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EXHIBIT 1.1
SUMMIT HOLDING SOUTHEAST, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
March __, 1997
XXXXXXX XXXXX & ASSOCIATES, INC.
ABN AMRO Chicago Corporation
as Representatives of the Several
Underwriters (the "Representatives")
c/o Raymond Xxxxx & Associates, Inc.
000 Xxxxxxxx Xxxxxxx
Xx. Xxxxxxxxxx, XX 00000
Dear Sirs:
Subject to the terms and conditions stated herein, Summit Holding
Southeast, Inc., a Florida corporation (the "Company"), proposes to issue and
sell shares of its common stock, par value $.01 per share ("Common Stock"), in
connection with the Amended Plan of Conversion and Recapitalization (the
"Plan") of Employers Self Insurers Fund ("ESIF"), pursuant to which ESIF will
simultaneously convert from a Florida group self-insurance fund to a Florida
stock insurance company under the name Bridgefield Employers Insurance Company
("Bridgefield") and become a wholly owned subsidiary of the Company (the
"Conversion"). Pursuant to the Plan, the Company proposes: (1) to issue to
Eligible Policyholders (as defined in the Plan) of ESIF shares of Series A
Preferred Stock, par value $10 per share (the "Preferred Stock"), in partial
exchange for their membership interests in ESIF; (2) to offer to issue and sell
shares of Common Stock to Eligible Policyholders, as well as to certain
directors, officers and employees of the Company and its subsidiaries (the
"Management Group"), pursuant to nontransferable subscription rights (the
"Subscription Offering"); and (3) to issue and sell shares of Common Stock not
subscribed and paid for pursuant to the Subscription Offering ("Firm Shares")
to the Underwriters named in Schedule I (the "Underwriters"), as provided in
this Agreement (the "Public Offering"). Furthermore, at the election of the
Underwriters and subject to the terms and conditions stated herein, the Company
proposes to sell to the Underwriters up to 750,000 additional shares of Common
Stock (the "Optional Shares"). The Firm Shares and the Optional Shares that
the Underwriters elect to purchase pursuant to Section 2 hereof are
collectively called the "Shares." As used in this Agreement, unless the
context requires otherwise, the term "Subsidiaries" refers to ESIF and its
subsidiaries, whether before or after the Company's acquisition of the Common
Stock of ESIF in connection with the Conversion.
1. REPRESENTATIONS AND WARRANTIES.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to, and agrees with, each of the Underwriters
that:
(i) A registration statement on Form S-1 (File
No. 333-16499) with respect to the Preferred Stock and Common
Stock, including a prospectus subject to completion, has been
filed by the Company with the Securities and Exchange
Commission (the "Commission") under the Securities Act of
1933, as amended (the Act"), and one or more amendments,
including one or more post-effective amendments, to such
registration statement may have been so filed. After the
execution of this Agreement, the Company will file with the
Commission, if such registration
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statement, as it may have been amended, has become effective
under the Act and information has been omitted therefrom (or
from any post-effective amendment thereto) in accordance with
Rule 430A under the Act, a prospectus in the form most recently
included in an amendment to such registration statement (or, if
no such amendment shall have been filed, in such registration
statement) with such changes or insertions as are required by
Rule 430A or permitted by Rule 424(b) under the Act and as have
been provided to and approved by the Underwriters. As used in
this Agreement, the term "Registration Statement" means such
registration statement, as amended at the time when it (or the
most recent post-effective amendment thereto) was or is
declared effective, including all financial statement schedules
and exhibits thereto and including any information omitted
therefrom pursuant to Rule 430A under the Act and included in
the Prospectus (as hereinafter defined); the term "Preliminary
Prospectus" means each prospectus subject to completion
included in such Registration Statement or any amendment or
post-effective amendment thereto (including the prospectus
subject to completion, if any, included in the Registration
Statement (or the most recent post-effective amendment thereto)
at the time it was or is declared effective); and the term
"Prospectus" means the prospectus first filed with the
Commission pursuant to Rule 424(b) under the Act or, if no
prospectus is required to be so filed, such term means the
prospectus included in the Registration Statement. For
purposes of the following representations and warranties, to
the extent reference is made to the Prospectus and at the
relevant time the Prospectus is not yet in existence, such
reference shall be deemed to be to the most recent Preliminary
Prospectus.
(ii) No order preventing or suspending the use of
any Preliminary Prospectus or the Prospectus has been issued
and no proceeding for that purpose has been instituted or
threatened by the Commission or the securities authority of any
state or other jurisdiction. No stop order suspending the
effectiveness of the Registration Statement or any part thereof
has been issued and no proceeding for that purpose has been
instituted or, to the knowledge of the Company, threatened or
contemplated by the Commission or the securities authority of
any state or other jurisdiction.
(iii) When any Preliminary Prospectus was filed with
the Commission it (A) contained all statements required to be
stated therein in accordance with, and complied in all material
respects with the requirements of, the Act and the rules and
regulations of the Commission thereunder, and (B) did not
include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading. When the Registration
Statement or any amendment thereto was or is declared
effective, and at each Time of Delivery (as hereinafter
defined), it (A) contained or will contain all statements
required to be stated therein in accordance with, and complied
or will comply in all material respects with the requirements
of, the Act and the rules and regulations of the Commission
thereunder, and (B) did not or will not include any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading. When
the Prospectus or any amendment or supplement thereto is filed
with the Commission pursuant to Rule 424(b) (or, if the
Prospectus or such amendment or supplement is not required to
be so filed, when the Registration Statement or the amendment
thereto containing such amendment or supplement to the
Prospectus was or is declared effective) and at each Time of
Delivery, the Prospectus, as amended or supplemented at any
such time, (A) contained or will contain all statements
required to be stated therein in accordance with, and complied
or will comply in all material respects with the requirements
of, the Act and the rules and regulations of the Commission
thereunder, and (B) did not or will not include any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not
misleading. The foregoing provisions of this paragraph (iii)
do not apply to statements or omissions made in any Preliminary
Prospectus, the Registration Statement or any amendment thereto
or the
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Prospectus or any amendment or supplement thereto in reliance
upon and in conformity with written information furnished to
the Company by any of the Underwriters specifically for use
therein.
(iv) The descriptions in the Registration Statement
and the Prospectus of statutes, legal and governmental
proceedings or contracts and other documents are accurate and
fairly present the information required to be shown; and there
are no statutes or legal or governmental proceedings required
to be described in the Registration Statement or the Prospectus
that are not described as required and no contracts or
documents of a character 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
and filed as required.
(v) The Company and its Subsidiaries each has
been duly incorporated, is validly existing as a corporation
in good standing under the laws of its jurisdiction of
incorporation and has full power and authority (corporate and
other) to own or lease its properties and conduct its business
as described in the Prospectus. The Company has full power
and authority (corporate and other) to enter into this
Agreement and to perform its obligations hereunder. The
Company and each of its Subsidiaries is duly qualified to
transact business as a foreign corporation and is in good
standing under the laws of each other jurisdiction in which it
owns or leases properties, or conducts any business, so as to
require such qualification, except where the failure to so
qualify would not have a material adverse effect on the
financial position, results of operations or business of the
Company (a "Material Adverse Effect").
(vi) The Company's authorized, issued and
outstanding capital stock is as set forth in the Prospectus
under the caption "Capitalization." All of the issued shares
of capital stock of the Company and each of its Subsidiaries
have been duly authorized and validly issued, are fully paid
and nonassessable and the Common Stock conforms to the
description of the Common Stock contained in the Prospectus.
None of the issued shares of capital stock of the Company and
its Subsidiaries each has been issued or is owned or held in
violation of any preemptive rights of shareholders, and no
person or entity has any preemptive or other rights to
subscribe for any of the Shares.
(vii) The Plan has been duly adopted by the
required vote of ESIF's Board of Trustees and policyholders
and is in compliance with the insurance laws of the State of
Florida applicable to the reorganization of group
self-insurance funds into stock property and casualty insurance
companies. On August 20, 1996, ESIF submitted an application,
including an initial Plan of Conversion and Recapitalization,
to the Department of Insurance of the State of Florida (the
"Florida DOI") for permission to convert from a group
self-insurance fund to a stock insurance company. On or before
September 30, 1996, ESIF gave notice of a public hearing
regarding the Plan by publication in the publications set forth
on Schedule II hereto. The Florida DOI held a public hearing
on October 10, 1996, and issued a consent order dated November
15, 1996 (the "Order") approving the Conversion, subject to the
satisfaction of certain conditions [UPDATE FOR AMENDMENT].
Other than the conditions to effectiveness set forth in the
Order or in the Plan, no other approvals are required to be
obtained under the Florida Insurance Code for the effectiveness
of the Plan. Prior to or contemporaneously with each Time of
Delivery (as hereinafter defined), each of the actions required
to occur prior to the effectiveness of the Plan pursuant to the
Order or the Plan will have occurred.
(viii) The Company does not own, directly or
indirectly, any capital stock or other equity securities of
any other corporation or any ownership interest in any
partnership, joint venture or other entity or association
other than those listed on Exhibit 21.1 to the Registration
Statement.
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(ix) Except as disclosed in the Prospectus, there
are no outstanding (A) securities or obligations of the
Company convertible into or exchangeable for any capital stock
of the Company, (B) warrants, rights or options to subscribe
for or purchase from the Company any such capital stock or any
such convertible or exchangeable securities or obligations, or
(C) obligations of the Company to issue any shares of capital
stock, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or options.
(x) Since the date of the most recent audited
financial statements included in the Prospectus, neither the
Company nor any of its Subsidiaries has sustained any material
loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action,
order or decree, otherwise than as disclosed in or
contemplated by the Prospectus.
(xi) Since the respective dates as of which
information is given in the Registration Statement and the
Prospectus, (A) the Company has not incurred any liabilities
or obligations, direct or contingent, or entered into any
transactions, not in the ordinary course of business, that are
material to the Company, (B) the Company has not purchased any
of its outstanding capital stock or declared, paid or
otherwise made any dividend or distribution of any kind on its
capital stock, (C) there has not been any change in the
capital stock, or any material increase or decrease in the
long-term debt or short-term debt of the Company, and (D)
there has not been any material adverse change, or any
development involving a prospective material adverse change,
in or affecting the financial position, results of operations
or business of the Company, in each case other than as
disclosed in or contemplated by the Prospectus.
(xii) The Shares to be issued and sold by the
Company have been duly authorized and, when issued and
delivered against payment therefor as provided herein, will be
validly issued and fully paid and nonassessable and will
conform to the description of the Common Stock contained in
the Prospectus; and the certificates evidencing the Shares
will comply with all applicable requirements of Florida law.
(xiii) Except as disclosed in the Prospectus, there
are no contracts, agreements or understandings between the
Company and any person granting such person the right to
require the Company to file a registration statement under the
Act with respect to any securities of the Company owned or to
be owned by such person or to require the Company to include
such securities in the securities registered pursuant to the
Registration Statement (unless an such right has been
exercised or effectively waived) or any securities being
registered pursuant to any other registration statement filed
by the Company under the Act.
(xiv) All offers and sales of the Company's capital
stock prior to the date hereof were at all relevant times duly
registered under the Act or exempt from the registration
requirements of the Act and were duly registered or the
subject of an available exemption from the registration
requirements of the applicable state securities or blue sky
laws.
(xv) The Company and its Subsidiaries each is not,
nor with the giving of notice or passage of time or both would
be, in violation of its Certificate of Incorporation or Bylaws
or in default under any indenture, mortgage, deed of trust,
loan agreement, lease, or other agreement or instrument to
which the Company or any of its Subsidiaries is a party or to
which any of their respective properties or assets is subject,
which default would have a Material Adverse Effect.
(xvi) Subject to the satisfaction of the conditions
to the effectiveness of the Conversion set forth in the Plan,
the issue and sale of the Shares to be issued and sold by the
Company and the performance of this Agreement and the
consummation of the transactions herein contemplated
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will not conflict with, or (with or without the giving of
notice or the passage of time or both) result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which the
Company or any of its Subsidiaries is a party or to which its
properties or assets is subject, nor will such action conflict
with or violate any provision of the Certificate of
Incorporation or Bylaws of the Company or any statute, rule or
regulation (assuming compliance with all applicable state
securities or blue sky laws) or any order, judgment or decree
of any court or governmental agency or body having jurisdiction
over the Company or any of its properties or assets.
(xvii) The Company and its Subsidiaries each has good
title to all personal property owned by it free and clear of
all liens, security interests, pledges, charges, encumbrances,
mortgages, and defects, except such as are disclosed in the
Prospectus or such as do not materially and adversely affect
the value of such property and do not interfere with the use
made or proposed to be made of such property by the Company;
and any real property and buildings held under lease by the
Company are held under valid, subsisting and enforceable
leases, with such exceptions as are disclosed in the
Prospectus or are not material and do not interfere with the
use made or proposed to be made of such property and
buildings by the Company.
(xviii) No consent, approval, authorization, order or
declaration of or from, or registration, qualification or
filing with, any court or governmental agency or body is
required for the sale of the Shares or the consummation of the
transactions contemplated by this Agreement, except: (1) the
approval by the Florida DOI of the Plan, ESIF's Certificate of
Incorporation and by-laws, and ESIF's application to convert to
a stock insurance company, and (2) the registration of the
Shares under the Act and as may be required by the National
Association of Securities Dealers, Inc. or under state
securities or blue sky laws in connection with the offer, sale
and distribution of the Shares by the Underwriters.
(xix) Other than as disclosed in the Prospectus,
there is no litigation, arbitration, claim, proceeding (formal
or informal) or investigation pending or, to the knowledge of
the Company, threatened (or any basis therefor) in which the
Company is a party or of which any of its properties or assets
is the subject which, if determined adversely to the Company,
would individually or in the aggregate have a Material Adverse
Effect. The Company is not in violation of, or in default with
respect to, any statute, rule, regulation, order, judgment or
decree, except as described in the Prospectus or such as do not
and will not individually or in the aggregate have a Material
Adverse Effect.
(xx) Ernst & Young LLP and Xxxxxxx & Xxxxxx, who
have certified certain financial statements of ESIF and its
Subsidiaries for the fiscal years ended March 31, 1994, 1995
and 1996, and Ernst & Young LLP who has certified certain
financial statements of Summit Holding Corporation and its
Subsidiaries (collectively, "SHC") for the fiscal years ended
December 31, 1993, 1994 and 1995 are, and were at all times,
during the periods covered by their reports included in the
Registration Statement and the Prospectus, independent public
accountants as required by the Act and the rules and
regulations of the Commission thereunder.
(xxi) The financial statements and schedules
(including the related notes) of ESIF and SHC and their
respective Subsidiaries included in the Registration
Statement, the Prospectus or any Preliminary Prospectus were
prepared in accordance with generally accepted accounting
principles consistently applied (or, if not consistently
applied, as applied on the basis stated in such financial
statements and schedules or the related notes thereto)
throughout the periods involved and fairly present the
financial position and results of operations of ESIF and SHC
and their respective Subsidiaries at the dates and for the
periods presented. The selected financial data set forth
under
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the caption "Selected Financial Data" in the Prospectus fairly
present, on the basis stated in the Prospectus, the information
included therein.
(xxii) This Agreement has been duly authorized,
executed and delivered by the Company.
(xxiii) None of the Company, any of its Subsidiaries,
or, to the knowledge of the Company, their respective officers,
directors or affiliates, has (A) taken, directly or indirectly,
any action designed to cause or result in, or that has
constituted or might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Shares or
(B) since the filing of the Registration Statement (1) sold,
bid for, purchased or paid anyone any compensation for
soliciting purchases of the Shares or (2) paid or agreed to pay
to any person any compensation for soliciting another to
purchase any other securities of the Company.
(xxiv) The Company has obtained for the benefit of
the Company and the Underwriters from each of the directors and
executive officers of the Company a written agreement that for
a period of 180 days from the date of the Conversion, such
director or executive officer will not, without the prior
written consent of Xxxxxxx Xxxxx & Associates, Inc. on behalf
of the Underwriters, offer, pledge, sell, contract to sell,
grant any option for the sale of, or otherwise dispose of (or
announce any offer, pledge, sale, grant of an option to
purchase, or other disposition), directly or indirectly, any
shares of Common Stock or securities convertible into,
exercisable, or exchangeable for, shares of Common Stock.
(xxv) Neither the Company nor any of its
Subsidiaries, nor, to the knowledge of the Company or any of
its Subsidiaries, any other director, officer, agent, employee
or other person associated with or acting on behalf of the
Company or any of its Subsidiaries has, directly or indirectly,
used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political
activity; made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds; violated
any provision of the Foreign Corrupt Practices Act of 1977, as
amended; or made any bribe, rebate, payoff, influence payment
kickback or other payment, unlawful under the laws of the
United States or any foreign jurisdiction.
(xxvi) The Company and its Subsidiaries each is in
compliance in all material respects with all foreign, federal,
state, and local laws, ordinances, rules, and regulations
(collectively, "Laws"), and the Company and its Subsidiaries
each has all licenses, permits, and authorizations necessary
to operate under all Laws, except where the failure to have
such license, permit, or authorization would not (individually
or in the aggregate with respect to all such failures) have a
Material Adverse Effect and are in compliance in all material
respects with all terms and conditions of such licenses,
permits, and authorizations; neither the Company nor any of
its Subsidiaries has authorized, conducted, or has knowledge
of the generation, transportation, storage, use, treatment,
disposal or release of any hazardous substance, hazardous
waste, hazardous material, hazardous constituent, toxic
substance, pollutant, contaminant, petroleum product, natural
gas, liquefied gas or synthetic gas defined or regulated under
any environmental law; and there is no pending or, to the
knowledge of the Company and each of its Subsidiaries,
threatened claim, litigation or any administrative agency
proceeding, nor has the Company or any of its Subsidiaries
received any written or oral notice from any governmental
entity or third party, that: (A) alleges a violation of any
Laws by the Company or any of its Subsidiaries; (B) alleges
the Company or any of its Subsidiaries is a liable party under
the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. Section 9602 et seq. or any state
superfund law;
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or (C) alleges possible contamination of the environment by
the Company or any of its Subsidiaries.
(xxvii) The Company owns or has the right to use all
patents, patent applications, trademarks, trademark
applications, trade names, service marks, copyrights,
franchises, trade secrets, proprietary or other confidential
information and intangible properties and assets (collectively,
"Intellectual Property Rights") necessary to conduct its
business as presently conducted and as described in the
Prospectus, and as the Prospectus indicates the Company
proposes to conduct its business, except where the failure to
own or have such rights would not have a Material Adverse
Effect; and to the knowledge of the Company, the Company has
not infringed and is not infringing, and the Company has not
received notice of infringement with respect to, asserted
Intellectual Property Rights of others and there is no
infringement by others of Intellectual Property Rights of the
Company, in either case which might result in a Material
Adverse Effect.
(xxviii) The Company is insured by insurers of
recognized financial responsibility against such losses and
risks and in such amounts as management of the Company deems
prudent and in the best interests of the Company and its
shareholders; and the Company has no reason to believe that it
will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its
business at a comparable cost, except as disclosed in the
Prospectus.
(xxix) The Company and its Subsidiaries each makes
and keeps accurate books and records reflecting its assets and
maintains internal accounting controls which provide
reasonable assurance that (A) transactions are executed in
accordance with management's authorization, (B) transactions
are recorded as necessary to permit preparation of the
Company's financial statements in accordance with generally
accepted accounting principles and to maintain accountability
for the assets of the Company, (C) access to the assets of the
Company is permitted only in accordance with management's
authorization, and (D) the recorded accountability for assets
of the Company is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
(xxx) The Company and its Subsidiaries each has
filed all foreign, federal, state and local tax returns that
are required to be filed by it and has paid all taxes shown as
due on such returns as well as all other taxes, assessments
and governmental charges that are due and payable; and no
deficiency with respect to any such return has been assessed
or, to the knowledge of the Company, proposed.
(xxxi) The Company is not and will not become as a
result of the transactions contemplated hereby, and does not
intend to conduct its business in a manner that would cause it
to become, an "investment company" or a company "controlled"
by an "investment company" within the meaning of the
Investment Company Act of 1940.
(xxxii) The Company and its Subsidiaries each has
complied with all provisions of Section 517.075, Florida
Statutes, relating to doing business with the Government of
Cuba and certain other persons and entities.
(xxxiii) As of the date of this Agreement, the
Company is not required to be licensed as an insurance company
in any state. ESIF, U.S. Employers Insurance, Inc. and
Bridgefield Casualty Insurance Company (together, the
"Insurance Subsidiaries") are the only Subsidiaries of the
Company that are insurance companies. Each of the Insurance
Subsidiaries holds all licenses, certificates and permits
from insurance departments and all other governmental
authorities
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(collectively, the "Insurance Licenses") necessary or desirable
to conduct its business as presently conducted or the Company
presently contemplates it will conduct its business in the
future. Each of the Insurance Subsidiaries has fulfilled and
performed all material obligations necessary to maintain its
Insurance Licenses, and no event or events have occurred which
would result in the impairment, modification, termination, or
revocation of such Insurance Licenses. The Company and the
Insurance Subsidiaries each have filed all material reports,
registrations and statements, together with any amendments
required to be made with respect thereto, that they were
required to file with any state insurance commission, agency or
authority. As of their respective dates, such reports,
registrations and statements complied in all material respects
with all the laws, statutes, rules, and regulations of each
such jurisdiction, including, without limitation, those rules
and regulations promulgated by the applicable insurance
commission, agency, or authority in any such state.
(xxxiv) Except as set forth in the Prospectus, no
loss experience has occurred that would require or make it
necessary or appropriate for the Company to change, alter,
modify or amend the Company's methodology or assumptions
relating to losses.
(xxxv) All reinsurance treaties, contracts,
agreements, and arrangements to which the Company or any of
its Subsidiaries is a party and as to which any of them
reported recoverables, premiums due or other amounts in its
financial statements are in full force and effect and neither
the Company nor any of the Insurance Subsidiaries is in
violation of, or in default in the performance, observance or
fulfillment of, any material obligation, agreement, covenant
or condition contained therein, which violation or default
would, singularly or in the aggregate, have a Material Adverse
Effect on the condition (financial or other), business,
properties, net worth or results of operations of the Company
and the Insurance Subsidiaries taken as a whole. Neither the
Company nor any of the Insurance Subsidiaries has any reason
to believe that any other party to such treaties, contracts,
agreements or arrangements will not or cannot perform in any
material respect its duties or obligations under such treaty,
contract, agreement, or arrangement, except where the failure
to perform would not have a Material Adverse Effect on the
condition (financial or other), business, properties, net
worth or results of operations of the Company and its
Subsidiaries taken as a whole.
2. PURCHASE AND SALE OF SHARES. Subject to the terms and
conditions herein set forth, (a) the Company agrees to sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly,
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to purchase from the Company, at a purchase price of $______ per share, the
number of the Firm Shares set forth opposite the name of each Underwriter on
Schedule I.
The Company hereby grants to the Underwriters the right to purchase at
their election in whole or in part up to 750,000 Optional Shares at the
purchase price per share set forth in clause (a) in the paragraph above for the
sole purpose of covering over-allotments in the sale of Firm Shares. If the
option granted hereby is exercised in part, then the respective number of
Optional Shares to be purchased by each of the Underwriters shall be determined
by multiplying the total number of Optional Shares as to which such election
shall have been exercised by the Underwriters by a fraction, the numerator of
which is the maximum number of Optional Shares such Underwriter is entitled to
purchase as set forth opposite the name of such Underwriter in Schedule I
hereto and the denominator of which is the maximum number of Optional Shares
that all Underwriters are entitled to purchase hereunder (with the resulting
number to be adjusted by the Underwriters so as to eliminate fractional
shares). Any such election to purchase Optional Shares may be exercised by
written notice from the Underwriters to the Company, given one time within a
period of 30 calendar days after the date of this Agreement and setting forth
the aggregate number of Optional Shares to be purchased and the date on which
such Optional Shares are to be delivered, which date shall not be less than
three or more than ten business days after such notice is given, as determined
by the Underwriters, but in no event earlier than the First Time of Delivery.
The Company shall furnish or cause to be furnished to the Underwriters the
certificates, letters, and opinions, and to satisfy all conditions, set forth
in Section 7 hereof at the Subsequent Time of Delivery (as such term is defined
in Section 4, below).
3. OFFERING BY THE UNDERWRITERS. Upon the authorization by the
Underwriters of the release of the Shares, the several Underwriters propose to
offer the Shares for sale upon the terms and conditions disclosed in the
Prospectus.
4. DELIVERY OF SHARES; CLOSING. Certificates in definitive form
for the Shares to be purchased by each Underwriter hereunder, and in such
denominations and registered in such names as Xxxxxxx Xxxxx & Associates, Inc.
may request upon at least 48 hours prior notice to the Company, shall be
delivered by or on behalf of the Company to the Underwriters for the respective
account of each such Underwriter, against payment by such Underwriter on its
behalf as provided herein. Payment shall be made (i) with respect to the
purchase price for the Firm Shares and any Optional Shares purchased from the
Company if any Optional Shares are purchased hereunder, to the Company by
official bank check or checks payable to the order of, or by wire transfer to
the account of, the Company, in same day available funds against delivery of
the certificates for the Firm Shares or Optional Shares purchased from the
Company, as the case may be. The closing of the sale and purchase of the
Shares shall be held at the offices of Xxxxxxx Xxxxx & Associates, Inc., 000
Xxxxxxxx Xxxxxxx, Xx. Xxxxxxxxxx, Xxxxxxx 00000, except that physical delivery
of certificates for the Shares shall be made at the office of ChaseMellon
Shareholder Services, L.L.C., 000 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, or at such other location designated by Xxxxxxx Xxxxx & Associates, Inc.
The time and date of such delivery and payment shall be, with respect to the
Firm Shares, at 10:00 a.m., local time, on the third (or if the Firm Shares are
priced as contemplated by Rule 15c6-1(c) of the Commission, after 4:30 p.m.,
Washington, D.C. time, the fourth) full business day after this Agreement is
executed or at such other time and date as the Underwriters and the Company may
agree upon in writing, and, with respect to the Optional Shares, 10:00 a.m.,
local time, on the date specified by the Underwriters in the written notice
given by the Underwriters of the Underwriters' election to purchase all or part
of such Optional Shares, or at such other time and date as the Underwriters and
the Company may agree upon in writing. Such time and date for delivery of the
Firm Shares is herein called the "First Time of Delivery," and such time and
date for delivery of any Optional Shares, if not the First Time of Delivery, is
herein called the "Subsequent Time of Delivery," and each such time and date
for delivery is herein called a "Time of Delivery." The Company will make
certificates for the Shares available for checking and packaging at least 24
hours prior to each Time of Delivery at the office of The Depository Trust
Company, 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at such other location in
New York, New York specified by the Underwriters in writing at least 48 hours
prior to such Time of Delivery.
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5. COVENANTS.
(a) COVENANTS OF THE COMPANY. The Company covenants and
agrees with each of the Underwriters:
(i) If required by the rules and regulations of
the Commission, the Company will file the Prospectus with the
Commission pursuant to and in accordance with subparagraph (1)
(or, if applicable and if consented to by the Underwriters,
subparagraph (4)) of Rule 424(b) not later than the earlier of
(A) the second business day following the execution and
delivery of this Agreement or (B) the fifth business day after
the date on which a post-effective amendment to the
Registration Statement is declared effective. The Company will
advise the Underwriters promptly of any such filing.
(ii) The Company will not file with the Commission
the Prospectus or the amendment referred to in the second
sentence of Section 1(i) hereof, any amendment or supplement
to the Prospectus or any amendment to the Registration
Statement unless the Underwriters have received a reasonable
period of time to review any such proposed amendment or
supplement and consented to the filing thereof, such consent
not to be unreasonably delayed or withheld. The Company will
use its best efforts to cause any such amendment to the
Registration Statement to be declared effective as promptly as
possible. Upon the reasonable request of the Underwriters or
counsel for the Underwriters, the Company will promptly prepare
and file with the Commission, in accordance with the rules and
regulations of the Commission, any amendments to the
Registration Statement or amendments or supplements to the
Prospectus that may be necessary or advisable in connection
with the distribution of the Shares by the several Underwriters
and will use its best efforts to cause any such amendment to
the Registration Statement to be declared effective as promptly
as possible. If required, the Company will file any amendment
or supplement to the Prospectus with the Commission in the
manner and within the time period required by Rule 424(b) under
the Act. The Company will advise the Underwriters, promptly
after receiving notice thereof, of the time when any amendment
to the Registration Statement has been filed or declared
effective or the Prospectus or any amendment or supplement
thereto has been filed and will provide evidence to the
Underwriters of each such filing or effectiveness.
(iii) The Company will advise the Underwriters
promptly after receiving notice or obtaining knowledge of (A)
the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or any part
thereof or any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto (B) the suspension of the qualification of
the Shares for offer or sale in any jurisdiction or of the
initiation or threatening of any proceeding for any such
purpose, or (C) any request made by the Commission or any
securities authority of any other jurisdiction for amending
the Registration Statement, for amending or supplementing the
Prospectus or for additional information. The Company will
use its best efforts to prevent the issuance of any such stop
order and, if any such stop order is issued, to obtain the
withdrawal thereof as promptly as possible.
(iv) If during the period when the delivery of a
prospectus relating to the Shares is required under the Act,
any events have occurred as a result of which the Prospectus
as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading, or if for any reason it is necessary during such
same period to amend or supplement the Prospectus to comply
with the Act or the rules and regulations thereunder, the
Company will promptly notify the Underwriters and upon their
request (but at the Company's expense) prepare and file with
the Commission an amendment or supplement to the
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Prospectus that corrects such statement or omission or effects
such compliance and will furnish without charge to each
Underwriter and to any dealer in securities as many copies of
such amended or supplemented Prospectus as the Underwriters may
from time to time reasonably request. If an Underwriter is
required to deliver a prospectus relating to the Shares at any
time after the period when delivery of a prospectus is required
under the Act, upon request of the Underwriters but at the
expense of the Underwriters, the Company will prepare and
deliver to the Underwriters as many copies as the Underwriters
may request of an amended or supplemented Prospectus complying
with Section 10(a)(3) of the Act. Neither the Underwriters'
consent to, nor the Underwriters' delivery of, any such
amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 7.
(v) The Company promptly from time to time will
take such action as the Underwriters may reasonably request to
qualify the Shares for offering and sale under the securities
or blue sky laws of such jurisdictions as the Underwriters may
request and will continue such qualification in effect for as
long as may be necessary to complete the distribution of the
Shares, provided that in connection therewith the Company
shall not be required to qualify as a foreign corporation or
to file a general consent to service of process in any
jurisdiction.
(vi) The Company will promptly provide the
Underwriters, without charge, (A) two manually executed copies
of the Registration Statement as originally filed with the
Commission and of each amendment thereto, (B) for each other
Underwriter a conformed copy of the Registration Statement as
originally filed and of each amendment thereto, without
exhibits, and (C) so long as a prospectus relating to the
Shares is required to be delivered under the Act, as many
copies of each Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto as the Underwriters may
reasonably request.
(vii) As soon as practicable, but in any event not
later than the 45th day following the end of the fiscal
quarter in which occurs the first anniversary of the effective
date of the Registration Statement (except such date shall be
the 90th day rather than the 45th day if such quarter is then
the fourth fiscal quarter of the Company's fiscal year) after
the effective date of the Registration Statement, the Company
will make generally available to its security holders an
earnings statement of the Company covering a period of at
least 12 months beginning after the effective date of the
Registration Statement (which need not be audited) complying
with Section 11(a) of the Act and the rules and regulations
thereunder.
(viii) During the period beginning from the date
hereof and continuing to and including the date 180 days after
the date of the Conversion, the Company will not, without the
prior written consent of Xxxxxxx Xxxxx & Associates, Inc.,
offer, pledge, issue, sell, contract to sell, grant any option
for the sale of, or otherwise dispose of (or announce any
offer, pledge, sale, grant of an option to purchase or other
disposition), directly or indirectly, any shares of Common
Stock or securities convertible into, exercisable or
exchangeable for, shares of Common Stock, except (a) as
provided in Section 2 and except for the issuance of Common
Stock upon the exercise of stock options or warrants
outstanding on the date of this Agreement to the extent that
such stock options or warrants were issued pursuant to plans
or agreements which are disclosed in the Prospectus, (b) the
grant of options to employees or directors under existing
stock option plans and the issuance of Common Stock upon the
exercise thereof, or (c) as otherwise disclosed or
contemplated by the Prospectus.
(ix) During a period of five years from the
effective date of the Registration Statement, the Company will
furnish to the Underwriters, without charge, (A) copies of all
reports or other communications (financial or other) furnished
to shareholders generally, (B) as soon as they are available,
copies of any reports and financial statements furnished to or
filed with the
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Commission or the National Association of Securities Dealers,
Inc. or any national securities exchange upon which trading in
shares of the Common Stock is listed or reported, and (C) such
additional information concerning the business and financial
condition of the Company as the Underwriters may reasonably
request subject to appropriate confidentiality provisions with
respect to material non-public information.
(x) The Company will not (A) take, directly or
indirectly, prior to the termination of the underwriting
syndicate contemplated by this Agreement, any action designed
to cause or to result in, or that might reasonably be expected
to constitute, the stabilization or manipulation of the price
of any security of the Company to facilitate the sale or
resale of any of the Shares, (B) sell, bid for, purchase or
pay anyone any compensation for soliciting purchases of, the
Shares, or (C) pay or agree to pay to any person any
compensation for soliciting another to purchase any other
securities of the Company.
(xi) The Company will apply the net proceeds from
the offering in the manner set forth under "Use of Proceeds"
in the Prospectus.
(xii) The Company will use its best efforts to cause
the Shares to be listed on the Nasdaq National Market at each
Time of Delivery and maintain such listing on a continuous
basis for at least one year from the date hereof.
(xiii) If at any time during the period beginning on
the date the Registration Statement becomes effective and
ending on the later of (A) the date 25 days after such
effective date (or if the Underwriter's option granted pursuant
to Section 2 hereof has not been exercised by such date, then
35 days after such effective date) and (B) the date that is the
earlier of (1) the date on which the Company first files with
the Commission a Quarterly Report on Form 10-Q after such
effective date and (2) the date on which the Company first
issues a quarterly financial report to shareholders after such
effective date, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in the
reasonable opinion of the Underwriters the market price of the
Common Stock has been or is likely to be materially affected
(regardless of whether such rumor, publication or event
necessitates an amendment of or supplement to the Prospectus),
the Company will, after written notice from the Underwriters
advising the Company to the effect set forth above, forthwith
prepare, consult with the Underwriters concerning the substance
of, and consult with Company counsel to determine whether or
not it is advisable, under the circumstances, to disseminate a
press release or other public statement, reasonably
satisfactory to the Underwriters, responding to or commenting
on such rumor, publication or event.
6. EXPENSES. The Company will pay all costs and expenses
incident to the performance of its respective obligations under this Agreement,
whether or not the transactions contemplated hereby are consummated or this
Agreement is terminated pursuant to Section 10 hereof, including, without
limitation, all costs and expenses incident to (i) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with the
registration of the Shares under the Act and all other expenses in connection
with the preparation, printing and, if applicable, filing of the Registration
Statement (including all amendments thereto), any Preliminary Prospectus, the
Prospectus and any amendments and supplements thereto, and any blue sky
memoranda; (ii) the delivery of copies of the foregoing documents and this
Agreement to the Underwriters; (iii) the filing fees of the Commission and the
National Association of Securities Dealers, Inc. relating to the Shares; (iv)
the preparation, issuance and delivery to the Underwriters of any certificates
evidencing the Shares, including transfer agent's and registrar's fees; (v) the
qualification of the Shares for offering and sale under state securities and
blue sky laws, including filing fees and the reasonable fees and disbursements
of counsel for the Underwriters relating thereto; (vi) any listing of the
Shares on the Nasdaq National Market and (vii) any expenses for travel, lodging
and meals incurred by the
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Company and any of its officers, directors and employees in connection with any
meetings with prospective investors in the Shares.
7. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters hereunder to purchase and pay for the Shares to
be delivered at each Time of Delivery shall be subject, in their discretion, to
the accuracy of the representations and warranties of the Company contained
herein as of the date hereof and as of such Time of Delivery, to the accuracy
of the statements of Company officers made pursuant to the provisions hereof,
to the performance by the Company of their respective covenants and agreements
hereunder, and to the following additional conditions precedent:
(a) If the registration statement as amended to date has
not become effective prior to the execution of this Agreement, such
registration statement shall have been declared effective not later than 5:30
p.m., St. Petersburg time, on the date of this Agreement or such later date
and/or time as shall have been consented to by the Underwriters in writing. If
required, the Prospectus and any amendment or supplement thereto shall have
been filed with the Commission pursuant to Rule 424(b) within the applicable
time period prescribed for such filing and in accordance with Section 5(a) of
this Agreement; no stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceedings for
that purpose shall have been instituted, or to the knowledge of the Company and
the Underwriters, threatened or contemplated by the Commission; and all
requests for additional information on the part of the Commission shall have
been complied with to the reasonable satisfaction of the Underwriters.
(b) Holland & Knight, counsel for the Underwriters, shall
have furnished to the Underwriters such opinion or opinions, dated such Time of
Delivery, with respect to the incorporation of the Company, the validity of the
Shares being delivered at such Time of Delivery, the Registration Statement,
the Prospectus, and other related matters as the Underwriters may reasonably
request, and the Company shall have furnished to such counsel such documents as
such counsel or the Underwriters request prior to such Time of Delivery for the
purpose of enabling them to pass upon such matters.
(c) The Underwriters shall have received an opinion,
dated at each Time of Delivery, of Xxxxxx & Bird LLP, to the effect that:
(i) The Company and each of its Subsidiaries is
duly qualified to transact business as a foreign corporation
and is in good standing under the laws of each other
jurisdiction other than Florida in which it owns or leases
property, or conducts any business, so as to require such
qualification, except where the failure to so qualify would
not have a Material Adverse Effect.
(ii) The Company has no subsidiaries other than
those listed on Exhibit 21.1 to the Registration Statement
and, to the knowledge of such counsel, does not have any
ownership interest in any partnership, joint venture, or other
entity or association.
(iii) Except as disclosed in the Prospectus, to the
knowledge of such counsel there are no outstanding (A)
securities or obligations of the Company convertible into or
exchangeable for any capital stock of the Company, (B)
warrants, rights or options to subscribe for or purchase from
the Company any such capital stock or any such convertible or
exchangeable securities or obligations, or (C) obligations of
the Company to issue any shares of capital stock, any such
convertible or exchangeable securities or obligations, or any
such warrants, rights, or options.
(iv) Except as disclosed in the Prospectus, to the
knowledge of such counsel there are no contracts, agreements,
or understandings between the Company and any person granting
such person the right to require the Company to file a
registration statement under the Act with respect to any
securities of the Company owned or to be owned by such person
or to require the
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Company to include such securities in the securities registered
pursuant to the Registration Statement (or any such right has
been effectively exercised or waived) or in any securities
being registered pursuant to any other registration statement
filed by the Company under the Act.
(v) All offers and sales of the Company's capital
stock prior to the date hereof were at all relevant times duly
registered under the Act or exempt from the registration
requirements of the Act.
(vi) The Company is not, nor with the giving of
notice or passage of time or both, will it be, in violation of
its Articles of Incorporation or Bylaws or in default under
any indenture, mortgage, deed of trust, loan agreement, lease,
or other agreement or instrument to which the Company is a
party or to which any of its properties or assets is subject
and which in each instance is an exhibit to the Registration
Statement.
(vii) The issue and sale of the Shares being issued
at such Time of Delivery and the performance of this Agreement
and the consummation of the transactions herein contemplated
will not conflict with, or (with or without the giving of
notice or the passage of time or both) result in a breach or
violation of any of the terms or provisions of, or constitute
a default under, any material indenture, mortgage, deed of
trust, loan agreement, lease, or other agreement or instrument
known to such counsel to which the Company is party or to
which any of its properties or assets is subject, nor will
such action conflict with or violate any provision of the
Articles of Incorporation or Bylaws of the Company or any
federal statute, rule or regulation normally applicable to
transactions of the type herein contemplated, or to the
knowledge of such counsel, any other statute, rule or
regulation (assuming compliance with all applicable state
securities or blue sky laws) or, to the extent known to such
counsel, any order, judgment, or decree of any court or
governmental agency or body having jurisdiction over the
Company or any of its properties or assets (it being
understood that such counsel need not express any opinion with
regard to insurance regulatory matters or, under this
paragraph, compliance with federal securities laws).
(viii) No consent, approval, authorization, order,
or declaration of or from, or registration, qualification or
filing with, any federal court or governmental agency or body,
or to the knowledge of such counsel, any other court or
governmental agency or body, is required for the issue and
sale of the Shares or the consummation of the transactions
contemplated by this Agreement, except such as have been
obtained under the Act and the rules and regulations
thereunder and such as may be required by the National
Association of Insurance Dealers, Inc. or under state
securities or blue sky laws in connection with the offer,
sale, and distribution of the Shares by the Underwriters (it
being understood that such counsel need not express any
opinion with regard to insurance regulatory matters).
(ix) To such counsel's knowledge and other than as
disclosed in or contemplated by the Prospectus, (A) there is
no litigation, arbitration, claim, proceeding (formal or
informal) or investigation pending or threatened (or any
reasonable basis therefor) in which the Company or any of its
Subsidiaries is a party or of which any of its properties or
assets is the subject which, if determined adversely to the
Company or any of its Subsidiaries, would, individually or in
the aggregate, reasonably be expected to have a Material
Adverse Effect; and (B) neither the Company nor any of its
Subsidiaries is in violation of, or in default with respect
to, any foreign or domestic statute, rule, regulation, order,
judgment or decree, (excluding any insurance law, rule,
regulation, order, judgment or decree).
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(x) This Agreement has been duly authorized,
executed and delivered by the Company.
(xi) The Registration Statement and the Prospectus
and each amendment or supplement thereto (other than the
financial statements and related schedules and other financial
and statistical data therein and the section therein entitled
"Underwriting," as to which such counsel need express no
opinion), as of their respective effective or issue dates,
complied as to form in all material respects with the
requirements of the Act and the rules and regulations
thereunder. The descriptions in the Registration Statement and
the Prospectus of statutes, legal and governmental proceedings
(excluding insurance and Florida laws, regulations, and
governmental proceedings, as to which such counsel need not
express an opinion), or contracts and other documents are
accurate in all material respects and fairly present
the information required to be shown, and such counsel does
not know of any statutes or legal or governmental proceedings
required to be described in the Registration Statement or
Prospectus that are not described as required or of any
contracts or documents of a character required to be described
in the Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement which are not described
and filed as required.
(xii) The Registration Statement is effective under
the Act, any required filing of the Prospectus pursuant to
Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b), and no stop order suspending
the effectiveness of the Registration Statement or any part
thereof has been issued and, to such counsel's knowledge, no
proceedings for that purpose have been instituted or
threatened or are contemplated by the Commission.
(xiii) The Company is not, and will not be as a
result of the consummation of the transactions contemplated by
this Agreement, an "investment company," or a company
"controlled" by an "investment company," within the meaning of
the Investment Company Act of 1940.
In rendering any such opinion, such counsel may rely, as to
matters of fact, to the extent such counsel deem proper, on warranties,
representations and certificates of responsible officers of the Company and
public officials and, as to matters involving the application of laws of any
jurisdiction other than Georgia or the United States, to the extent satisfactory
in form and scope to counsel for the Underwriters, upon the opinion of local
counsel satisfactory to counsel for the Underwriters, provided that such counsel
states such counsel believes that the Underwriters are justified in relying upon
such opinion and copies of such opinion are delivered to the Underwriters and
counsel for the Underwriters.
In addition, such counsel shall state that (i) based solely
upon a letter from The Nasdaq Stock Market to the Company attached to such
counsel's opinion, the Firm Shares and the Optional Shares have been approved
for quotation on The Nasdaq National Market upon issuance, (ii) based solely
upon a certificate of officers of the Company, no securities of the Company have
previously been offered or sold to any person who is not a Florida resident,
except in connection with the transactions contemplated by this Agreement and
(iii) such counsel has participated in conferences with officers and other
representatives of the Company and the Underwriters and their counsel during
which the contents of the Registration Statement and the Prospectus and related
matters were discussed and reviewed, and, although such counsel has not
independently verified and is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus, on the basis of the
information that such counsel developed in the course of the performance of the
services referred to above, considered in the light of such counsel's
understanding of the applicable law, nothing came to their attention that
caused them to believe that the Registration Statement or the Prospectus (other
than the financial statements and schedules and the other financial and
statistical data therein, as to which such counsel need express no belief), on
such effective date, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary
to make the statements therein not misleading.
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(d) The Underwriters shall have received an opinion,
dated at each Time of Delivery, of XxXxxxxxxxxxx, Xxxxxx, Xxxxx & Cherr, P.A.,
to the effective that:
(i) The Company and each of its Subsidiaries has
been duly incorporated, is validly existing as a corporation
in good standing under the laws of Florida and has the
corporate power and authority to own or lease its properties
and conduct its business as described in the Registration
Statement and the Prospectus. The Company has the corporate
power and authority to enter into this Agreement and perform
its obligations hereunder.
(ii) The Company's authorized, issued and
outstanding capital stock is set forth in the Prospectus. All
of the issued shares of Common Stock of the Company have been
duly authorized and validly issued, are fully paid and
nonassessable and conform to the description of the Common
Stock contained in the Prospectus. None of the issued shares
of capital stock of the Company has been issued or is owned or
held in violation of any preemptive rights of shareholders,
and no person or entity (including any holder of outstanding
shares of capital stock of the Company) has any statutory
preemptive or, to the knowledge of such counsel, other rights
to subscribe for any of the Shares. All offers and sales of
the Company's capital stock outstanding prior to the date
hereof were the subject of an available exemption from the
registration or qualification requirements of the Florida
securities or blue sky laws (to the extent such offers and
sales were subject to such Florida laws).
(iii) The Shares to be issued and sold by the
Company have been duly authorized and, when issued and
delivered against payment therefor as provided herein, will be
validly issued and fully paid and nonassessable and will
conform to the description of the Common Stock contained in
the Prospectus, and the certificates evidencing the Shares
comply with all requirements of applicable law.
(iv) ESIF holds such insurance licenses,
certificates and permits from governmental authorities
(including, without limitation, Insurance Licenses) which are
necessary to the conduct of its business as described in the
Prospectus, and the Company and ESIF have fulfilled and
performed all obligations necessary to maintain the Insurance
Licenses. Neither the Company nor ESIF has received any
notice of, and such counsel has no knowledge of, any action,
suit, proceeding, or investigation, and to the best knowledge
of such counsel there has been no threatened action, suit,
proceeding or investigation, that could reasonably be expected
to result in the revocation, termination or suspension of any
Insurance Licenses.
(v) The issue and sale of the Shares being issued
at such Time of Delivery and the performance of this Agreement
and the consummation of the transactions herein contemplated
will not violate any Florida statute, rule, or regulation,
or to the extent known to such counsel, any order, judgment,
or decree of any court or governmental agency or body having
jurisdiction over the Company or any of its properties or
assets related to insurance regulatory matters.
(vi) No consent, approval, authorization, order, or
declaration of or from, or registration, qualification or
filing with, any Florida court or Florida governmental agency
or body or to the knowledge of such counsel from any other
court, governmental agency or body related to insurance
regulatory matters is required for the issue and sale of the
Shares or the consummation of the transactions contemplated by
this Agreement, except such as have been obtained under the
Florida Insurance Code and the rules and regulations
thereunder.
(vii) The Plan has been duly adopted by the
required vote of ESIF's Board of Trustees and members and is
in compliance with the insurance laws of the State of Florida
applicable to the
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reorganization of group self-insurance funds into stock
property and casualty insurance companies. Other than the
conditions to effectiveness set forth in the Order or in the
Plan, no other approvals are required to be obtained under the
Florida Insurance Code for the effectiveness of the Plan.
Prior to or contemporaneously with the First Time of Delivery
(as hereinafter defined) each of the actions required to occur
prior to the effectiveness of the Plan pursuant to the Order
or the Plan will have occurred.
(viii) To such counsel's knowledge and other than as
disclosed in or contemplated by the Prospectus, neither the
Company nor any of its Subsidiaries is in violation of, or in
default with respect to, any Florida statute, rule, regulation,
order, judgment or decree, or as to insurance regulatory
matters, any other statute, rule, regulation, order, judgment
or decree.
(ix) The descriptions in the Registration Statement
and the Prospectus of insurance-related and Florida laws and
regulations and governmental proceedings are accurate and
fairly present the information required to be shown, and such
counsel does not know of any insurance related or Florida laws
or regulations or governmental proceedings required to be
described in the Registration Statement or Prospectus that are
not described as required.
In rendering any such opinion, such counsel may rely, as to
matters of fact, to the extent such counsel deem proper, on warranties,
representations and certificates of responsible officers of the Company and
public officials.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company and the Underwriters and their counsel during which the contents of the
Registration Statement and the Prospectus and related matters were discussed
and reviewed, and, although such counsel has not independently verified and is
not passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus, on the basis of the information that such counsel
developed in the course of the performance of the services referred to above,
considered in the light of such counsel's understanding of the applicable law,
nothing came to their attention that caused them to believe that the
Registration Statement or the Prospectus, on such effective date, contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading.
(e) The Underwriters shall have received from Ernst &
Young LLP and Xxxxxxx & Xxxxxx letters as of the date hereof and as of the
Effective Date and each Time of Delivery, in form and substance satisfactory to
the Underwriters, to the effect set forth in Annex I and Annex II hereto,
respectively. In the event that the letters referred to in this Section 7(e)
set forth any changes, decreases or increases in the items specified in clause
(iii) of Annex I, it shall be a further condition to the obligations of the
Underwriters that (i) such letters shall be accompanied by a written
explanation by the Company as to the significance thereof, unless the
Underwriters deem such explanation unnecessary, and (ii) such changes,
decreases, or increases do not, in the reasonable judgment of the Underwriters,
make it impracticable or inadvisable to proceed with the purchase, sale and
delivery of the Shares being delivered at such Time of Delivery as contemplated
by the Registration Statement, as amended as of the date of such letter.
(f) Since the date of the latest audited financial
statements included in the Prospectus, the Company and its Subsidiaries shall
not have sustained (i) any loss or interference with their respective businesses
from fire, explosion, flood, hurricane or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as disclosed in or contemplated by the Prospectus, or
(ii) any change, or any development involving a prospective change (including
without limitation a change in management or control of the Company) in or
affecting the position (financial or otherwise), results of operations, net
worth or business prospects of the Company and its Subsidiaries, otherwise than
as disclosed in or contemplated by the Prospectus, the effect of which, in
either such case, is in the reasonable judgment of the
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Underwriters so material and adverse as to make it impracticable or inadvisable
to proceed with the purchase, sale, and delivery of the Shares being delivered
at such Time of Delivery as contemplated by the Registration Statement, as
amended as of the date hereof.
(g) Subsequent to the date hereof there shall not have
occurred any of the following: (i) any suspension or limitation in trading in
securities generally on the New York Stock Exchange, or any setting of minimum
prices for trading on such exchange or in the Common Stock by the Commission or
The Nasdaq Stock Market; (ii) a moratorium on commercial banking activities in
New York or Florida declared by either federal or state authorities; or (iii)
any outbreak or escalation of hostilities involving the United States,
declaration by the United States of a national emergency or war or any other
national or international calamity or emergency if the effect of any such event
specified in this clause (iii) in the reasonable judgment of the Underwriters
makes it impractical or inadvisable to proceed with the purchase, sale and
delivery of the Shares being delivered at such Time of Delivery as contemplated
by the Registration Statement, as amended as of the date hereof.
(h) The Company shall have furnished to the Underwriters
at such Time of Delivery certificates of officers of the Company, reasonably
satisfactory to the Underwriters, as to the accuracy in all material respects
of the representations and warranties of the Company herein at and as of such
Time of Delivery, as to the performance by the Company of all of their
respective obligations hereunder to be performed at or prior to such Time of
Delivery, and as to such other matters as the Underwriters may reasonably
request, and the Company shall have furnished or caused to be furnished
certificates as to the matters set forth in subsections (a) and (f) of this
Section 7, and as to such other matters as the Underwriters may reasonably
request.
(i) The Shares shall have been approved for quotation on
the Nasdaq National Market.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless
each Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon: (i) any untrue statement or
alleged untrue statement made by the Company in Section 1 of this Agreement;
(ii) any untrue statement or alleged untrue statement of any material fact
contained in (A) the Registration Statement or any amendment thereto, any
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, or (B) any application or other document, or any amendment or
supplement thereto, executed by the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Shares under the securities or blue sky laws thereof or filed with
the Commission or any securities association or securities exchange (each an
"Application"); or (iii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, any Preliminary Prospectus,
the Prospectus or any amendment or supplement thereto, or any Application a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating, defending against or appearing as a third-party witness in
connection with any such loss, claim, damage, liability or action; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or action arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement or any Amendment thereto,
any Preliminary Prospectus, the Prospectus or any amendment or supplement
thereto or any Application in reliance upon and in conformity with written
information furnished to the Company by any Underwriter expressly for use
therein. The obligations of the Company to indemnify the Underwriters (or any
controlling person of such Underwriter) pursuant to this indemnity agreement
are subject to the condition that, insofar as such losses, claims, damages,
liabilities or expenses relate to any such untrue statement, alleged untrue
statement, omission or alleged omission made in a Preliminary Prospectus that
is corrected in the Prospectus, such indemnity agreement shall not inure to the
benefit of any Underwriter from whom the person asserting such losses,
liabilities, claims, damages or expenses purchased the Shares in the Offering,
if (i) such Underwriter failed to deliver a copy of the Prospectus to such
person at or prior to the time delivery of the
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Prospectus as is required by the Act, unless such failure was due to the
failure by the Company to provide copies of the Prospectus to such Underwriter;
and (ii) the delivery of such Prospectus to such person would have constituted
a complete defense to the losses, claims, damages, liabilities or expenses
asserted by such person. The Company will not, without the prior written
consent of each Underwriter, settle or compromise or consent to the entry of
any judgment in any pending or threatened claim, action, suit or proceeding (or
related cause of action or portion thereof) in respect to which indemnification
may be sought hereunder (whether or not such Underwriter is a party to such
claim, action, suit or proceeding), unless such settlement, compromise or
consent includes an unconditional release of such Underwriter from all
liability arising out of such claim, action, suit or proceeding (or related
cause of action or portion thereof).
(b) Each Underwriter, severally but not jointly, agrees
to indemnify and hold harmless the Company against any losses, claims, damages
or liabilities to which the Company may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement or any amendment thereto, any Preliminary Prospectus, the Prospectus,
or any amendment or supplement thereto, or any Application or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
the Company by such Underwriter expressly for use therein; and will reimburse
the Company for any legal or other expenses reasonably incurred by the Company
in connection with investigating or defending any such loss, claim, damage,
liability or action.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided, however,
that if the defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have reasonably concluded
that there may be one or more legal defenses available to it or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnifying party shall not have the right to
assume the defense of such action on behalf of such indemnified party and such
indemnified party shall have the right to select separate counsel to defend such
action oh behalf of such indemnified party, provided, further, however, that the
Company shall be liable for the fees and expenses of only one separate firm of
attorneys (in addition to local counsel) for all indemnified parties at any time
in connection with any action, suit or proceeding, or in a series of separate
but substantially similar or related actions, suits or proceedings arising out
of the same general allegations and circumstances. After such notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof and approval by such indemnified party of counsel appointed to
defend such action, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses, other
than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence or (ii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party. Nothing in this Section 8(c) shall preclude an
indemnified party from participating at its own expense in the defense of any
such action so assumed by the indemnifying party.
(d) If the indemnification provided for in this Section 8
is unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the
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amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other from the offering of
the Shares. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company on the one hand and the Underwriters on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters. The relative fault
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 on the
one hand or the Underwriters on the other and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not
be just and equitable if contributions pursuant to this subsection (d) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include 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 subsection (d), (i) no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission, and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section 8
shall be in addition to any liability which the Company may otherwise have and
shall extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act; and the obligations of
the Underwriters under this Section 8 shall be in addition to any liability
which the respective Underwriters may otherwise have and shall extend, upon the
same terms and conditions, to each officer and director of the Company and to
each person, if any, who controls the Company within the meaning of the Act.
9. DEFAULT OF UNDERWRITER.
(a) If any Underwriter defaults in its obligation to
purchase Shares at a Time of Delivery, the Underwriters in their discretion may
arrange for their or another party or other parties to purchase such Shares on
the terms contained herein. If within thirty-six hours after such default by
any Underwriter the Underwriters do not arrange for the purchase of such
Shares, the Company shall be entitled to a further period of thirty-six hours
within which to procure another party or other parties satisfactory to the
Underwriters to purchase such Shares on such terms. In the event that, within
the respective prescribed periods, the Underwriters notify the Company that
they have so arranged for the purchase of such Shares, or the Company notifies
the Underwriters that they have so arranged for the purchase of such Shares,
the Underwriters or the Company shall have the right to postpone a Time of
Delivery for a period of not more than seven days in order to effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus, or in any other documents or arrangements, and the Company agrees
to file promptly any amendments to the Registration Statement or the Prospectus
that in the opinion of the Underwriters may thereby be made necessary. The
cost of preparing, printing and filing any such amendments shall be paid for by
the Underwriters. The term "Underwriter" as used in this Agreement shall
include
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any person substituted under this Section with like effect as if such person
had originally been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by the
Underwriters and the Company as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased does not exceed one-eleventh of
the aggregate number of Shares to be purchased at such Time of Delivery, then
the Company shall have the right to require each non-defaulting Underwriter to
purchase the number of Shares which such Underwriter agreed to purchase
hereunder at such Time of Delivery and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the number
of Shares which such Underwriter agreed to purchase hereunder) of the Shares of
such defaulting Underwriter or Underwriters for which such arrangements have not
been made, but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
10. TERMINATION.
(a) This Agreement may be terminated with respect to (i)
the Firm Shares or (ii) any Optional Shares, in the sole discretion of the
Underwriters, by notice to the Company given prior to the First Time of
Delivery or any Subsequent Time of Delivery, respectively, in the event that
(a) any condition to the obligations of the Underwriters set forth in Section 7
hereof has not been satisfied, or (b) the Company shall have failed, refused or
been unable to deliver the Shares or to perform all obligations and satisfy all
conditions on its part to be performed or satisfied hereunder at or prior to
such Time of Delivery, in either case other than by reason of a default by any
of the Underwriters. If this Agreement is terminated pursuant to this Section
10(a), the Company will reimburse the Underwriters severally upon demand for all
out-of-pocket expenses (including reasonable counsel fees and disbursements)
that shall have been reasonably incurred by them in connection with the proposed
purchase and sale of the Shares. The Company shall not in any event be liable
to any of the Underwriters for the loss of expected profits from the
transactions covered by this Agreement.
(b) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter by the Underwriters and the
Company as provided in Section 9(a), the aggregate number of such Shares which
remains unpurchased exceeds one-eleventh of the aggregate number of Shares to
be purchased at such Time of Delivery, or if the Company shall not exercise the
right described in Section 9(b) to require non-defaulting Underwriter to
purchase Shares of a defaulting Underwriter or Underwriters, then this
Agreement (or, with respect to a Subsequent Time of Delivery, the obligations
of the Underwriters to purchase and of the Company to sell the Optional Shares)
shall thereupon terminate, without liability on the part of any non-defaulting
Underwriter to the Company, except for the expenses to be borne by the Company
and the Underwriters as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
11. SURVIVAL. The respective indemnities, agreements,
representations, warranties and other statements of the Company and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person referred to in
Section 8(e) or the Company or any officer or director or controlling person of
the Company referred to in Section 8(e), and shall survive delivery of and
payment for the Shares. The respective agreements, covenants, indemnities and
other statements set forth in Sections 6 and 8 hereof shall remain in full force
and effect, regardless of any termination or cancellation of this Agreement.
12. NOTICES. All communications hereunder shall be in writing
and, if sent to any of the Underwriters, shall be mailed, delivered or
telecopied and confirmed in writing to the Underwriters in care of Xxxxxxx
Xxxxx & Associates, Inc., 000 Xxxxxxxx Xxxxxxx, Xx. Xxxxxxxxxx, Xxxxxxx 00000,
Attention: Xxxx X. Xxxxxx, with a copy to Holland & Knight, 000 Xxxxx Xxxxxx
Xxxxx, Xxxxx, Xxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxxx, Esq.; and
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if sent to the Company, shall be mailed, delivered or telecopied and confirmed
in writing to the Company at 0000 X-X Xxxx Xxxx, Xxxxxxxx, Xxxxxxx 00000,
Attention: Xxxxxxx X. Xxxx with a copy to Xxxxxx & Bird LLP, 0000 Xxxx
Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000- 3424, Attention: X. Xxxx Xxxxxxxx,
Esq.
13. ACTION BY THE UNDERWRITERS. Any action under this Agreement
taken by Xxxxxxx Xxxxx & Associates, Inc. will be binding upon the
Underwriters.
14. BINDING EFFECT. This Agreement shall be binding upon, and
inure solely to the benefit of, the Underwriters, the Company and to the extent
provided in Sections 8 and 10 hereof, the officers and directors and controlling
persons referred to therein and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Shares from any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
15. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida without giving
effect to any provisions regarding conflicts of laws.
16. COUNTERPARTS. This Agreement may be executed by any one or
more of the parties hereto in any number of counterparts, each of which shall
be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us one of the counterparts hereof, and
upon the acceptance hereof by Xxxxxxx Xxxxx & Associates, Inc., on behalf of
each of the Underwriters, this letter will constitute a binding agreement among
the Underwriters and the Company. It is understood that your acceptance of
this letter on behalf of each of the Underwriters is pursuant to the authority
set forth in the Master Agreement among Underwriters, a copy of which shall be
submitted to the Company for examination, upon request, but without warranty on
the part of the Underwriters as to the authority of the signers thereof.
Very truly yours,
SUMMIT HOLDING SOUTHEAST, INC.
By:
-------------------------------
Title:
-----------------------------
The foregoing Agreement is hereby confirmed and
accepted as of the date first written above at
March ____, 1997.
XXXXXXX XXXXX & ASSOCIATES, INC.
By: Xxxxxxx Xxxxx & Associates, Inc.
By:__________________________________________
On behalf of each of the Underwriters
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SCHEDULE I
Maximum
Number of
Optional Shares
to be Purchased
Number of Upon Exercise
Firm Shares of
to be Over-Allotment
Underwriter Purchased Option
----------- --------- ------
Xxxxxxx Xxxxx & Associates, Inc.
ABN AMRO Chicago Corporation
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SCHEDULE II
PUBLIC HEARING NOTICE PUBLICATIONS
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ANNEX I
Pursuant to Section 7(e) of the Underwriting Agreement, Ernst & Young
LLP shall furnish a letter to the Underwriters to the effect that:
(i) they are independent public accountants with respect
to the Company within the meaning the Act and the applicable published
rules and regulations thereunder;
(ii) in their opinion, the financial statements and
schedules audited by them and included in the Prospectus and the
Registration Statement comply as to form in all material respects with
the applicable accounting requirements of the Act and the related
published rules and regulations thereunder;
(iii) On the basis of limited procedures, not constituting
an audit in accordance with generally accepted auditing standards,
consisting of a reading of the latest available interim financial
statements of the Company, inspection of the minute books of the
Company since the date of the latest audited financial statements
included in the Prospectus, inquiries of officials of the Company
responsible for financial accounting matters and such other inquiries
and procedures as may be specified in such letter, nothing came to
their attention that caused them to believe that:
(A) the unaudited financial statements of the
Company included in the Registration Statement and the
Prospectus do not comply in form in all material respects with
the applicable accounting requirements of the Act and the
related published rules and regulations thereunder or are not
in conformity with generally accepted principles applied on
the basis substantially consistent with that of the audited
financial statements included in the Registration Statement
and the Prospectus;
(B) the unaudited amounts for sales, net revenues
and total and per share amounts of net income included in the
Registration Statement and the Prospectus do not agree with the
amounts set forth in the unaudited financial statements for
those same periods or are not in conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the corresponding amounts in the
audited financial statements included in the Registration
Statement and the Prospectus;
(C) as of a specified date not more than five
days prior to the date of such letter, there were any changes
in the capital stock (other than the issuance of capital stock
upon exercise of options which were outstanding on the date of
the latest balance sheet included in the Prospectus) or any
increase in inventories or the long-term debt or short-term
debt of the Company, or any decreases in net current assets or
net assets or other items specified by the Underwriters, or
any increases in any items specified by the Underwriters, in
each case as compared with amounts shown in the latest balance
sheet included in the Prospectus, except in each case for
changes, increases or decreases which the Prospectus discloses
have occurred or may occur or which are described in such
letter;
(D) for the period from the date of the latest
financial statements included in the Prospectus to the
specified date referred to in Clause (A) there were any
decreases in net sales or operating income or the total or per
share amounts of net income or other items specified by the
Underwriters, or any increases in any items specified by the
Underwriters, in each case as compared with the comparable
period of the preceding year and with any other period of
corresponding length specified by the Underwriters, except in
each case for increases or decreases which the Prospectus
discloses have occurred or may occur which are described in
such letter; and
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(iv) In addition to the audit referred to in their
report(s) included in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to
in paragraph (iii) above, they have carried out certain specified
procedures, not constituting an audit in accordance with generally
accepted auditing standards, with respect to certain amounts,
percentages and financial information specified by the Underwriters
which are derived from the general accounting records of the Company,
included in the Registration Statement and the Prospectus, or which
appear in Part II of, or in exhibits and schedules to, the Registration
Statement specified by the Underwriters, and have compared certain of
such amounts, percentages and financial information with the accounting
records of the Company and have found them to be in agreement.
References to the Registration Statement and the Prospectus in this
Annex I shall include any amendment or supplement thereto at the date of such
letter.
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ANNEX II
Pursuant to Section 7(e) of the Underwriting Agreement, Xxxxxxx &
Xxxxxx shall furnish a letter to the Underwriters to the effect that:
(i) they are independent public accountants with respect
to the Company within the meaning the Act and the applicable published
rules and regulations thereunder;
(ii) in their opinion, the financial statements and
schedules audited by them and included in the Prospectus and the
Registration Statement comply as to form in all material respects with
the applicable accounting requirements of the Act and the related
published rules and regulations thereunder;
(iii) On the basis of limited procedures, not constituting
an audit in accordance with generally accepted auditing standards,
consisting of a reading of the latest available interim financial
statements of the Company, inspection of the minute books of the
Company since the date of the latest audited financial statements
included in the Prospectus, inquiries of officials of the Company
responsible for financial accounting matters and such other inquiries
and procedures as may be specified in such letter, nothing came to
their attention that caused them to believe that:
(A) the unaudited financial statements of the
Company included in the Registration Statement and the
Prospectus do not comply in form in all material respects with
the applicable accounting requirements of the Act and the
related published rules and regulations thereunder or are not
in conformity with generally accepted principles applied on
the basis substantially consistent with that of the audited
financial statements included in the Registration Statement
and the Prospectus;
(B) the unaudited amounts for sales, net revenues
and total and per share amounts of net income included in the
Registration Statement and the Prospectus do not agree with the
amounts set forth in the unaudited financial statements for
those same periods or are not in conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the corresponding amounts in the
audited financial statements included in the Registration
Statement and the Prospectus;
(C) as of a specified date not more than five days
prior to the date of such letter, there were any changes in the
capital stock (other than the issuance of capital stock upon
exercise of options which were outstanding on the date of the
latest balance sheet included in the Prospectus) or any
increase in inventories or the long-term debt or short-term
debt of the Company, or any decreases in net current assets or
net assets or other items specified by the Underwriters, or any
increases in any items specified by the Underwriters, in each
case as compared with amounts shown in the latest balance sheet
included in the Prospectus, except in each case for changes,
increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter;
(D) for the period from the date of the latest
financial statements included in the Prospectus to the
specified date referred to in Clause (A) there were any
decreases in net sales or operating income or the total or per
share amounts of net income or other items specified by the
Underwriters, or any increases in any items specified by the
Underwriters, in each case as compared with the comparable
period of the preceding year and with any other period of
corresponding length specified by the Underwriters, except in
each case for increases or decreases which the Prospectus
discloses have occurred or may occur which are described in
such letter; and
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(iv) In addition to the audit referred to in their
report(s) included in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to
in paragraph (iii) above, they have carried out certain specified
procedures, not constituting an audit in accordance with generally
accepted auditing standards, with respect to certain amounts,
percentages and financial information specified by the Underwriters
which are derived from the general accounting records of the Company,
included in the Registration Statement and the Prospectus, or which
appear in Part II of, or in exhibits and schedules to, the Registration
Statement specified by the Underwriters, and have compared certain of
such amounts, percentages and financial information with the accounting
records of the Company and have found them to be in agreement.
References to the Registration Statement and the Prospectus in this
Annex I shall include any amendment or supplement thereto at the date of such
letter.
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