Exhibit 1.1
DRAFT -- JUNE 10, 1997
5,750,000 Shares
ARM FINANCIAL GROUP, INC.
CLASS A COMMON STOCK, PAR VALUE $0.01 PER SHARE
UNDERWRITING AGREEMENT
June __, 1997
June __, 1997
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities
Corporation
Xxxxxxxxxxx & Co., Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities
Corporation
Xxxxxxxxxxx & Co., Inc.
c/o Morgan Xxxxxxx & Co. International Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
England
Dear Sirs and Mesdames:
ARM Financial Group, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to the several Underwriters (as defined below)
5,750,000 shares of its Class A Convertible Common Stock, par value $0.01 per
share (the "Firm Shares").
It is understood that, subject to the conditions hereinafter stated,
4,600,000 Firm Shares (the "U.S. Firm Shares") will be sold to the several U.S.
Underwriters named in Schedule II hereto (the "U.S. Underwriters") in connection
with the offering and sale of such U.S. Firm Shares in the United States and
Canada to United States and Canadian Persons (as such terms are defined in the
Agreement Between U.S. and International Underwriters of even date herewith),
and 1,150,000 Firm Shares (the "International Shares") will be sold to the
several International Underwriters named in Schedule III hereto (the
"International Underwriters") in connection with the offering and sale of such
International Shares outside the United States and Canada to persons other than
United States and Canadian Persons. Xxxxxx Xxxxxxx & Co. Incorporated,
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation ("DLJ") and Xxxxxxxxxxx &
Co., Inc. shall act as representatives (the "U.S. Representatives") of the
several U.S. Underwriters, and Xxxxxx Xxxxxxx & Co. International Limited, DLJ
and Xxxxxxxxxxx & Co., Inc. shall act as representatives (the "International
Representatives") of the several International Underwriters. The U.S.
Underwriters and the International Underwriters are hereinafter collectively
referred to as the Underwriters.
Certain shareholders of the Company (the "Selling Shareholders")
severally propose to issue and sell to the several U.S. Underwriters, pro rata
in proportion to the amount set forth opposite such Selling Shareholder's name
in Schedule I hereto, an aggregate of not more than an additional 862,500 shares
of the Company's Class A Convertible Common Stock, par value $0.01 per share
(the "Additional Shares"), if and to the extent that the U.S. Representatives
shall have determined to exercise, on behalf of the U.S. Underwriters, the right
to purchase such shares of common stock granted to the U.S. Underwriters in
Section 3 hereof. The Firm Shares and the Additional Shares are hereinafter
collectively referred to as the "Shares." The shares of the Class A Convertible
Common Stock, par value $0.01 per share, of the Company to be outstanding after
giving effect to the sales contemplated hereby are hereinafter referred to as
the "Common Stock." The Company and the Selling Shareholders are hereinafter
sometimes collectively referred to as the "Sellers."
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement relating to the Shares. The registration
statement contains two prospectuses to be used in connection with the offering
and sale of the Shares: the U.S. prospectus, to be used in connection with the
offering and sale of Shares in the United States and Canada to United States and
Canadian Persons, and the international prospectus, to be used in connection
with the offering and sale of Shares outside the United States and Canada to
persons other than United States and Canadian Persons. The international
prospectus is identical to the U.S. prospectus except for the outside front
cover page. The registration statement as amended at the time it becomes
effective, including the information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A under
the Securities Act of 1933, as amended (the "Securities Act"), is hereinafter
referred to as the "Original Registration Statement;" any registration statement
filed pursuant to Rule 462(b) under the Securities Act is hereinafter referred
to as the "Rule 462(b) Registration Statement;" the Original Registration
Statement and any Rule 462(b) Registration Statement are hereinafter referred to
collectively as the "Registration Statement." The U.S. prospectus and the
international prospectus in the respective forms first used to confirm sales of
Shares are hereinafter collectively referred to as the "Prospectus."
As part of the offering contemplated by this Agreement, Xxxx Xxxxxx
Xxxxxxxx Inc. ("Xxxx Xxxxxx") has agreed to reserve out of the Shares set forth
opposite its name on Schedule II to this Agreement, up to 460,000 shares, for
sale to the Company's employees, officers and directors and other parties
associated with the Company (collectively, "Participants"), as set forth in the
Prospectus under the heading "Underwriters" (the "Directed Share Program"). The
Shares to be sold by Xxxx Xxxxxx pursuant to the Directed Share Program (the
"Directed Shares") will be sold by Xxxx Xxxxxx pursuant to this Agreement at the
public offering price. Any Directed Shares not orally confirmed for purchase by
any Participants by the end of the first business day after the date on which
this Agreement is executed will be offered to the public by the U.S.
Underwriters as set forth in the Prospectus.
The Company hereby confirms its appointment of DLJ as, and DLJ hereby
confirms its agreement with the Company to render services as, a "qualified
independent
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underwriter" within the meaning of Rule 2720 of the National Association of
Securities Dealers, Inc. (the "NASD") with respect to the offering and sale of
the Shares. DLJ, solely in its capacity as qualified independent underwriter,
and not otherwise, is referred to herein as the "QIU." As compensation for the
services of the QIU, as qualified independent underwriter hereunder, the Company
agrees to pay the QIU $5,000 on the Closing Date (as defined in Section 6
hereof). The Public Offering Price (as defined in Section 5 hereof) shall not
be higher than the maximum price recommended by DLJ acting as QIU.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to and agrees with each of the Underwriters that:
(a) The Original Registration Statement has become effective; if the
Company has elected to rely upon Rule 462(b) under the Securities Act, the
Rule 462(b) Registration Statement shall have become effective not later
than the earlier of (i) 10:00 p.m. (New York City time) on the date hereof
and (ii) the time confirmations are sent or given, as specified by Rule
462(b) under the Securities Act; no stop order suspending the effectiveness
of the Registration Statement is in effect, and no proceedings for such
purpose are pending before or, to the knowledge of the Company, threatened
by the Commission.
(b) (i) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, (ii) the Registration Statement and the Prospectus comply
and, as amended or supplemented, if applicable, will comply as to form in
all material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder and (iii) the Prospectus does not
contain and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the representations
and warranties set forth in this paragraph 1(b) do not apply to statements
or omissions in the Registration Statement or the Prospectus or any
amendment or supplement thereto based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through
you expressly for use therein or upon information relating to any Selling
Shareholder furnished in writing to the Company by or on behalf of any
Selling Shareholder expressly for use in the Registration Statement.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure
to be
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so qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(d) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to
own its property and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(e) All of the issued shares of capital stock of each of the
Company's subsidiaries have been duly authorized and validly issued and are
fully paid and non-assessable. All of the outstanding shares of capital
stock of each of the Company's subsidiaries are owned directly or
indirectly by the Company, in each case free of all liens, encumbrances,
security interests and claims, except as set forth in the Prospectus and
except such liens, encumbrances, security interests and claims which,
singly or in the aggregate, would neither (i) have a material adverse
effect on the Company and its subsidiaries, taken as a whole nor (ii)
materially and adversely affect the ability of the Company to consummate
the transactions contemplated by this Agreement.
(f) the Company and each of its subsidiaries holds all such licenses,
authorizations, certificates and permits as are necessary to conduct its
business under the laws of each jurisdiction in which it conducts its
business, except where the failure to have such licenses, authorizations,
certificates or permits would not, individually or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as a
whole; all such licenses, authorizations, certificates and permits are in
full force and effect; and neither the Company nor any of its subsidiaries
has received any notice of any event, inquiry, investigation or proceeding
that would reasonably be expected to result in the suspension, revocation
or limitation of any such license, authorization, certificate or permit, or
otherwise impose any limitation on the conduct of the business of such
subsidiaries, except for such events, inquiries, investigations or
proceedings which would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
(g) This Agreement has been duly authorized, executed and delivered
by the Company.
(h) Upon the closing of the offering of the Shares, the authorized,
issued and outstanding capital stock of the Company will be as set forth in
the Prospectus under the caption "Capitalization" in the columns entitled
"As Adjusted," and the authorized capital stock of the Company will conform
as to legal matters to the description thereof contained in the Prospectus.
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(i) The shares of Common Stock (including the shares to be sold by
the Selling Shareholders) outstanding prior to the issuance of the Shares
to be sold by the Company have been duly authorized and are validly issued,
fully paid and non-assessable.
(j) The Shares to be sold by the Company have been duly authorized
and, when issued and delivered in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable, and the
issuance of such Shares will not be subject to any preemptive or similar
rights.
(k) (i) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement will
not contravene any provision of applicable law or the certificate of
incorporation or by-laws of the Company or any agreement or other
instrument binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, or any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Company or any subsidiary except for such judgments,
orders or decrees, the violation of which would neither (x) have a material
adverse effect on the Company and its subsidiaries, taken as a whole, nor
(y) materially and adversely affect the ability of the Company to
consummate the transactions contemplated by this Agreement and (ii) and no
consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the Company
of its obligations under this Agreement, except such as have been obtained
under the Securities Act and any insurance laws and regulations, such as
may be required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Shares and such consents,
approvals, authorizations, orders or qualifications, the failure to have
which would neither (x) have a material adverse effect on the Company and
its subsidiaries, taken as a whole nor (y) materially and adversely affect
the ability of the Company to consummate the transactions contemplated by
this Agreement.
(l) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus.
(m) There are no legal or governmental proceedings pending or, to the
best knowledge of the Company, threatened to which the Company or any of
its subsidiaries is a party or to which any of the properties of the
Company or any of its subsidiaries is subject that are required to be
described in the Registration Statement or the Prospectus and are not so
described or any statutes, regulations, contracts or other documents known
to the Company that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement that are not described or filed as required.
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(n) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed in
all material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder.
(o) Neither the Company nor any of its subsidiaries (other than SBM
Certificate Company) is, and, after giving effect to the offering and sale
of the Shares and the application of the proceeds thereof as described in
the Prospectus, neither the Company nor any of its subsidiaries (other than
SBM Certificate Company) will be, an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
(p) There are no holders of securities (debt or equity) of the
Company, or holders of rights, options or warrants to obtain securities of
the Company, who have the right to require the Company to register under
the Securities Act securities held by them or obtainable by them through
the exercise of any right, warrant or option, other than holders who (i)
have waived such rights or will not have such rights for the 180-day period
after the date of the offering of the Shares and (ii) have waived their
rights with respect to the inclusion of their securities in the
Registration Statement.
(q) The 1995 and 1996 statutory annual statements and the 1997
statutory quarterly statements of Integrity Life Insurance Company
("Integrity") and National Integrity Life Insurance Company ("National
Integrity") and the statutory balance sheets and income statements included
in such statutory annual and quarterly statements have been prepared in
conformity with statutory accounting principles or practices required or
permitted by the Insurance Department of the states of Ohio and New York,
respectively, and such statutory accounting practices have been applied on
a consistent basis throughout the periods involved, except as may otherwise
be indicated in the notes thereto, and present fairly the statutory
financial position of Integrity and National Integrity as of the dates
thereof, and the statutory basis results of operations of Integrity and
National Integrity for the periods covered thereby.
(r) The Company is not aware of any threatened or pending downgrading
in the ratings assigned by A.M. Best Company, Inc., Standard & Poor's
Corporation, Duff & Xxxxxx or Xxxxx'x Investors Service to Integrity or
National Integrity.
(s) The Company has complied with all provisions of Section 517.075,
Florida Statutes relating to doing business with the Government of Cuba or
with any person or affiliate located in Cuba.
(t) The Company has not offered, or caused the Underwriters to offer,
Shares to any person pursuant to the Directed Share Program with the
specific intent to unlawfully influence (i) a customer or supplier of the
Company to alter the customer's or supplier's level or type of business
with the Company, or (ii) a trade journalist or
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publication to write or publish favorable information about the Company or
its products or services.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS. Each
of the Selling Shareholders represents and warrants to and agrees with each of
the U.S. Underwriters that:
(a) This Agreement has been duly authorized, executed and delivered
by or on behalf of such Selling Shareholder.
(b) The execution and delivery by such Selling Shareholder of, and
the performance by such Selling Shareholder of its obligations under, this
Agreement will not contravene any provision of applicable law, or the
certificate of incorporation or by-laws of such Selling Shareholder (if
such Selling Shareholder is a corporation), or any agreement or other
instrument binding upon such Selling Shareholder or any judgment, order or
decree of any governmental body, agency or court having jurisdiction over
such Selling Shareholder, and no consent, approval, authorization or order
of, or qualification with, any governmental body or agency is required for
the performance by such Selling Shareholder of its obligations under this
Agreement, except such as may be required by the securities or Blue Sky
laws of the various states in connection with the offer and sale of the
Shares.
(c) Such Selling Shareholder has, and on the Closing Date will have,
valid title to the Shares to be sold by such Selling Shareholder and the
legal right and power, and all authorization and approval required by law,
to enter into this Agreement and to sell, transfer and deliver the Shares
to be sold by such Selling Shareholder.
(d) The Shares to be sold by such Selling Shareholder pursuant to
this Agreement have been duly authorized and are validly issued, fully paid
and non-assessable.
(e) Delivery of the Shares to be sold by such Selling Shareholder
pursuant to this Agreement will, upon delivery and payment for such Shares
as contemplated herein, pass title to such Shares free and clear of any
security interests, claims, liens, equities and other encumbrances.
(f) (i) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and (ii) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set
forth in this paragraph
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2(f) apply only to statements or omissions relating to such Selling
Shareholder in the Registration Statement or the Prospectus based upon
information relating to such Selling Shareholder furnished in writing to
the Company by or on behalf of such Selling Shareholder expressly for use
in the Registration Statement.
3. REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITERS. Each U.S.
Underwriter hereby makes to and with the Company the representations and
agreements of such U.S. Underwriter in the sixth and seventh paragraphs of
Article III of the Agreement Between U.S. and International Underwriters of even
date herewith. Each International Underwriter hereby makes to and with the
Company the representations and agreements of such International Underwriter in
the eighth, ninth and tenth paragraphs of Article III of such Agreement. Copies
of such representations and agreements are attached to this Agreement as
Schedule IV.
4. AGREEMENTS TO SELL AND PURCHASE. The Company hereby agrees to
sell to the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the respective numbers of Firm Shares set forth in Schedules II and III
hereto opposite the name of such Underwriter at U.S. $_______(1) a share (the
"Purchase Price").
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Selling Shareholders
agree to sell to the U.S. Underwriters the Additional Shares, and the U.S.
Underwriters shall have a one-time right to purchase, severally and not jointly,
up to 862,500 Additional Shares at the Purchase Price. If the U.S.
Representatives, on behalf of the U.S. Underwriters, elect to exercise such
option, the U.S. Representatives shall so notify the Selling Shareholders in
writing not later than 30 days after the date of this Agreement, which notice
shall specify the number of Additional Shares to be purchased by the U.S.
Underwriters and the date on which such shares are to be purchased. Such date
may be the same as the Closing Date (as defined below) but not earlier than the
Closing Date nor later than ten business days after the date of such notice.
Additional Shares may be purchased as provided in Section 6 hereof solely for
the purpose of covering over-allotments made in connection with the offering of
the Firm Shares. If any Additional Shares are to be purchased, each U.S.
Underwriter agrees, severally and not jointly, to purchase the number of
Additional Shares (subject to such adjustments to eliminate fractional shares as
the U.S. Representatives may determine) that bears the same proportion to the
total number of Additional Shares to be purchased as the number of U.S. Firm
Shares set forth in Schedule II hereto opposite the name of such U.S.
Underwriter bears to the total number of U.S. Firm Shares.
Each Seller hereby agrees that, without the prior written consent of
the U.S. Representatives on behalf of the Underwriters (in the case of the
Selling Shareholders) or
_____________________
(1) Insert offering price less underwriting fee, management fee and selling
concession.
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Xxxxxx Xxxxxxx & Co. Incorporated on behalf of the Underwriters (in the case of
the Company), it will not, during the period ending 180 days after the date of
the Prospectus, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock (provided such shares or securities
are either owned by such Seller on the date of this Agreement or are thereafter
acquired prior to the public offering of the Shares contemplated hereby) or (ii)
enter into any swap or other arrangement that transfers to another, in whole or
in part, any of the economic consequences of ownership of the Common Stock,
whether any such transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) the Shares to be sold
hereunder, (B) the issuance by the Company of shares of the Common Stock upon
the exercise of an option or warrant or the conversion of a security outstanding
on the date hereof (including the conversion of Class A Convertible Common
Stock, par value $0.01 per share, to Class B Convertible Common Stock, par
value $0.01 per share, and vice versa) of which the Underwriters have been
advised in writing or (C) the issuance by the Company of any shares of Common
Stock or other securities or the grant by the Company of any options to purchase
Common Stock or other securities pursuant to employee benefit plans of the
Company, including, without limitation, the ARM Financial Group, Inc. Stock
Option Plan and the 1997 Equity Incentive Plan. In addition, each Selling
Shareholder agrees that, without the prior written consent of the U.S.
Representatives on behalf of the Underwriters, it will not, during the period
ending 180 days after the date of the Prospectus, make any demand for, or
exercise any right with respect to, the registration of any shares of Common
Stock or any security convertible into or exercisable or exchangeable for Common
Stock.
5. TERMS OF PUBLIC OFFERING. The Sellers are advised by you that
the Underwriters propose to make a public offering of their respective portions
of the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Sellers are further
advised by you that the Shares are to be offered to the public initially at
U.S.$_____ a share (the "Public Offering Price") and to certain dealers selected
by you at a price that represents a concession not in excess of U.S.$____ a
share under the Public Offering Price, and that any Underwriter may allow, and
such dealers may reallow, a concession, not in excess of U.S.$____ a share, to
any Underwriter or to certain other dealers.
6. PAYMENT AND DELIVERY. Payment for the Firm Shares to be sold by
each Seller shall be made in Federal or other funds immediately available in New
York City against delivery of such Firm Shares for the respective accounts of
the several Underwriters at 10:00 A.M., New York City time, on June __, 1997, or
at such other time on the same or such other date, not later than ________,
1997, as shall be agreed to by you and the Company. The time and date of such
payment are hereinafter referred to as the "Closing Date."
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Payment for any Additional Shares shall be made to the Selling
Shareholders in Federal or other funds immediately available in New York City
against delivery of such Additional Shares or the respective accounts of the
several Underwriters at 10:00 A.M., New York City time, on the date specified in
the notice described in Section 2 or at such other time on the same or on such
other date, in any event not later than ______ 1997,(2) as shall be agreed to by
the U.S. Representatives and the Selling Shareholders. The time and date of
such payment are hereinafter referred to as the "Option Closing Date."
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters or the U.S. Underwriters, as the
case may be, with any transfer taxes payable in connection with the transfer of
the Shares to the Underwriters or the U.S. Underwriters, as the case may be,
duly paid, against payment of the Purchase Price therefor.
7. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The obligation of
the Company to sell the Shares to the Underwriters and the several obligations
of the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the condition that the Registration Statement shall have become
effective not later than the date hereof.
The several obligations of the Underwriters are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction
of the possible change, in the rating accorded to Integrity, National
Integrity or any of the Company's securities by any "nationally
recognized statistical rating organization," as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company
and its subsidiaries, taken as a whole, from that set forth in the
Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement) that, in your judgment, is
material and adverse and that makes it, in your judgment,
_____________________
(2) Insert date 10 business days after the expiration of the greenshoe option.
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impracticable to market the Shares on the terms and in the manner
contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company, acting in such capacity but not personally, to the effect set
forth in clause (a)(i) above and to the effect that the representations and
warranties of the Company contained in this Agreement are true and correct
as of the Closing Date and that the Company has complied in all material
respects with all of the agreements and satisfied in all material respects
all of the conditions on its part to be performed or satisfied hereunder on
or before the Closing Date.
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an
opinion of Shearman & Sterling, outside counsel for the Company, dated the
Closing Date, to the effect that:
(i) the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of Delaware
and has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus, except to the
extent that the failure to be so qualified or be in good standing
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
(ii) National Integrity has been duly incorporated, is validly
existing as a corporation in good standing under the laws of New York
and has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus, except to the
extent that the failure to be so qualified or be in good standing
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
(iii) [upon the closing of the offering of the Shares, the
authorized, issued and outstanding capital stock of the Company will
be as set forth in the Prospectus under the caption "Capitalization"
in the columns entitled "As Adjusted," and] the authorized capital
stock of the Company will conform in all material respects as to legal
matters to the description thereof contained in the Prospectus;
(iv) the shares of Common Stock (including the Shares to be
sold by the Selling Shareholders) outstanding prior to the issuance of
the Shares to be sold by the Company have been duly authorized and are
validly issued, fully paid and non-assessable;
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(v) the Shares to be sold by the Company pursuant to this
Agreement have been duly authorized and, when issued and delivered in
accordance with the terms of this Agreement, will be validly issued,
fully paid and non-assessable, and the issuance of such Shares will
not be subject to any preemptive rights;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company;
(vii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law or the certificate
of incorporation or by-laws of the Company or, to the best of such
counsel's knowledge, any agreement or other instrument binding upon
the Company or any of its subsidiaries that is material to the Company
and its subsidiaries, taken as a whole, or, to the best of such
counsel's knowledge, any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Company or any
subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for
the performance by the Company of its obligations under this
Agreement, except such as have been obtained under the Securities Act
and such as may be required by the securities or Blue Sky laws of the
various states in connection with the offer and sale of the Shares by
the U.S. Underwriters;
(viii) the statements (A) in the Prospectus under the captions
"Management -- Classified Board of Directors," "-- Stock Option Plan,"
"-- Employment Contracts" and "-- 1997 Equity Incentive Plan,"
"Certain Relationships and Related Party Transactions -- Stockholders'
Agreement" and the second paragraph of "-- Certain Relationships and
Related Party Transactions," "Description of Certain Indebtedness,"
"Description of Capital Stock," "Shares Eligible for Future Sale" and
"Underwriters" and (B) in the Registration Statement in Items 14 and
15, in each case insofar as such statements constitute summaries of
the legal matters, documents or proceedings referred to therein,
fairly present in all material respects the information summarized
therein;
(ix) after due inquiry, such counsel does not know of any legal
or governmental proceedings pending or threatened to which the Company
or any of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is subject that
are required to be described in the Registration Statement or the
Prospectus and are not so described or of any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement that are not described or filed as
required;
12
(x) neither the Company nor any of its subsidiaries (other
than SBM Certificate Company) is, and, after giving effect to the
offering and sale of the Shares and the application of the proceeds
thereof as described in the Prospectus, neither the Company nor any of
its subsidiaries (other than SBM Certificate Company) will be, an
"investment company" as such term is defined in the Investment Company
Act of 1940, as amended;
(xi) (i) in such counsel's opinion, the Registration Statement
and the Prospectus (other than the financial statements and schedules
and other financial and statistical data contained therein or omitted
therefrom, as to which such counsel need express no view) comply as to
form in all material respects with the requirements of the Securities
Act and the applicable rules and regulations of the Commission
thereunder; (ii) no facts came to such counsel's attention which gave
such counsel reason to believe that (a) the Registration Statement
(other than the financial statements and schedules and other financial
and statistical data contained therein or omitted therefrom, as to
which such counsel need not comment), at the time it became effective,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or (b) the Prospectus (other than
the financial statements and schedules and other financial and
statistical data contained therein or omitted therefrom, as to which
such counsel need not comment), as of its date or the Closing Date,
contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; and (iii) such counsel do not know of any
contract or other document of a character required to be filed as an
exhibit to the Registration Statement that is not so filed.
(d) The Underwriters shall have received on the Closing Date an
opinion of Xxxxx Xxxxxxxxx, Esq., counsel for the Selling Shareholders,
dated the Closing Date, to the effect that:
(i) this Agreement has been duly authorized, executed and
delivered by or on behalf of each of the Selling Shareholders;
(ii) the execution and delivery by each Selling Shareholder of,
and the performance by such Selling Shareholder of its obligations
under, this Agreement will not contravene any provision of applicable
law, or the certificate of incorporation or by-laws of such Selling
Shareholder (if such Selling Shareholder is a corporation), or, to the
best of such counsel's knowledge, any agreement or other instrument
binding upon such Selling Shareholder or, to the best of such
counsel's knowledge, any judgment, order or decree of any governmental
body, agency or court having jurisdiction over such Selling
Shareholder, and no consent, approval, authorization or order of,
13
or qualification with, any governmental body or agency is required for
the performance by such Selling Shareholder of its obligations under
this Agreement, except such as may be required by the securities or
Blue Sky laws of the various states in connection with offer and sale
of the Shares;
(iii) each of the Selling Shareholders has valid title to the
Shares to be sold by such Selling Shareholder and the legal right and
power, and all authorization and approval required by law, to enter
into this Agreement and to sell, transfer and deliver the Shares to be
sold by such Selling Shareholder; and
(iv) delivery of the Shares to be sold by each Selling
Shareholder pursuant to this Agreement will pass title to such Shares
free and clear of any security interests, claims, liens, equities and
other encumbrances.
(e) You shall have received on the Closing Date an opinion of Xxxxxx
X. Xxxxx, Esq., General Counsel of the Company, dated the Closing Date, to
the effect that:
(i) the Company and each of its subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as
a whole;
(ii) all of the outstanding shares of capital stock of each of
the Company's subsidiaries have been duly authorized and validly
issued and are fully paid and non-assessable; all of the outstanding
shares of capital stock of each of the Company's subsidiaries are
owned directly or indirectly by the Company, in each case free of all
liens, encumbrances, security interests and claims, except as set
forth in the Prospectus;
(iii) the Company and each of its subsidiaries holds all such
licenses, authorizations, certificates and permits as are required to
conduct its business under the laws of each jurisdiction in which it
conducts business, except where the failure to have such licenses,
authorizations, certificates or permits would not, individually or in
the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole; all such licenses, authorizations,
certificates and permits are in full force and effect; and, except as
disclosed in the Prospectus, to the best of such counsel's knowledge,
neither the Company nor any of its subsidiaries has received any
notice of any event,
14
inquiry, investigation or proceeding that would reasonably be expected
to result in the suspension, revocation or limitation of any such
license, authorization, certificate or permit or otherwise impose any
limitation on the conduct of the business of the Company or any of its
subsidiaries, except for such events, inquiries, investigations or
proceedings which would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole;
(iv) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law (including any
insurance law, rule or regulation) or the certificate of incorporation
or by-laws of the Company or any of its subsidiaries or, to the best
of such counsel's knowledge, any agreement or other instrument binding
upon the Company or any of its subsidiaries that is material to the
Company and its subsidiaries, considered as one enterprise, or, to the
best of such counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the
Company or any of its subsidiaries;
(v) the statements (A) in the Prospectus under the captions
"Business -- Legal Proceedings" and (B) in the Registration Statement
in Items 14 and 15, in each case insofar as such statements constitute
summaries of the legal matters, documents or proceedings referred to
therein, fairly present the information called for with respect to
such legal matters, documents and proceedings and fairly summarize the
matters referred to therein;
(vi) such counsel does not know of any legal or governmental
proceeding pending or threatened in writing to which the Company or
any of its subsidiaries is a party or to which any of the properties
of the Company or any of its subsidiaries is subject that are required
to be described in the Registration Statement or the Prospectus and
are not so described or of any statutes, regulations, contracts or
other documents applicable to the Company or any of its subsidiaries
that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required; and
(vii) no facts came to such counsel's attention which gave such
counsel reason to believe that (a) the Registration Statement (other
than the financial statements and schedules and other financial and
statistical data contained therein or omitted therefrom, as to which
such counsel need not comment), at the time it became effective,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or (b) the Prospectus (other than
the financial statements and schedules and other financial and
statistical data contained therein or omitted therefrom, as to which
such counsel
15
need not comment), as of its date or the Closing Date, contained or
contains an untrue statement of a material fact or omitted or omits to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(f) The Underwriters shall have received on the Closing Date an
opinion of Xxxxxxx & Xxxxxx, special Ohio counsel for the Company and
Integrity, dated the Closing Date, to the effect that:
(i) Integrity is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Ohio, has
the corporate power and authority to own its property and conduct its
business as described in the Prospectus, and is duly qualified to
transact business as a life insurance company in the jurisdictions
specified in an exhibit to such opinion;
(ii) all outstanding shares of capital stock of Integrity have
been duly authorized and validly issued and are fully paid and
non-assessable and are owned of record by Integrity Holdings, Inc.
free of all liens, encumbrances, security interests and claims, except
as set forth in the Prospectus;
(iii) (x) Integrity has been granted all licenses,
authorizations, certificates and permits (collectively, the "Ohio
Authorizations") as are required to be obtained from the Ohio
Department of Insurance under Title 39, Ohio Revised Code, to conduct
the business of a life insurance company in the State of Ohio, and all
of the Ohio Authorizations are in full force and effect; (y) the Ohio
Authorizations consitute all requisite and valid licenses,
authorizations, certificates and permits necessary under Title 39 of
the Ohio Revised Code and the rules, regulations and written policies
of general applicability of the Ohio Department of Insurance to enable
Integrity to conduct its business as described in the Registration
Statement and the Prospectus, subject only to the ongoing reqirements
to obtain appropriate consents, authorizations and approvals from the
Ohio Department of Insurance, in each case in the ordinary course of
business; and (z) to the best knowledge of such counsel, no
proceedings to revoke any of the Ohio Authorizations are threatened or
pending by the Ohio Department of Insurance.
(g) The Underwriters shall have received on the Closing Date an
opinion of LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P., counsel for the
Underwriters, dated the Closing Date, covering the matters referred to in
subparagraphs (v), (vi), (viii) (but only as to the statements in the
Prospectus under "Description of Capital Stock" and "Underwriters") and
(xi) of paragraph (c) above.
With respect to subparagraph (xi) of paragraph (c) above, Shearman &
Sterling and LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P. may state that their
opinion and belief
16
are based upon their participation in the preparation of the Registration
Statement and Prospectus and any amendments or supplements thereto and
review and discussion of the contents thereof, but are without independent
check or verification, except as specified. With respect to paragraph (d)
above, Xxxxx Xxxxxxxxx, Esq. may rely upon an opinion or opinions of
counsel for any Selling Shareholders and, with respect to factual matters
and to the extent such counsel deems appropriate, upon the representations
of each Selling Shareholder contained herein and in other documents and
instruments; PROVIDED that (A) each such counsel for the Selling
Shareholders is satisfactory to your counsel, (B) a copy of each opinion so
relied upon is delivered to you and is in form and substance satisfactory
to your counsel, (C) copies of such other documents and instruments shall
be delivered to you and shall be in form and substance satisfactory to your
counsel and (D) Xxxxx Xxxxxxxxx, Esq, shall state in his opinion that he is
justified in relying on each such other opinion.
The opinions of Shearman & Sterling, Xxxxx Xxxxxxxxx, Esq., Xxxxxx X.
Xxxxx, Esq. and Xxxxxxx & Xxxxxx, described in paragraphs (c), (d), (e) and
(f) above (and any opinions of counsel for any Selling Shareholder referred
to in the immediately preceding paragraph) shall be rendered to the
Underwriters at the request of the Company or one or more of the Selling
Shareholders, as the case may be, and shall so state therein.
(h) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to the Underwriters,
from Ernst & Young, LLP, independent public accountants, containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements
and certain financial information contained in the Registration Statement
and the Prospectus; PROVIDED that the letter delivered on the Closing Date
shall use a "cut-off date" not earlier than the date hereof.
(i) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and certain shareholders, officers and
directors of the Company relating to sales and certain other dispositions
of shares of Common Stock or certain other securities, delivered to you on
or before the date hereof, shall be in full force and effect on the Closing
Date.
(j) Each of the requisite governmental or regulatory approvals and
authorizations which are required in connection with the consummation of
the transactions contemplated by this Agreement shall have been obtained
and shall not contain any conditions or qualifications having in your
reasonable judgment a material adverse effect on the Company and its
subsidiaries, taken as a whole
(k) The Shares shall have been approved for inclusion on the American
Stock Exchange, subject to official notice of issuance.
17
The several obligations of the U.S. Underwriters to purchase
Additional Shares hereunder are subject to the delivery to the U.S.
Representatives on the Option Closing Date of such documents as they may
reasonably request with respect to the good standing of the Company, the due
authorization and issuance of the Additional Shares and other matters related to
the issuance of the Additional Shares.
8. COVENANTS OF THE COMPANY. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, seven signed copies of the
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and to furnish to you in New York City, without
charge, prior to 10:00 A.M. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned in
paragraph (c) below, as many copies of the Prospectus and any supplements
and amendments thereto or to the Registration Statement as you may
reasonably request.
(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to
which you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with sales
by an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses you will furnish
to the Company) to which Shares may have been sold by you on behalf of the
Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as
so amended or supplemented will not, in the light of the circumstances when
the Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
(d) To cooperate with the Underwriters to qualify the Shares for
offer and sale under the securities or Blue Sky laws of such jurisdictions
as you shall reasonably
18
request; PROVIDED, HOWEVER, that the Company shall not be obligated to file
any general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it is
not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject.
(e) To make generally available to the Company's security holders and
to you as soon as practicable a consolidated earnings statement of the
Company covering the twelve-month period ending June 30, 1998 that
satisfies the provisions of Section ll(a) of the Securities Act and the
rules and regulations of the Commission thereunder.
(f) Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be paid
all expenses incident to the performance of its obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the
Company's counsel and the Company's accountants in connection with the
registration and delivery of the Shares under the Securities Act and all
other fees or expenses in connection with the preparation and filing of the
Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing
costs associated therewith, and the mailing and delivering of copies
thereof to the Underwriters and dealers, in the quantities hereinabove
specified, (ii) all costs and expenses related to the transfer and delivery
of the Shares to the Underwriters, including any transfer or other taxes
payable thereon (other than such transfer or other taxes, if any, payable
on the transfer and sale of the Shares being sold by the Selling
Shareholders), (iii) the cost of printing or producing any Blue Sky or
Legal Investment memorandum in connection with the offer and sale of the
Shares under state securities laws and all expenses in connection with the
qualification of the Shares for offer and sale under state securities laws
as provided in Section 7(d) hereof, including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky or
Legal Investment memorandum, (iv) all filing fees and disbursements of
counsel to the Underwriters incurred in connection with the review and
qualification of the offering of the Shares by the National Association of
Securities Dealers, Inc., (v) all fees and expenses in connection with the
preparation and filing of the registration statement on Form 8-A relating
to the Common Stock and all costs and expenses incident to listing the
Shares on the American Stock Exchange, (vi) the cost of printing
certificates representing the Shares, (vii) the costs and charges of any
transfer agent, registrar or depositary, (viii) except as otherwise agreed
in writing, the costs and expenses of the Company relating to investor
presentations on any "road show" undertaken in connection with the
marketing of the offering of the Shares, including, without limitation,
expenses associated with the production of road show slides and graphics,
fees and expenses of any consultants engaged in connection with the road
show presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company and any
such consultants, and the cost
19
of any aircraft chartered in connection with the road show, (ix) all costs
and expenses of the Underwriters, including the fees and disbursements of
counsel for the Underwriters, in connection with the matters related to the
Directed Share Program, (x) the $5,000 fee of the QIU, and (xi) all other
costs and expenses incident to the performance of the obligations of the
Company hereunder for which provision is not otherwise made in this
Section. It is understood, however, that except as provided in this
Section, Section 10 entitled "Indemnity and Contribution," Section 11
entitled "QIU Indemnity" and the last paragraph of Section 13 below, the
Underwriters will pay all of their costs and expenses, including fees and
disbursements of their counsel, stock transfer taxes payable on resale of
any of the Shares by them and any advertising expenses connected with any
offers they may make and their out-of-pocket costs with respect to any
"road show" undertaken in connection with the marketing of the offering of
the Shares.
(g) In connection with the Directed Share Program, to ensure that the
Directed Shares will be restricted to the extent required by the NASD or
the NASD rules from sale, transfer, assignment, pledge or hypothecation for
a period of three months following the date of the effectiveness of the
Registration Statement. Xxxx Xxxxxx will notify the Company as to which
Participants will need to be restricted. At the request of Xxxx Xxxxxx,
the Company will direct the transfer agent to place stop transfer
restrictions upon such securities for such period of time.
(h) To pay all fees and disbursements incurred by the Underwriters in
connection with the Directed Share Program and stamp duties, similar taxes
or duties or other taxes, if any, incurred by the Underwriters in
connection with the Directed Share Program.
9. EXPENSES OF SELLING SHAREHOLDERS. Each Selling Shareholder,
severally and not jointly, agrees to pay or cause to be paid all transfer or
other taxes, if any, payable on the transfer and sale of the Shares being sold
by such Selling Shareholder.
10. INDEMNITY AND CONTRIBUTION. (a) The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any preliminary
prospectus or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information
20
relating to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein; PROVIDED, HOWEVER, that the
foregoing indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
such losses, claims, damages or liabilities purchased Shares, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities.
(b) The Company agrees to indemnify and hold harmless Xxxx Xxxxxx and
each person, if any, who controls Xxxx Xxxxxx within the meaning of either
Section 15 of the Securities Act of Section 20 of the Exchange Act from and
against any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) (i) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
prospectus wrapper material prepared by or with the consent of the Company for
distribution in connection with the Directed Share Program attached to the
Prospectus or any preliminary prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, when considered in conjunction with
the Prospectus or any applicable preliminary prospectus, not misleading or (ii)
caused by the failure of any Participant to pay for and accept delivery of the
shares which, immediately following the effectiveness of the Registration
Statement, were subject to a properly confirmed agreement to purchase.
(c) Each Selling Shareholder agrees, severally and not jointly, to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred by any Underwriter or any such
controlling person in connection with defending or investigating any such action
or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
but only with reference to information relating to such Selling Shareholder
furnished to the Company in writing by or on behalf of such Selling Shareholder
expressly for use in the Registration Statement, any preliminary prospectus or
the Prospectus; PROVIDED, HOWEVER, that the foregoing indemnity agreement with
respect to any preliminary prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages or
liabilities purchased Shares, or any person controlling such Underwriter, if a
copy of the Prospectus (as then amended or supplemented if the Company
21
shall have furnished any amendments or supplements thereto) was not sent or
given by or on behalf of such Underwriter to such person, if required by law so
to have been delivered, at or prior to the written confirmation of the sale of
the Shares to such person, and if the Prospectus (as so amended or supplemented)
would have cured the defect giving rise to such losses, claims, damages or
liabilities. Notwithstanding any other provision of this Section 10, the
liability of each Selling Shareholder to the Underwriters shall not exceed the
net amount received by each such Selling Shareholder (after deducting any
underwriting discount) from the sale of the Shares pursuant to this Agreement.
(d) Each Selling Shareholder agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
but only with reference to information relating to such Selling Shareholder
furnished in writing by or on behalf of such Selling Shareholder to the Company
expressly for use in the Registration Statement, any preliminary prospectus, the
Prospectus or any amendments or supplements thereto. Notwithstanding any other
provision of this Section 10, the liability of each Selling Shareholder to the
Company shall not exceed the net amount received by each such Selling
Shareholder (after deducting any underwriting discount) from the sale of the
Shares pursuant to this Agreement.
(e) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Selling Shareholders, the directors of the
Company, the officers of the Company who sign the Registration Statement and
each person, if any, who controls the Company or any Selling Shareholder within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
but only with reference to information relating to such Underwriter furnished to
the Company in writing by such Underwriter through you expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
22
(f) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to paragraph (a), (b), (c), (d) or (e) of this Section 10, such
person (the "indemnified party") shall promptly notify the person against whom
such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the reasonable fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. Subject to the final sentence of
this Section 10(f) and to Sections 11(b) and 11(c) hereof, it is understood that
the indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for (i) all Underwriters and
all persons, if any, who control any Underwriter within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, (ii) the
Company, its directors, its officers who sign the Registration Statement and
each person, if any, who controls the Company within the meaning of either such
Section and (iii) all Selling Shareholders and all persons, if any, who control
any Selling Shareholder within the meaning of either such Section, and that all
such fees and expenses shall be reimbursed as they are incurred. In the case of
any such separate firm for the Underwriters and such control persons of the
Underwriters, such firm shall be designated in writing by Xxxxxx Xxxxxxx & Co.
Incorporated. In the case of any such separate firm for the Company, and such
directors, officers and control persons of the Company, such firm shall be
designated in writing by the Company. In the case of any such separate firm for
the Selling Shareholders and such controlling persons of the Selling
Shareholders, such firm shall be designated in writing by Selling Shareholders
selling a majority of the amount of Shares being sold by the Selling
Shareholders under this Agreement. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened
23
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding. Notwithstanding anything contained herein to the contrary, if
indemnity may be sought pursuant to Section 10(b) hereof in respect of such
action or proceeding, then in addition to such separate firm for the indemnified
parties, the indemnifying party shall be liable for the reasonable fees and
expenses of not more than one separate firm designated in writing by Xxxx Xxxxxx
(in addition to any local counsel) for Xxxx Xxxxxx for the defense of any
losses, claims, damages and liabilities arising out of the Directed Share
Program, and all persons, if any, who control Xxxx Xxxxxx within the meaning of
either Section 15 of the Securities Act of Section 20 of the Exchange Act.
(g) To the extent the indemnification provided for in paragraph (a),
(b), (c), (d) or (e) of this Section 10 is unavailable to an indemnified party
or insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each indemnifying party under such paragraph, in lieu
of indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by the indemnifying party or parties on
the one hand and the indemnified party or parties on the other hand from the
offering of the Shares or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Sellers on the one hand and the Underwriters on the other hand
in connection with the offering of the Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by the Sellers and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate Public
Offering Price of the Shares. The relative fault of the Sellers on the one hand
and the Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Sellers or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission, or such loss, claim, damage or liability
related to, arising out of or in connection with the Directed Share Program.
The Underwriters' respective obligations to contribute pursuant to this Section
10 are several in proportion to the respective number of Shares they have
purchased hereunder, and not joint.
(h) The Sellers and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 10 were determined by PRO
RATA allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method
24
of allocation that does not take account of the equitable considerations
referred to in paragraph (h) of this Section 10. The amount paid or payable by
an indemnified party as a result of the losses, claims, damages and liabilities
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 10, (x) no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages that such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission, and (y) no Selling Shareholder shall be required to contribute any
amount in excess of the amount by which the net amount received by such Selling
Shareholder (after deducting any underwriting discount) exceeds the amount of
damages that any such Selling Shareholder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
remedies provided for in this Section 10 are not exclusive and shall not limit
any rights or remedies which may otherwise be available to any indemnified party
at law or in equity.
(i) The indemnity and contribution provisions contained in this
Section 10 and the representations and warranties of the Company and the Selling
Shareholders contained in this Agreement shall remain operative and in full
force and effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, any Selling Shareholder or any person controlling any Selling
Shareholder, or the Company, its officers or directors or any person controlling
the Company and (iii) acceptance of and payment for any of the Shares.
11. QIU INDEMNITY. (a) The Company agrees to indemnify and hold
harmless the QIU and each person, if any, who controls the QIU within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, damages, liabilities and
judgments (including, without limitation, any legal or other expenses reasonably
incurred in connection with defending or investigating any matter, including any
action that could give rise to any such losses, claims, damages, liabilities or
judgments), as and when incurred, related to, based upon or arising out of (i)
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto), the Prospectus (or any
amendment or supplement thereto) or any preliminary prospectus, or any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except in
the case of this clause (i) insofar as any such losses, claims, damages,
liabilities or judgments are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to the QIU
furnished to the Company in writing by the QIU through you expressly for use
therein; or (ii) the QIU's activities as QIU under its engagement pursuant to
this Agreement, except in the case of this clause (ii) insofar as any
25
such losses, claims, damages, liabilities or judgments are found in a final
judgment by a court of competent jurisdiction, not subject to further appeal, to
have resulted solely from the bad faith, willful misconduct or gross negligence
of the QIU.
(b) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to paragraph (a) of this
Section 11 (the "QIU Indemnified Party"), the QIU Indemnified Party shall
promptly notify the Company in writing and the Company shall assume the defense
of such action, including the employment of counsel reasonably satisfactory to
the QIU Indemnified Party and the payment of all reasonable fees and expenses of
such counsel, as incurred. Any QIU Indemnified Party shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the QIU Indemnified Party unless (i) the employment of such counsel shall have
been specifically authorized in writing by the Company, (ii) the Company shall
have failed, within _______ days of the receipt by the Company of a request from
the QIU Indemnified Party, to assume the defense of such action or employ
counsel reasonably satisfactory to the QIU Indemnified Party or (iii) the named
parties to any such action (including any impleaded parties) include both the
QIU Indemnified Party and the Company, and the QIU Indemnified Party shall have
been advised by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the
Company (in which case the Company shall not have the right to assume the
defense of such action on behalf of the QIU Indemnified Party). In any such
case, the Company shall not, in connection with any one action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) for all QIU Indemnified Parties, which firm shall be designated in
writing by the QIU, and all such fees and expenses shall be reimbursed as they
are incurred. The Company shall indemnify and hold harmless the QIU Indemnified
Party from and against any and all losses, claims, damages, liabilities and
judgments by reason of any settlement of any action (i) effected with its
written consent or (ii) effected without its written consent if the settlement
is entered into more than 30 days after the Company shall have received a
request from the QIU Indemnified Party for reimbursement for the reasonable fees
and expenses of counsel (in any case where such fees and expenses are at the
expense of the Company) and, prior to the date of such settlement, the Company
shall have failed to comply with such reimbursement request. The Company shall
not, without the prior written consent of the QIU Indemnified Party, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened action in respect of which the QIU Indemnified
Party is or could have been a party and indemnity or contribution may be or
could have been sought hereunder by the QIU Indemnified Party, unless such
settlement, compromise or judgment (i) includes an unconditional release of the
QIU Indemnified Party from all liability on claims that are or could have been
the subject matter of such action and (ii) does not include a statement as to or
an admission of fault, culpability or a failure to act, by or on behalf of the
QIU Indemnified Party.
26
(c) The QIU agrees to indemnify and hold harmless the Company, the
directors of the Company, the officers of the Company who sign the Registration
Statement and each person, if any, who controls the Company within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company, but only with
reference to information relating to the QIU furnished to the Company in writing
by the QIU through you expressly for use in the Registration Statement (or any
amendment thereto), the Prospectus (or any amendment or supplement thereto) or
any preliminary prospectus. In the case any action shall be commenced involving
any person in respect of which indemnity may be sought pursuant to this Section
11(c), the QIU shall have the rights and duties given to the Company by Section
11(b) hereof (except that if the Company shall have assumed the defense thereof,
the QIU shall not be required to do so, but may employ separate counsel therein
and participate in the defense thereof but the fees and expenses of such counsel
shall be at the expense of the QIU), and the person seeking indemnity pursuant
to this Section 11(c) shall have the same rights and duties given to the QIU
Indemnified Parties by Section 11(b) hereof.
(d) To the extent the indemnification provided for in this Section 11
is unavailable to a person in respect of which indemnity may be sought pursuant
to this Section 11 (a "Section 11 Indemnified Party") or insufficient in respect
of any losses, claims, damages, liabilities or judgments referred to therein,
then each person from whom indemnity may be sought pursuant to this Section 11
(a "Section 11 Indemnifying Party"), in lieu of indemnifying such Section 11
Indemnified Party, shall contribute to the amount paid or payable by such
Section 11 Indemnified Party as a result of such losses, claims, damages,
liabilities and judgments (i) in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and the QIU on the
other hand from the offering of the Shares or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the QIU in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative benefits received by the Company and QIU from the
offering of the Shares shall be deemed to be in the same proportion as the total
net proceeds from the offering (before deducting expenses) received by the
Company as set forth in the table on the cover page of the Prospectus, and the
fee received by the QIU pursuant to this Agreement, bear to the sum of such
total net proceeds and such fee. The relative fault of the Company and the QIU
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or the
QIU and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission and whether the
QIU's activities as QIU under its engagement pursuant to this Agreement involved
any bad faith, willful misconduct or gross negligence on the part of the QIU.
The Company and the QIU agree that it would not be just and equitable
if contribution pursuant to this Section 11(d) were determined by pro rata
allocation or by any
27
other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by a Section 11 Indemnified Party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any reasonable legal or other expenses incurred by such Section 11
Indemnified Party in connection with investigating or defending any matter that
could have given rise to such losses, claims, damages, liabilities or judgments.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(e) The remedies provided for in this Section 11 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any Section 11 Indemnified Party at law or in equity.
12. TERMINATION. This Agreement shall be subject to termination by
notice given by you to the Company and the Selling Shareholders, if (a) after
the execution and delivery of this Agreement and prior to the Closing Date (i)
trading generally shall have been suspended or materially limited on or by, as
the case may be, any of the New York Stock Exchange, the American Stock Exchange
or the National Association of Securities Dealers, Inc., (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses (a)(i) through (iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable to
market the Shares on the terms and in the manner contemplated in the Prospectus.
13. EFFECTIVENESS; DEFAULTING UNDERWRITERS. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
that it has or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number of
Firm Shares set forth opposite their respective names in Schedule II or Schedule
III bears to the aggregate number of Firm Shares set forth opposite the names of
all such non-defaulting Underwriters, or in such other proportions as you may
specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; PROVIDED
that in no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to this Agreement be increased pursuant to this Section 13 by
an amount in excess of
28
one-ninth of such number of Shares without the written consent of such
Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Firm Shares and the aggregate number of Firm Shares
with respect to which such default occurs is more than one-tenth of the
aggregate number of Firm Shares to be purchased, and arrangements satisfactory
to you and the Company for the purchase of such Firm Shares are not made within
36 hours after such default, this Agreement shall terminate without liability on
the part of any non-defaulting Underwriter, the Company or the Selling
Shareholders. In any such case either you or the Company shall have the right
to postpone the Closing Date, but in no event for longer than seven days in
order that the required changes, if any, in the Registration Statement and in
the Prospectus or in any other documents or arrangements may be effected. If,
on the Option Closing Date, any Underwriter or Underwriters shall fail or refuse
to purchase Additional Shares and the aggregate number of Additional Shares with
respect to which such default occurs is more than one-tenth of the aggregate
number of Additional Shares to be purchased, the non-defaulting Underwriters
shall have the option to (i) terminate their obligation hereunder to purchase
Additional Shares or (ii) purchase not less than the number of Additional Shares
that such non-defaulting Underwriters would have been obligated to purchase in
the absence of such default. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of any Seller to comply with
the terms or to fulfill any of the conditions of this Agreement, or if for any
reason any Seller shall be unable to perform its obligations under this
Agreement, the Sellers will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
14. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
15. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
16. HEADINGS. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
Very truly yours,
ARM FINANCIAL GROUP, INC.
29
By_______________________
Name:
Title:
THE XXXXXX XXXXXXX LEVERAGED
EQUITY FUND II, L.P.
By: Xxxxxx Xxxxxxx Leveraged Equity Holdings,
Inc., its general partner
By_______________________
Name:
Title:
XXXXXX XXXXXXX CAPITAL PARTNERS
III, L.P.
By: MSCP III, L.P., its general partner
By: Xxxxxx Xxxxxxx Capital Partners III, Inc.,
its general partner
By_______________________
Name:
Title:
XXXXXX XXXXXXX CAPITAL
INVESTORS, L.P.
By: MSCP III, L.P., its general partner
By: Xxxxxx Xxxxxxx Capital Partners III, Inc.,
its general partner
By_______________________
Name:
Title:
30
MSCP III 892 INVESTORS, L.P.
By: MSCP III, L.P.,its general partner
By: Xxxxxx Xxxxxxx Capital Partners III, Inc.,
its general partner
By_______________________
Name:
Title:
Accepted as of the date hereof
XXXXXX XXXXXXX & CO. INCORPORATED
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES CORPORATION
XXXXXXXXXXX & CO., INC.
Acting severally on behalf of themselves and the several
U.S. Underwriters named in Schedule II hereto.
By: Xxxxxx Xxxxxxx & Co. Incorporated
By__________________________
Name:
Title:
XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED
XXXXXXXXX, LUFKIN & XXXXXXXX SECURITIES CORPORATION
XXXXXXXXXXX & CO., INC.
Acting severally on behalf of themselves and the several
International Underwriters named in Schedule III hereto.
By: Xxxxxx Xxxxxxx & Co. International Limited
By___________________________
Name:
Title:
31
Schedule I
Number of
Firm Shares
Selling Shareholder To Be Sold
------------------- ----------
The Xxxxxx Xxxxxxx Leveraged Equity
Fund II, X.X.
Xxxxxx Xxxxxxx Capital Partners III, X.X.
Xxxxxx Xxxxxxx Capital Investors, L.P.
MSCP III 892 Investors, L.P.
--------------
Total................................................... 862,500
==============
Schedule II
U.S. Underwriters
-----------------
Number of
Firm Shares
Underwriter To Be Purchased
----------- ---------------
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation
Xxxxxxxxxxx & Co., Inc.
[NAMES OF OTHER U.S. UNDERWRITERS]
-----------
Total U.S. Firm Shares ......................................... 4,600,000
===========
Schedule III
International Underwriters
--------------------------
Number of
Firm Shares
Underwriter To Be Purchased
----------- ---------------
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation
Xxxxxxxxxxx & Co., Inc.
[NAMES OF OTHER INTERNATIONAL CO-MANAGERS]
---------
Total International Firm Shares ..................................1,150,000
=========
Schedule IV
-----------
Each U.S. Underwriter represents that it has not offered or sold, and
agrees not to offer or sell, any Shares, directly or indirectly, in any province
or territory of Canada or to, or for the benefit of, any resident of any
province or territory of Canada in contravention of the securities laws thereof
and, without limiting the generality of the foregoing, represents that any offer
or sale of Shares in Canada will be made only pursuant to an exemption from the
requirement to file a prospectus in the province or territory of Canada in which
such offer or sale is made. Each U.S. Underwriter further agrees to send to any
dealer who purchases from it any of the Shares a notice stating in substance
that, by purchasing such Shares, such dealer represents and agrees that it has
not offered or sold, and will not offer or sell, directly or indirectly, any of
such Shares in any province or territory of Canada or to, or for the benefit of,
any resident of any province or territory of Canada in contravention of the
securities laws thereof and that any offer or sale of Shares in Canada will be
made only pursuant to an exemption from the requirement to file a prospectus in
the province or territory of Canada in which such offer or sale is made, and
that such dealer will deliver to any other dealer to whom it sells any of such
Shares a notice containing substantially the same statement as is contained in
this sentence.
The Underwriters understand that no action has been or will be taken
in any jurisdiction by the Underwriters or the Company that would permit a
public offering of the Shares, or possession or distribution of the Prospectus
(as defined in the Underwriting Agreement), in preliminary or final form, in any
jurisdiction where, or in any circumstances in which, action for that purpose is
required, other than the United States.
Each International Underwriter agrees that it will comply with all
applicable laws and regulations, and make or obtain all necessary filings,
consents or approvals, in each jurisdiction in which it purchases, offers, sells
or delivers Shares (including, without limitation, any applicable requirements
relating to the delivery of the international prospectus, in preliminary or
final form), in each case at its own expense. In connection with sales of and
offers to sell Shares made by it, each International Underwriter will either
furnish to each person to whom any such sale or offer is made a copy of the then
current international prospectus (in preliminary or final form and as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto), or inform such person that such international prospectus,
in preliminary or final form, will be made available upon request, and will keep
an accurate record of the names and addresses of all persons to whom it gives
copies of the registration statement relating to the offering of the Shares, the
international prospectus, in preliminary or final form, or any amendment or
supplement thereto, and, when furnished with any subsequent amendment to such
registration statement, any subsequent prospectus or any medium outlining
changes in the registration statement or any prospectus, will upon request of
the International Representatives, promptly forward copies thereof to such
persons or inform such persons that such amendment, subsequent prospectus or
other medium will be made available upon request.
Each International Underwriter further represents that it has not
offered or sold, and agrees not to offer or sell, directly or indirectly, in
Japan or to or for the account of any resident thereof, any of the Shares
acquired in connection with the distribution contemplated hereby, except for
offers or sales to Japanese International Underwriters or dealers and except
pursuant to any exemption from the registration requirements of the Securities
and Exchange Law and otherwise in compliance with applicable provisions of
Japanese law. Each International Underwriter further agrees to send to any
dealer who purchases from it any of the Shares a notice stating in substance
that, by purchasing such Shares, such dealer represents and agrees that it has
not offered or sold, and will not offer or sell, any of such Shares, directly or
indirectly, in Japan or to or for the account of any resident thereof except for
offers or sales to Japanese International Underwriters or dealers and except
pursuant to any exemption from the registration requirements of the Securities
and Exchange Law and otherwise in compliance with applicable provisions of
Japanese law, and that such dealer will send to any other dealer to whom it
sells any of such Shares a notice containing substantially the same statement as
is contained in this sentence.
Each International Underwriter further represents and agrees that (i)
it has not offered or sold and, prior to the date six months after the Closing
Date, will not offer or sell, any Shares to persons in the United Kingdom except
to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the purposes of
their businesses or otherwise in circumstances which have not resulted and will
not result in an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995; (ii) it has complied and will
comply with all applicable provisions of the Financial Services Xxx 0000 with
respect to anything done by it in relation to the Shares in, from or otherwise
involving the United Kingdom; and (iii) it has only issued or passed on and will
only issue or pass on in the United Kingdom any document received by it in
connection with the offering of the Shares to a person who is of a kind
described in Article 11(3) of the Financial Services Xxx 0000 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such document may
otherwise lawfully be issued or passed on.
Exhibit A
---------
[FORM OF LOCK-UP LETTER]
----------------------
_____________, 1997
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation
Xxxxxxxxxxx & Co., Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Xxxxxx Xxxxxxx & Co. International Limited
Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation
Xxxxxxxxxxx & Co., Inc.
c/o Morgan Xxxxxxx & Co. International Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
England
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated
("Xxxxxx Xxxxxxx") and Xxxxxx Xxxxxxx & Co. International Limited ("MSIL")
propose to enter into an Underwriting Agreement (the "Underwriting Agreement")
with ARM Financial Group, Inc., a Delaware corporation (the "Company"), and
certain shareholders of the Company providing for the public offering (the
"Public Offering") by the several Underwriters, including Xxxxxx Xxxxxxx and
MSIL, (the "Underwriters") of shares (the "Shares") of the Class A Convertible
Common Stock, par value $0.01 per share, of the Company (the "Common Stock").
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of Xxxxxx
Xxxxxxx on behalf of the Underwriters, it will not, during the period commencing
on the date hereof and ending 180 days after the date of the final prospectus
relating to the Public Offering (the "Prospectus"), (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell,
grant any option, right or warrant to purchase, or otherwise transfer or dispose
of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock (provided that
such shares or securities are either now owned by the undersigned or are
hereafter acquired prior to the Public Offering), or (2) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the sale of any Shares to the Underwriters
pursuant to the Underwriting Agreement or (B) any shares acquired from Xxxx
Xxxxxx Xxxxxxxx Inc. in connection with the Directed Share Program (as defined
in the Underwriting Agreement). In addition, the undersigned agrees that,
without the prior written consent of Xxxxxx Xxxxxxx on behalf of the
Underwriters, it will not, during the period commencing on the date hereof and
ending 180 days after the date of the Prospectus, make any demand for or
exercise any right with respect to, the registration of any shares of Common
Stock or any security convertible into or exercisable or exchangeable for Common
Stock.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. This Letter Agreement will terminate
in the event that the Public Offering has not been consummated on or prior to
August 30, 1997. Any Public Offering will only be made pursuant to an
Underwriting Agreement, the terms of which are subject to negotiation between
the Company and the Underwriters.
Very truly yours,
_______________________________________
(Name)
_______________________________________
(Address)
