospectus in the province or territory of Canada in which such offer
or sale is made, and that such dealer will deliver to any other dealer to whom
it sells any of such Shares a notice containing substantially the same statement
as is contained in this sentence.
The Underwriters understand that no action has been or will be taken
in any jurisdiction by the Underwriters or the Company that would permit a
public offering of the Shares, or possession or distribution of the Prospectus
(as defined in the Underwriting Agreement), in preliminary or final form, in any
jurisdiction where, or in any circumstances in which, action for that purpose is
required, other than the United States.
Each International Underwriter agrees that it will comply with all
applicable laws and regulations, and make or obtain all necessary filings,
consents or approvals, in each jurisdiction in which it purchases, offers, sells
or delivers Shares (including, without limitation, any applicable requirements
relating to the delivery of the international prospectus, in preliminary or
final form), in each case at its own expense. In connection with sales of and
offers to sell Shares made by it, each International Underwriter will either
furnish to each person to whom any such sale or offer is made a copy of the then
current international prospectus (in preliminary or final form and as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto), or inform such person that such international prospectus,
in preliminary or final form, will be made available upon request, and will keep
an accurate record of the names and addresses of all persons to whom it gives
copies of the registration statement relating to the offering of the Shares, the
international prospectus, in preliminary or final form, or any amendment or
supplement thereto, and, when furnished with any subsequent amendment to such
registration statement, any subsequent prospectus or any medium outlining
changes in the registration statement or any prospectus, will upon request of
the International Representatives, promptly forward copies thereof to such
persons or inform such persons that such amendment, subsequent prospectus or
other medium will be made available upon request.
36
Each International Underwriter further represents that it has not
offered or sold, and agrees not to offer or sell, directly or indirectly, in
Japan or to or for the account of any resident thereof, any of the Shares
acquired in connection with the distribution contemplated hereby, except for
offers or sales to Japanese International Underwriters or dealers and except
pursuant to any exemption from the registration requirements of the Securities
and Exchange Law and otherwise in compliance with applicable provisions of
Japanese law. Each International Underwriter further agrees to send to any
dealer who purchases from it any of the Shares a notice stating in substance
that, by purchasing such Shares, such dealer represents and agrees that it has
not offered or sold, and will not offer or sell, any of such Shares, directly or
indirectly, in Japan or to or for the account of any resident thereof except for
offers or sales to Japanese International Underwriters or dealers and except
pursuant to any exemption from the registration requirements of the Securities
and Exchange Law and otherwise in compliance with applicable provisions of
Japanese law, and that such dealer will send to any other dealer to whom it
sells any of such Shares a notice containing substantially the same statement as
is contained in this sentence.
Each International Underwriter further represents and agrees that
(i) it has not offered or sold and, prior to the date six months after the
Closing Date, will not offer or sell, any Shares to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995; (ii) it
has complied and will comply with all applicable provisions of the Financial
Services Xxx 0000 with respect to anything done by it in relation to the Shares
in, from or otherwise involving the United Kingdom; and (iii) it has only issued
or passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the offering of the Shares to a person who is
of a kind described in Article 11(3) of the Financial Services Xxx 0000
(Investment Advertisements) (Exemptions) Order 1996 or is a person to whom such
document may otherwise lawfully be issued or passed on.
37
Schedule V
Persons Who Have Not Executed a "Lock-up" Agreement in the Form of
Exhibit A to the Underwriting Agreement by [ ___,] 1998
Number of Options to
Number of Shares of Class Acquire Shares of
A Convertible Common Class A Convertible
Stock to be Owned Common Stock to be Owned
Name Following the Offering Following the Offering
---- ---------------------- ----------------------
38
Exhibit A
[FORM OF LOCK-UP LETTER]
_____________, 1998
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
PaineWebber Incorporated
Xxxxxxxx & Co. Inc..
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
PaineWebber International (U.K.) Ltd.
J. Xxxxx Xxxxxxxx & Co. Limited
c/o Morgan Xxxxxxx & Co. International Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
England
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated
("Xxxxxx Xxxxxxx") and Xxxxxx Xxxxxxx & Co. International Limited ("MSIL")
propose to enter into an Underwriting Agreement (the "Underwriting Agreement")
with ARM Financial Group, Inc., a Delaware corporation (the "Company"), and
certain shareholders of the Company providing for the public offering (the
"Public Offering") by the several Underwriters, including Xxxxxx Xxxxxxx and
MSIL, (the "Underwriters") of shares (the "Shares") of the Class A Convertible
Common Stock, par value $0.01 per share, of the Company (the "Common Stock").
To induce the Underwriters that may participate in the Public
Offering to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of Xxxxxx
Xxxxxxx on behalf of the Underwriters, it will not, during the period commencing
on the date hereof and ending 90 days after the date of the
39
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 Common Stock (provided that such shares or securities are
either now owned by the undersigned or are hereafter acquired prior to the
Public Offering), 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 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 sale of any
Shares to the Underwriters pursuant to the Underwriting Agreement, (B) the
issuance by the Company of shares of the Common Stock upon the exercise of an
option or warrant or the conversion of a security outstanding on the date hereof
of which the Underwriters have been advised in writing or (C) the issuance by
the Company of any shares of Common Stock or other securities or the grant by
the Company of any options to purchase Common Stock or other securities pursuant
to the employee benefit plans of the Company. In addition, the undersigned
agrees that, without the prior written consent of Xxxxxx Xxxxxxx on behalf of
the Underwriters, it will not, during the period commencing on the date hereof
and ending 90 days after the date of the Prospectus, make any demand for or
exercise any right with respect to, the registration of any shares of Common
Stock or any security convertible into or exercisable or exchangeable for Common
Stock.
Whether or not the Public Offering actually occurs depends on a
number of factors, including market conditions. This Letter Agreement will
terminate in the event that the Public Offering has not been consummated on or
prior to [________, 1998]. Any Public Offering will only be made pursuant to an
Underwriting Agreement, the terms of which are subject to negotiation between
the Company and the Underwriters.
Very truly yours,
-------------------------------
(Name)
-------------------------------
(Address)
