Exhibit 1
PROCENTURY CORPORATION
COMMON SHARES
UNDERWRITING AGREEMENT
________________, 2004
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
X.X. XXXXXXX & SONS, INC.
Xxxxxxx Xxxxx & Sons, Inc.
as Representatives of the several Underwriters
c/o Friedman, Billings, Xxxxxx & Co., Inc.
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
ProCentury Corporation, an Ohio corporation, formerly named ProFinance
Holdings Corporation (the "Company"), and certain shareholders of the Company
listed on Schedule I hereto (collectively, the "Selling Shareholders"), each
confirms its agreement with each of the Underwriters listed on Schedule II
hereto (collectively, the "Underwriters"), for whom Friedman, Billings, Xxxxxx &
Co., Inc. ("FBR"), X.X. Xxxxxxx & Sons, Inc. and Xxxxxxx Xxxxx & Sons, Inc. are
acting as representatives (in such capacity, the "Representatives"), with
respect to (i) the sale by the Company and the Selling Shareholders of 8,900,000
common shares, without par value, of the Company (the "Common Shares") in the
respective numbers of shares set forth opposite the names of the Company and
each Selling Shareholder in Schedule I hereto, and the purchase by the
Underwriters, acting severally and not jointly, of the respective number of
common shares of the Company set forth opposite the names of the Underwriters in
Schedule II hereto, and (ii) the grant of the option described in Section 1(b)
hereof to purchase all or any part of 1,335,000 additional Common Shares to
cover over-allotments (the "Option Shares"), if any, by the Company to the
Underwriters, acting severally and not jointly, in the respective numbers of
Common Shares set forth opposite the names of the Underwriters in Schedule II
hereto. The 8,900,000 Common Shares to be purchased by the Underwriters (the
"Initial Shares") and all or any part of the 1,335,000 Option Shares are
hereinafter collectively referred to as the "Shares."
The Company understands that the Underwriters propose to make a public
offering of the Shares as soon as the Underwriters deem advisable after this
Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-111294) and a
related preliminary prospectus for the registration of the Shares under the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations thereunder (the "Securities Act Regulations"). The Company has
prepared and filed such amendments thereto, if any, and such amended preliminary
prospectuses, if any, as may have been required to the date hereof, and will
file such additional amendments thereto and such amended prospectuses as may
hereafter be required.
The registration statement has been declared effective under the Securities Act
by the Commission. The registration statement as amended at the time it became
effective (including all information deemed (whether by incorporation by
reference or otherwise) to be a part of the registration statement at the time
it became effective pursuant to Rule 430A(b) of the Securities Act Regulations)
is hereinafter called the "Registration Statement," except that, if the Company
files a post-effective amendment to such registration statement which becomes
effective prior to the Closing Time (as defined below), "Registration Statement"
shall refer to such registration statement as so amended. Any registration
statement filed pursuant to Rule 462(b) of the Securities Act Regulations is
hereinafter called the "Rule 462(b) Registration Statement," and after such
filing the term "Registration Statement" shall include the 462(b) Registration
Statement. Each prospectus included in the Registration Statement, or amendments
thereof or supplements thereto, before it became effective under the Securities
Act and any prospectus filed with the Commission by the Company pursuant to Rule
424(a) of the Securities Act Regulations is hereinafter called the "Preliminary
Prospectus." The term "`Prospectus" means the final prospectus, as first filed
with the Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the
Securities Act Regulations, and any amendments thereof or supplements thereto.
The Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus.
Each Selling Shareholder has executed and delivered a Custody Agreement
and a Power of Attorney in the form attached hereto as Exhibit A (collectively,
the "Custody Agreement and Power of Attorney") pursuant to which each Selling
Shareholder party thereto has placed the Initial Shares to be sold by such
Selling Shareholder pursuant to this Agreement in custody of the Custodian
(defined below) and appointed the persons designated therein as such Selling
Shareholder's agents and attorneys-in-fact (collectively, the
"Attorneys-in-Fact") with the authority to execute and deliver this Agreement on
behalf of such Selling Shareholder and to take certain other actions with
respect thereto and hereto.
The Company, the Selling Shareholders and the Underwriters agree as
follows:
1. SALE AND PURCHASE.
(a) INITIAL SHARES. Upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per share of $________, the Company agrees to sell to the Underwriters the
number of Initial Shares set forth in Schedule I opposite its name and each
Selling Shareholder agrees to sell to the Underwriters the number of Initial
Shares set forth in Schedule I opposite such Selling Shareholder's name, and
each Underwriter agrees, severally and not jointly, to purchase from the Company
and the Selling Shareholders the number of Initial Shares set forth in Schedule
II opposite such Underwriter's name, plus any additional number of Initial
Shares which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof, subject in each case, to such adjustments among
the Underwriters as the Representatives in their sole discretion shall make to
eliminate any sales or purchases of fractional shares. The Underwriters may from
time to time increase or decrease the public offering price after the initial
public offering to such extent as the Underwriters may determine.
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(b) OPTION SHARES. In addition, upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per share set forth in paragraph (a), the Company hereby grants an option
to the Underwriters, acting severally and not jointly, to purchase from the
Company, all or any part of the Option Shares, plus any additional number of
Option Shares which such Underwriter may become obligated to purchase pursuant
to the provisions of Section 10 hereof. The option hereby granted will expire
thirty (30) days after the date hereof and may be exercised in whole or in part
only for the purpose of covering over-allotments which may be made in connection
with the offering and distribution of the Initial Shares upon notice by the
Representatives to the Company and the Custodian setting forth the number of
Option Shares as to which the several Underwriters are then exercising the
option and the time and date of payment and delivery for such Option Shares. Any
such time and date of delivery (a "Date of Delivery") shall be determined by the
Representatives, but shall not be later than three full business days (or
earlier, without the consent of the Company, than two full business days) after
the exercise of such option, nor in any event prior to the Closing Time, as
hereinafter defined. If the option is exercised as to all or any portion of the
Option Shares, the Company will sell the total number of Option Shares then
being purchased, and each of the Underwriters, acting severally and not jointly,
will purchase that proportion of the total number of Option Shares then being
purchased which the number of Initial Shares set forth in Schedule II opposite
the name of such Underwriter bears to the total number of Initial Shares,
subject in each case to such adjustments among the Underwriters as the
Representatives in their sole discretion shall make to eliminate any sales or
purchases of fractional shares. The Underwriters may from time to time increase
or decrease the public offering price after the initial public offering to such
extent as the Underwriters may determine.
2. PAYMENT AND DELIVERY.
(a) INITIAL SHARES. Delivery to the Underwriters of Initial Shares
shall be made in book-entry form through the facilities of the Depository Trust
Company ("DTC") against payment therefor by wire or other immediately available
funds at 9:30 a.m., New York City time, on the third full business day (fourth,
if pricing occurs after 4:30 p.m., New York City time) following the date hereof
(the time and date of the closing being referred to as the "Closing Time"). The
closing shall take place at the offices of Xxxxx & Xxxxxxxxx LLP, 00 Xxxx Xxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxxx, Xxxx 00000, or such other place as the Company and
the Representatives may agree.
(b) OPTION SHARES. Delivery to the Underwriters of any Option Shares to
be purchased by the several Underwriters shall be made in book-entry form
through the facilities of DTC against payment therefor by wire or other
immediately available funds at such time on the Date of Delivery (the "Option
Closing Time"). The option closing shall take place at the offices of Xxxxx &
Xxxxxxxxx LLP, 00 Xxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxx, Xxxx 00000, or such
other place as the Company and the Representatives may agree.
(c) MANNER OF DELIVERY. Unless the Representatives request otherwise,
the Initial Shares and the Option Shares shall be delivered in global form and
shall be deposited with, or on behalf of, DTC and registered in the name of
DTC's nominee. If at the request of the Representatives the Initial Shares or
the Option Shares are delivered in definitive form, certificates for such Shares
shall be registered in such names and in such denominations as the
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Representatives shall request upon at least forty-eight (48) hours prior notice
to the Company preceding the Closing Time or the Option Closing Time, as the
case may be. Such certificates shall be made available to the Representatives
for inspection and packaging not later than at least twenty-four (24) hours
prior to the Closing Time or the Option Closing Time, as the case may be.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Underwriters that:
(a) the Company has an authorized capitalization as set forth in the
Prospectus; the outstanding shares of capital stock of the Company and each
direct and indirect subsidiary of the Company (each, a "Subsidiary") have been
duly and validly authorized and issued and are fully paid and non-assessable,
and all of the outstanding shares of capital stock of the Subsidiaries are
directly or indirectly owned of record and beneficially by the Company; except
as disclosed in the Prospectus, there are no outstanding (i) securities or
obligations of the Company or any of the Subsidiaries convertible into or
exchangeable for any capital stock of the Company or any such Subsidiary, (ii)
warrants, rights or options to subscribe for or purchase from the Company or any
such Subsidiary any such capital stock or any such convertible or exchangeable
securities or obligations, or (iii) obligations of the Company or any such
Subsidiary to issue any shares of capital stock, any such convertible or
exchangeable securities or obligation, or any such warrants, rights or options;
(b) each of the Company and the Subsidiaries (all of which are named in
Exhibit 21 to the Registration Statement except for those that are not required
to be named therein pursuant to Item 601(b)(21) of Regulation S-K of the
Commission (such named Subsidiaries, the "Significant Subsidiaries")) has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of its respective jurisdiction of incorporation with full
corporate power and authority to own its respective properties and to conduct
its respective businesses as described in the Registration Statement and
Prospectus and, in the case of the Company, to execute and deliver this
Agreement and to consummate the transactions contemplated herein;
(c) each of the Company and the Subsidiaries is duly qualified or
licensed and is in good standing in each jurisdiction in which it conducts its
respective businesses or in which it owns or leases real property or otherwise
maintains an office and in which the failure, individually or in the aggregate,
to be so qualified or licensed could have a material adverse effect on the
assets, business, operations, earnings, properties or condition (financial or
otherwise) of the Company and the Subsidiaries taken as a whole, (any such
effect or change, where the context so requires, is hereinafter called a
"Material Adverse Effect" or "Material Adverse Change"); except as disclosed in
the Prospectus, no Subsidiary is prohibited or restricted, directly or
indirectly, from paying dividends to the Company, or from making any other
distribution with respect to such Subsidiary's capital stock or from repaying to
the Company or any other Subsidiary any amounts which may from time to time
become due under any loans or advances to such Subsidiary from the Company or
such other Subsidiary, or from transferring any such Subsidiary's property or
assets to the Company or to any other Subsidiary; and other than as disclosed in
the Prospectus and except for Subsidiaries that are not Significant
Subsidiaries, the Company does not own, directly or indirectly, any capital
stock or other equity
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securities of any other corporation or any ownership interest in any
partnership, joint venture or other association;
(d) the Company and the Subsidiaries are in compliance in all material
respects with all applicable laws, rules, regulations, orders, decrees and
judgments, including those relating to transactions with affiliates;
(e) neither the Company nor any Subsidiary is in breach of or in
default under (nor has any event occurred which with notice, lapse of time, or
both would constitute a breach of, or default under), its respective
organizational documents, or in the performance or observance of any obligation,
agreement, covenant or condition contained in any license, indenture, mortgage,
deed of trust, loan or credit agreement or other agreement or instrument to
which the Company or any Subsidiary is a party or by which any of them or their
respective properties is bound, except for such breaches or defaults which could
not have a Material Adverse Effect;
(f) the execution, delivery and performance of this Agreement, and
consummation of the transactions contemplated herein will not (A) conflict with,
or result in any breach of, or constitute a default under (nor constitute any
event which with notice, lapse of time, or both would constitute a breach of, or
default under), (i) any provision of the organizational documents of the Company
or any Subsidiary, or (ii) any provision of any license, indenture, mortgage,
deed of trust, loan or credit agreement or other agreement or instrument to
which the Company or any Subsidiary is a party or by which any of them or their
respective properties may be bound or affected, or under any federal, state,
local or foreign law, regulation or rule or any decree, judgment or order
applicable to the Company or any Subsidiary, except in the case of this clause
(ii) for such breaches or defaults which could not have a Material Adverse
Effect; or (B) result in the creation or imposition of any lien, charge, claim
or encumbrance upon any property or asset of the Company or any Subsidiary;
(g) this Agreement has been duly authorized, executed and delivered by
the Company and is a legal, valid and binding agreement of the Company
enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, and by general equitable principles, and except to
the extent that the indemnification and contribution provisions of Section 11
hereof may be limited by federal or state securities laws and public policy
considerations in respect thereof;
(h) no approval, authorization, consent or order of or filing with any
federal, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the Company's execution,
delivery and performance of this Agreement, its consummation of the transactions
contemplated herein, and its sale and delivery of the Shares contemplated to be
sold by it hereunder, other than (A) such as have been obtained, or will have
been obtained at the Closing Time or the relevant Date of Delivery, as the case
may be, under the Securities Act and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (B) such approvals as have been obtained in
connection with the approval of the quotation of the Shares on the Nasdaq
National Market and (C) any necessary qualification under the securities or blue
sky laws of the various jurisdictions in which the Shares are being offered by
the Underwriters and approval of underwriting terms and arrangements by the
National Association of Securities Dealers, Inc. (the "NASD");
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(i) each of the Subsidiaries holds such insurance licenses,
certificates and permits from governmental authorities (including, without
limitation, from the insurance regulatory agencies of the various jurisdictions
where it conducts business) (the "Insurance Licenses") as are necessary to the
conduct of its business as described in the Prospectus; each Subsidiary has
fulfilled and performed all obligations necessary to maintain the Insurance
Licenses; there is no pending or, to the knowledge of the Company after due
inquiry, threatened action, suit, proceeding or investigation that could
reasonably be expected to result in the revocation, termination or suspension of
any Insurance License; and no insurance regulatory agency or body has issued, or
to the knowledge of the Company, commenced any proceeding for the issuance of,
any order or decree impairing, restricting or prohibiting the payment of
dividends or the making of any loan by any Subsidiary to its parent, which would
have, individually or in the aggregate, a Material Adverse Effect or which is
not described in the Registration Statement;
(j) all reinsurance treaties and arrangements to which the Company or
any Subsidiary is a party as a cedant are in full force and effect; neither the
Company nor any Subsidiary is in material violation of or in material default in
the performance, observance or fulfillment of any obligation, agreement,
covenant or condition contained therein; neither the Company nor any Subsidiary
has received any notice from any of the other parties to such treaties or
arrangements that such other party intends not to perform such treaty; and, to
the best knowledge of the Company, the Company and the Subsidiaries have no
reason to believe that any of the other parties to such treaties or arrangements
will be unable to perform such treaty or arrangement except to the extent
adequately and properly reserved for in the consolidated financial statements of
the Company included in the Prospectus;
(k) the 2002 statutory annual statements of each of the Subsidiaries
required to prepare such statements and the statutory balance sheets and income
statements included in such statutory annual statements, together with related
schedules and notes, have been prepared, in all material respects, in conformity
with statutory accounting principles or practices required or permitted by the
appropriate insurance department of the jurisdiction of domicile of each such
Subsidiary, and such statutory accounting practices have been applied on a
consistent basis throughout the periods involved, except as may otherwise be
indicated therein or in the notes thereto, and present fairly, in all material
respects, the statutory financial position of the Subsidiaries as of the dates
thereof, and the statutory basis results of operations of the Subsidiaries for
the periods covered thereby;
(l) the Subsidiaries have made no material changes in their insurance
reserving practices since December 31, 2003, except as described in the
Registration Statement or where such change in such insurance reserving
practices would not reasonably be expected to have a Material Adverse Effect;
(m) the Company is not aware of any threatened or pending downgrading
of its or any Subsidiary's financial rating from A.M. Best Company, Inc. (the
"Rating Agency");
(n) each of the Registration Statement and any Rule 462(b) Registration
Statement has become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the
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Securities Act and no proceedings for that purpose have been instituted or are
pending or, to the knowledge of the Company or any Selling Shareholder, are
threatened by the Commission, and the Company has complied to the Commission's
satisfaction with any request on the part of the Commission for additional
information;
(o) the Preliminary Prospectus and the Registration Statement comply,
and the Prospectus and any further amendments or supplements thereto will, when
they have become effective or are filed with the Commission, as the case may be,
comply, in all material respects with the requirements of the Securities Act and
the Securities Act Regulations; the Registration Statement did not, and any
amendment thereto will not, in each case as of the applicable effective date,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; and
the Preliminary Prospectus does not, and the Prospectus or any amendment or
supplement thereto will not, as of the applicable filing date and at the Closing
Time and on each Date of Delivery (if any), contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Company
makes no warranty or representation with respect to any statement contained in
the Registration Statement or the Prospectus in reliance upon and in conformity
with the information concerning the Underwriters and furnished in writing by or
on behalf of the Underwriters through the Representatives to the Company
expressly for use in the Registration Statement or the Prospectus (that
information being limited to that described in the penultimate sentence of the
first paragraph of Section 11(d) hereof);
(p) the Preliminary Prospectus was and the Prospectus delivered to the
Underwriters for use in connection with this offering will be identical to the
versions of the Preliminary Prospectus and Prospectus created to be transmitted
to the Commission for filing via the Electronic Data Gathering Analysis and
Retrieval System ("XXXXX"), except to the extent permitted by Regulation S-T or
Rule 424 of the Securities Act Regulations;
(q) except as described in the Prospectus, there are no actions, suits,
proceedings, inquiries or investigations pending or, to the knowledge of the
Company or any Selling Shareholder, threatened against the Company or any
Subsidiary or any of their respective officers and directors or to which the
properties, assets or rights of any such entity are subject, at law or in
equity, before or by any federal, state, local or foreign governmental or
regulatory commission, board, body, authority, arbitral panel or agency which
are reasonably expected to result in a judgment, decree, award or order having a
Material Adverse Effect;
(r) the financial statements, including the notes thereto, included in
(or incorporated by reference into) the Registration Statement and the
Prospectus present fairly the consolidated financial position of the entities to
which such financial statements relate (the "Covered Entities") as of the dates
indicated and the consolidated results of operations and changes in financial
position and cash flows of the Covered Entities for the periods specified; such
financial statements have been prepared in conformity with generally accepted
accounting principles as applied in the United States and on a consistent basis
during the periods involved and in accordance with Regulation S-X promulgated by
the Commission, except as disclosed
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therein; the financial statement schedules included in the Registration
Statement and the amounts in the Prospectus under the captions "Prospectus
Summary - Summary Financial Information" and "Selected Consolidated Financial
Data" fairly present the information shown therein and have been compiled on a
basis consistent with the financial statements included in the Registration
Statement and the Prospectus; no other financial statements or supporting
schedules are required to be included in the Registration Statement; the amounts
in the Prospectus under "Summary Unaudited Pro Forma Condensed Financial
Information" and "Pro Forma Information" (including the related notes) comply as
to form in all material respects with the applicable accounting requirements of
the Securities Act and the Securities Act Regulations, and management of the
Company believes that the assumptions underlying the pro forma adjustments are
reasonable; such pro forma adjustments have been properly applied to the
historical amounts in the compilation of the information and such information
fairly presents with respect to the Company and the Subsidiaries, the financial
position, results of operations and other information purported to be shown
therein at the respective dates and for the respective periods specified; no
other pro forma financial information is required to be included in the
Registration Statement;
(s) KPMG LLP, whose reports on the consolidated financial statements of
the Company and the Subsidiaries are filed with the Commission as part of the
Registration Statement and Prospectus, and any other accounting firm that has
certified Company financial statements and delivered its reports with respect
thereto, are, and were during the periods covered by their reports, independent
public accountants as required by the Securities Act and the Securities Act
Regulations;
(t) subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, and except as may be otherwise
stated in the Registration Statement or Prospectus, there has not been (A) any
Material Adverse Change or any development that could reasonably be expected to
result in a Material Adverse Change, whether or not arising in the ordinary
course of business, (B) any transaction that is material to the Company and the
Subsidiaries taken as a whole, contemplated or entered into by the Company or
any of the Subsidiaries, (C) any obligation, contingent or otherwise, directly
or indirectly incurred by the Company or any Subsidiary that is material to the
Company and Subsidiaries taken as a whole or (D) any dividend or distribution of
any kind declared, paid or made by the Company on any class of its capital
stock;
(u) the Shares conform in all material respects to the description
thereof contained in the Registration Statement and the Prospectus;
(v) there are no persons with registration or other similar rights to
have any equity or debt securities, including securities which are convertible
into or exchangeable for equity securities, registered pursuant to the
Registration Statement or otherwise registered by the Company under the
Securities Act;
(w) the Shares have been duly authorized and, when issued and duly
delivered against payment therefor as contemplated by this Agreement, will be
validly issued, fully paid and non-assessable, free and clear of any pledge,
lien, encumbrance, security interest or other claim, and the issuance and sale
of the Shares by the Company is not subject to preemptive or other similar
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rights arising by operation of law, under the organizational documents of the
Company or under any agreement to which the Company or any Subsidiary is a party
or otherwise;
(x) the Shares have been approved for listing on the Nasdaq National
Market, subject to official notice of issuance;
(y) the Company has not taken, and will not take, directly or
indirectly, any action which is designed to or which has constituted or which
might reasonably be expected to cause or result in stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Shares;
(z) neither the Company nor any of its affiliates (i) is required to
register as a "broker" or "dealer" in accordance with the provisions of the
Exchange Act, or the rules and regulations thereunder (the "Exchange Act
Regulations"), or (ii) directly, or indirectly through one or more
intermediaries, controls or has any other association with (within the meaning
of Article I of the By-laws of the NASD) any member firm of the NASD;
(aa) the Company has not relied upon the Representatives or legal
counsel for the Representatives for any legal, tax or accounting advice in
connection with the offering and sale of the Shares;
(bb) any certificate signed by any officer of the Company or any
Subsidiary delivered to the Representatives or to counsel for the Underwriters
pursuant to or in connection with this Agreement shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby;
(cc) the form of certificate used to evidence the Common Shares
complies in all material respects with all applicable statutory requirements,
with any applicable requirements of the organizational documents of the Company
and the requirements of the Nasdaq National Market;
(dd) the Company and the Subsidiaries have good and marketable title in
fee simple to all real property, if any, and good title to all personal property
owned by them, in each case free and clear of all liens, security interests,
pledges, charges, encumbrances, mortgages and defects, except such as are
disclosed in the Prospectus or such as do not materially and adversely affect
the value of such property and do not interfere with the use made or proposed to
be made of such property by the Company and the Subsidiaries; and any real
property and buildings held under lease by the Company or any Subsidiary are
held under valid, existing and enforceable leases, with such exceptions as are
disclosed in the Prospectus or are not material and do not interfere with the
use made or proposed to be made of such property and buildings by the Company or
such Subsidiary;
(ee) the descriptions in the Registration Statement and the Prospectus
of the legal or governmental proceedings, contracts, leases and other legal
documents therein described present fairly the information required to be shown,
and there are no legal or governmental proceedings, contracts, leases, or other
documents of a character required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration Statement which
are not described or filed as required; all material agreements expressly
referenced in the Prospectus
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between the Company or any of the Subsidiaries and third parties are legal,
valid and binding obligations of the Company or one or more of the Subsidiaries,
enforceable in accordance with their respective terms, except to the extent
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and by general
equitable principles;
(ff) the Company and each Subsidiary own or possess adequate licenses
or other rights to use all patents, trademarks, service marks, trade names,
copyrights, software and design licenses, trade secrets, manufacturing
processes, other intangible property rights and know-how (collectively,
"Intangibles") necessary to entitle the Company and each Subsidiary to conduct
its business as described in the Prospectus, and neither the Company nor any
Subsidiary has received notice of infringement of or conflict (other than any
which has been resolved) with (and neither the Company nor any Selling
Shareholder knows of any such infringement of or conflict with) asserted rights
of others with respect to any Intangibles which could have a Material Adverse
Effect;
(gg) the Company and each of the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles as applied in the United States and to maintain asset
accountability; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences;
(hh) The Company has taken all necessary actions to ensure that, upon
and at all times after the effectiveness of the Registration Statement, it will
be in compliance with all applicable provisions of the Xxxxxxxx-Xxxxx Act of
2002 (the "Xxxxxxxx-Xxxxx Act") that are then in effect and is actively taking
steps to ensure that it will be in compliance with other applicable provisions
of the Xxxxxxxx-Xxxxx Act not currently in effect upon and at all times after
the effectiveness of such provisions;
(ii) each of the Company and the Subsidiaries has filed on a timely
basis all necessary federal, state, local and foreign income and franchise tax
returns required to be filed through the date hereof (or has received timely
extension thereof) and have paid all taxes shown as due thereon (other than
those contested in good faith for which adequate reserves have been provided);
no tax deficiency has been asserted against any such entity, nor does any such
entity nor any Selling Shareholder know of any tax deficiency which is likely to
be asserted against any such entity which, if determined adversely to any such
entity, could have a Material Adverse Effect; and all tax liabilities are
adequately provided for on the respective books of such entities;
(jj) each of the Company and the Subsidiaries maintains insurance
(issued by insurers of recognized financial responsibility) of the types and in
the amounts generally deemed adequate for their respective businesses and
consistent with insurance coverage maintained by similar companies in similar
businesses, including, but not limited to, insurance covering real
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and personal property owned or leased by the Company and the Subsidiaries
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and effect;
provided, however, that it is hereby understood and agreed that this
representation does not relate to any reinsurance activities of the Company;
(kk) neither the Company nor any Subsidiary is in violation of or has
received notice of any violation with respect to any federal or state law
relating to discrimination in the hiring, promotion or pay of employees, nor any
applicable federal or state wages and hours law, nor any state law precluding
the denial of credit due to the neighborhood in which a property is situated,
the violation of any of which could have a Material Adverse Effect;
(ll) the Company and each of the Subsidiaries are in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company or any of the Subsidiaries would have any
liability; the Company and each of the Subsidiaries have not incurred and do not
expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Section 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder ("Code"); and each "pension plan" for
which the Company and each of its Subsidiaries would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by failure to
act, which would cause the loss of such qualification;
(mm) during the last five years, neither the Company nor any of the
Subsidiaries nor any officer or director purporting to act on behalf of the
Company or any of the Subsidiaries has at any time (i) made any contributions to
any candidate for political office, or failed to disclose fully any such
contributions, in either case in violation of law, (ii) made any payment to any
state, federal or foreign governmental officer or official, or other person
charged with similar public or quasi-public duties, other than payments required
or allowed by applicable law, (iii) made any payment outside the ordinary course
of business to any investment officer or loan broker or person charged with
similar duties of any entity to which the Company or any of the Subsidiaries
sells or from which the Company or any of the Subsidiaries buys loans or
servicing arrangements for the purpose of influencing such agent, officer,
broker or person to buy loans or servicing arrangements from or sell loans to
the Company or any of the Subsidiaries, or (iv) engaged in any transactions,
maintained any bank account or used any corporate funds except for transactions,
bank accounts and funds which have been and are reflected in the normally
maintained books and records of the Company and the Subsidiaries;
(nn) except as otherwise disclosed in the Prospectus, there are no
material outstanding loans or advances or material guarantees of indebtedness by
the Company or any of the Subsidiaries to or for the benefit of any of the
officers or directors of the Company or any of the Subsidiaries or any of the
members of the families of any of them;
(oo) neither the Company nor any of the Subsidiaries nor, to the
knowledge of the Company or any Selling Shareholder, any employee or agent of
the Company or any of the
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Subsidiaries, has made any payment of funds of the Company or of any Subsidiary
or received or retained any funds in violation of any law, rule or regulation or
of a character required to be disclosed in the Prospectus;
(pp) all securities issued by the Company, any of the Subsidiaries or
any trusts established by the Company or any Subsidiary, have been issued and
sold in compliance with (i) all applicable federal and state securities laws,
(ii) the laws of the applicable jurisdiction of incorporation of the issuing
entity and, (iii) to the extent applicable to the issuing entity, the
requirements of the Nasdaq National Market and/or any securities exchanges on
which such securities are listed;
(qq) in connection with this offering, the Company has not offered and
will not offer its Common Shares or any other securities convertible into or
exchangeable or exercisable for Common Shares in a manner in violation of the
Securities Act. The Company has not distributed and will not distribute any
Prospectus or other offering material in connection with the offer and sale of
the Shares;
(rr) the Company has complied and will comply with all the provisions
of Florida Statutes, Section 517.075 (Chapter 92-198, Laws of Florida); and
neither the Company nor any of the Subsidiaries or affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba;
(ss) except for the Underwriters' discounts and commissions, the
Company has not incurred any liability for any finder's fees or similar payments
in connection with the transactions herein contemplated;
(tt) no relationship, direct or indirect, exists between or among the
Company or any of the Subsidiaries on the one hand, and the directors, officers,
shareholders, customers or suppliers of the Company or any of the Subsidiaries
on the other hand, which is required by the Securities Act and the Securities
Act Regulations to be described in the Registration Statement and the Prospectus
and which is not so described;
(uu) neither the Company nor any of the Subsidiaries is and, after
giving effect to the offering and sale of the Shares, will be an "investment
company" or an entity "controlled" by an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended (the "Investment
Company Act"); and
(vv) there are no existing or, to the knowledge of the Company,
threatened labor disputes with the employees of the Company or any of the
Subsidiaries which are likely to have individually or in the aggregate to have a
Material Adverse Effect.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS.
Each Selling Shareholder represents and warrants to the Underwriters
that:
(a) such Selling Shareholder has full power and authority to enter into
this Agreement and the Custody Agreement and Power of Attorney to which it is a
party. All authorizations and consents necessary for the execution and delivery
by such Selling Shareholder of the Custody
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Agreement and Power of Attorney, and for the execution of this Agreement on
behalf of such Selling Shareholder, have been given. Each of the Custody
Agreement and Power of Attorney and this Agreement has been duly authorized,
executed and delivered by or on behalf of such Selling Shareholder and
constitutes a valid and binding agreement of such Selling Shareholder and is
enforceable against such Selling Shareholder in accordance with the terms
thereof and hereof, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, and by general equitable principles, and except to the extent that
the indemnification and contribution provisions of Section 11 hereof may be
limited by federal or state securities laws and public policy considerations in
respect thereof;
(b) such Selling Shareholder now has, and at the Closing Time will
have, (i) good and marketable title to the Shares to be sold by such Selling
Shareholder hereunder, free and clear of all liens, encumbrances and claims
whatsoever (other than pursuant to the Custody Agreement and Power of Attorney),
and (ii) full legal right and power, and all authorizations and approvals
required by law, to sell, transfer and deliver such Shares to the Underwriters
hereunder and to make the representations, warranties and agreements made by
such Selling Shareholder herein. Upon the delivery of and payment for such
Shares hereunder, such Selling Shareholder will deliver good and marketable
title thereto, free and clear of any pledge, lien, encumbrance, security
interest or other claim;
(c) at the Closing Time, all stock transfer or other taxes (other than
income taxes) which are required to be paid in connection with the sale and
transfer of the Shares to be sold by such Selling Shareholder to the
Underwriters hereunder will have been fully paid or provided for by such Selling
Shareholder and all laws imposing such taxes will have been fully complied with;
(d) The performance of this Agreement and the consummation of the
transactions contemplated herein will not conflict with, or result in any breach
of, or constitute a default under (nor constitute any event which with notice,
lapse of time, or both would constitute a breach of, or default under), (i) any
provision of the certificate or articles of incorporation, other charter or
similar constitutive documents, or the bylaws of the Selling Shareholder, or
(ii) any provision of any license, indenture, mortgage, deed of trust, loan or
credit agreement or other agreement or instrument to which the Selling
Shareholder is a party or by which it or its properties may be bound or
affected, or under any federal, state, local or foreign law, regulation or rule
or any decree, judgment or order applicable to the Selling Shareholder; or
result in the creation or imposition of any lien, charge, claim or encumbrance
upon any property or asset of the Selling Shareholder;
(e) no approval, authorization, consent or order of or filing with any
federal, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the Selling Shareholder's
execution, delivery and performance of this Agreement, its consummation of the
transactions contemplated herein, and its sale and delivery of the Shares, other
than (i) such as have been obtained, or will have been obtained at the Closing
Time, under the Securities Act and the Exchange Act, (ii) such approvals as have
been obtained in connection with the approval of the quotation of the Shares on
the Nasdaq National Market and (iii) any necessary qualification under the
securities or blue sky laws of the various jurisdictions in which the Shares are
being offered by the Underwriters;
- 13 -
(f) such Selling Shareholder (i) has carefully reviewed the
representations and warranties of the Company contained in this Agreement and
has no reason to believe that such representations and warranties are untrue or
incorrect, (ii) is familiar with the Registration Statement and the Prospectus
and has no knowledge of any material fact, condition or information not
disclosed in the Registration Statement or the Prospectus which has had or may
have a Material Adverse Effect and (iii) is not prompted to sell Shares by any
information concerning the Company which is not set forth in the Registration
Statement or the Prospectus;
(g) all material information with respect to such Selling Shareholder
contained in the Registration Statement and the Prospectus (as amended or
supplemented, if the Company shall have filed with the Commission any amendment
or supplement thereto) complied and will comply in all material respects with
all applicable provisions of the Securities Act and the Securities Act
Regulations, contains and will contain all statements of material fact required
to be stated therein in accordance with the Securities Act and the Securities
Act Regulations, and does not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading;
(h) other than as permitted by the Securities Act and the Securities
Act Regulations, such Selling Shareholder has not distributed and will not
distribute any preliminary prospectus, the Prospectus or any other offering
material in connection with the offering and sale of the Shares. Such Selling
Shareholder has not taken, directly or indirectly, any action intended, or which
might reasonably be expected, to cause or result in, under the Securities Act,
the Securities Act Regulations or otherwise, or which has constituted,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares;
(i) certificates in negotiable form for the Shares to be sold hereunder
by such Selling Shareholder have been placed in custody, for the purpose of
making delivery of such Shares under this Agreement and under the Custody
Agreement and Power of Attorney which appoints the Company, as custodian (the
"Custodian"), for such Selling Shareholder; such Selling Shareholder agrees that
the Shares represented by the certificates held in custody for him or it under
the Custody Agreement and Power of Attorney are for the benefit of and coupled
with and subject to the interest hereunder of the Custodian, the
Attorneys-in-Fact, the Underwriters, each other Selling Shareholder and the
Company; that the arrangements made by such Selling Shareholder for such custody
and the appointment of the Custodian and the Attorneys-in-Fact by such Selling
Shareholder are irrevocable; and that the obligations of such Selling
Shareholder hereunder shall not be terminated by operation of law, whether by
the death, disability, incapacity or liquidation of any Selling Shareholder or
the occurrence of any other event; if any Selling Shareholder should die, become
disabled or incapacitated or be liquidated or if any other such event should
occur before the delivery of the Shares hereunder, certificates for the Shares
shall be delivered by the Custodian in accordance with the terms and conditions
of this Agreement and actions taken by the Committee and the Custodian pursuant
to the Custody Agreement and Power of Attorney shall be as valid as if such
death, liquidation, incapacity or other event had not occurred, regardless of
whether or not the Custodian or the Attorneys-in-Fact, or any of them, shall
have received notice thereof;
- 14 -
(j) such Selling Shareholder has not relied upon the Representatives or
legal counsel for the Representatives for any legal, tax or accounting advice in
connection with the offering and sale of the Shares;
(k) such Selling Shareholder does not have any registration or other
similar rights to have any equity or debt securities registered for sale by the
Company under the Registration Statement or included in the offering
contemplated by this Agreement, except for any such rights as are described in
the Prospectus under "Shares Eligible for Future Sale;"
(l) such selling Shareholder does not have, or has waived prior to the
date hereof, any preemptive right, co-sale right or right of first refusal or
other similar right to purchase any of the Shares that are to be sold by the
Company or any of the other Selling Shareholders to the Underwriters pursuant to
this Agreement; and such Selling Shareholder does not own any warrants, options
or similar rights to acquire, and does not have any right or arrangement to
acquire, any capital stock, right, warrants, options or other securities from
the Company, other than those, if any, described in the Registration Statement
and the Prospectus; and
(m) except as otherwise disclosed to the Underwriters in writing, such
Selling Shareholder is not a member of or an affiliate of or associated with any
member of the NASD.
5. CERTAIN COVENANTS OF THE COMPANY.
The Company hereby agrees with each Underwriter:
(a) to furnish such information as may be required and otherwise to
cooperate in qualifying the Shares for offering and sale under the securities or
blue sky laws of such jurisdictions (both domestic and foreign) as the
Representatives may designate and to maintain such qualifications in effect as
long as requested by the Representatives for the distribution of the Shares,
provided that the Company shall not be required to qualify as a foreign
corporation or to consent to the service of process under the laws of any such
state (except service of process with respect to the offering and sale of the
Shares);
(b) if, at the time this Agreement is executed and delivered, it is
necessary for a post-effective amendment to the Registration Statement to be
declared effective before the offering of the Shares may commence, the Company
will endeavor to cause such post-effective amendment to become effective as soon
as possible and will advise the Representatives promptly and, if requested by
the Representatives, will confirm such advice in writing, when such
post-effective amendment has become effective;
(c) to prepare the Prospectus in a form approved by the Underwriters
and timely file such Prospectus (or a term sheet as permitted by Rule 434) with
the Commission pursuant to Rule 424(b) under the Securities Act and to furnish
promptly (and with respect to the initial delivery of such Prospectus, not later
than 10:00 a.m. (New York City time) on the day following the execution and
delivery of this Agreement or on such other day as the parties may mutually
agree to the Underwriters copies of the Prospectus (or of the Prospectus as
amended or supplemented if the Company shall have made any amendments or
supplements thereto after the effective date of the Registration Statement) in
such quantities and at such locations as the Underwriters may reasonably request
for the purposes contemplated by the Securities Act
- 15 -
Regulations, which Prospectus and any amendments or supplements thereto
furnished to the Underwriters will be substantially the same as the version
created to be transmitted to the Commission for filing via XXXXX, except for
differences permitted by Regulation S-T and Rule 424 of the Securities Act;
(d) to advise the Representatives promptly and (if requested by the
Representatives) to confirm such advice in writing, when the Registration
Statement has become effective and when any post-effective amendment thereto
becomes effective under the Securities Act Regulations;
(e) to advise the Representatives immediately, confirming such advice
in writing, of (i) the receipt of any comments from, or any request by, the
Commission for amendments or supplements to the Registration Statement or
Prospectus or for additional information with respect thereto, or (ii) the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, or of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes and, if
the Commission or any other government agency or authority should issue any such
order, to make every reasonable effort to obtain the lifting or removal of such
order as soon as possible; to advise the Representatives promptly of any
proposal to amend or supplement the Registration Statement or Prospectus and to
file no such amendment or supplement to which the Representatives shall
reasonably object in writing;
(f) to furnish to the Underwriters for a period of three (3) years from
the date of this Agreement (i) as soon as available, copies of all annual,
quarterly and current reports or other communications supplied to holders of
Common Shares, (ii) as soon as practicable after the filing thereof, copies of
all reports filed by the Company with the Commission, the NASD or any securities
exchange and (iii) such other information as the Underwriters may reasonably
request regarding the business and financial condition of the Company and the
Subsidiaries, provided that (A) such information may be given legally pursuant
to Regulation FD and Rule 10b-5 promulgated under the Exchange Act, (B) such
information will be subject to such confidentiality and use restrictions as the
Company may reasonably impose and (C) the obligations of the Company under this
paragraph (f) shall be deemed satisfied by the placement of such information on
the Company's internet website and timely notification to you of such placement;
(g) to advise the Underwriters promptly of the happening of any event
known to the Company within the time during which a Prospectus relating to the
Shares is required to be delivered under the Securities Act Regulations which,
in the judgment of the Company or counsel to the Company, would require the
making of any change in the Prospectus then being used so that the Prospectus
would not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend or supplement the
Prospectus to comply with any law and, during such time, to promptly prepare and
furnish to the Underwriters copies of the proposed amendment or supplement
before filing any such amendment or supplement with the Commission and
thereafter promptly furnish at the Company's own expense to the Underwriters and
to dealers,
- 16 -
copies in such quantities and at such locations as the Representatives may from
time to time reasonably request of an appropriate amendment to the Registration
Statement or supplement to the Prospectus so that the Prospectus as so amended
or supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with the law;
(h) to file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Company or the Representatives, be required by
the Securities Act or requested by the Commission;
(i) prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 under the Securities Act, to furnish a copy thereof to the
Representatives and counsel for the Underwriters and obtain the consent of the
Representatives to the filing, which consent shall not be unreasonably withheld,
delayed or conditioned;
(j) to furnish promptly to each Representative a signed copy of the
Registration Statement, as initially filed with the Commission, and of all
amendments or supplements thereto (including all exhibits filed therewith or
incorporated by reference therein) and such number of conformed copies of the
foregoing as the Representatives may reasonably request;
(k) to furnish to each Representative, not less than one (1) business
day before filing with the Commission subsequent to the effective date of the
Prospectus and during the period when the Prospectus is required to be delivered
under the Securities Act or the Exchange Act, a copy of any document proposed to
be filed with the Commission pursuant to Section 13, 14, or 15(d) of the
Exchange Act (provided that such document may be given legally pursuant to
Regulation FD and Rule 10b-5 promulgated under the Exchange Act and such
document will be subject to such confidentiality and use restrictions as the
Company may reasonably impose) and during such period to file all such documents
in the manner and within the time periods required by the Exchange Act and the
Exchange Act Regulations;
(l) to apply the net proceeds of the sale of the Shares in accordance
with its statements under the caption "Use of Proceeds" in the Prospectus;
(m) to make generally available to its security holders and to deliver
to the Representatives as soon as practicable, but in any event not later than
the end of the fiscal quarter first occurring after the first anniversary of the
effective date of the Registration Statement an earning statement complying with
the provisions of Section 11(a) of the Securities Act (in form, at the option of
the Company, complying with the provisions of Rule 158 of the Securities Act
Regulations,) covering a period of twelve (12) months beginning after the
effective date of the Registration Statement;
(n) to use its commercially reasonable best efforts to maintain the
quotation of the Shares on the Nasdaq National Market and to file with the NASD
all documents and notices required by the NASD of companies that have securities
that are traded in the over-the-counter market and quotations for which are
reported by the Nasdaq National Market;
- 17 -
(o) to engage and maintain, at its expense, a registrar and transfer
agent for the Shares;
(p) to refrain during a period of one hundred eighty (180) days from
the date of the Prospectus, without the prior written consent of the
Representatives, from, directly or indirectly, (i) offering, pledging, selling,
contracting to sell, selling any option or contract to purchase, purchasing any
option or contract to sell, granting any option for the sale of, or otherwise
disposing of or transferring, (or entering into any transaction or device which
is designed to, or could be expected to, result in the disposition by any person
at any time in the future of), any Common Shares or any securities convertible
into or exercisable or exchangeable for Common Shares, or filing any
registration statement under the Securities Act with respect to any of the
foregoing, or (ii) entering into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of the Common Shares, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Shares or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the Shares to be sold hereunder, (B) any Common
Shares issued by the Company upon the exercise of an option outstanding on the
date hereof and referred to in the Prospectus or (C) equity-based awards granted
pursuant to the Company's equity-based award plans including restricted shares
and options to purchase Common Shares granted or to be granted to officers of
the Company as described in the Prospectus;
(q) not to, and to use its best efforts to cause its officers,
directors and affiliates not to, (i) take, directly or indirectly prior to
termination of the underwriting syndicate contemplated by this Agreement, any
action designed to stabilize or manipulate the price of any security of the
Company, or which may cause or result in, or which might in the future
reasonably be expected to cause or result in, the stabilization or manipulation
of the price of any security of the Company, to facilitate the sale or resale of
any of the Shares, (ii) sell, bid for, purchase or pay anyone any compensation
for soliciting purchases of the Shares or (iii) pay or agree to pay to any
person any compensation for soliciting any order to purchase any other
securities of the Company;
(r) to cause each 1% or greater shareholder, officer and director of
the Company to furnish to the Representatives, prior to the first Date of
Delivery, a letter or letters, substantially in the form of Exhibit B hereto
(collectively, the "Lock-Up Agreements"), pursuant to which each such person
shall agree not to, directly or indirectly, (1) offer for sale, sell, pledge or
otherwise dispose of (or enter into any transaction or device which is designed
to, or could be expected to, result in the disposition by any person at any time
in the future of) any Common Shares or securities convertible into or
exchangeable for Common Shares, except for the sales of Common Shares by the
Selling Shareholders pursuant to this Agreement, or (2) enter into any swap or
other derivatives transaction that transfers to another, in whole or in part,
any of the economic benefits or risks of ownership of such Common Shares,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Common Shares or other securities, in cash or otherwise,
in each case for a period of one hundred eighty (180) days from the date of the
Prospectus, without the prior written consent of the Representatives on behalf
of the Underwriters;
- 18 -
(s) that the Company shall obtain or maintain, as appropriate,
Directors and Officers liability insurance in the minimum amount of $15 million
which shall apply to the offering contemplated herein;
(t) if at any time during the 90-day period after the Registration
Statement becomes effective, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which, in the reasonable
opinion of the Representatives, the market price of the Common Shares has been
or is likely to be materially affected (regardless of whether such rumor,
publication or event necessitates a supplement to or amendment of the
Prospectus) and after written notice from the Representatives advising the
Company to the effect set forth above, to forthwith prepare, consult with the
Representatives concerning the substance of, and disseminate a press release or
other public statement, reasonably satisfactory to the Representatives,
responding to or commenting on such rumor, publication or event;
(v) that the Company will comply with all of the provisions of any
undertakings in the Registration Statement; and
(w) during the 90-day period after the Registration Statement becomes
effective, the Company shall deliver to the Representatives concurrently with
the public issuance thereof a copy of any press release or other public
statement issued by the Company.
6. CERTAIN COVENANTS OF THE SELLING SHAREHOLDERS.
Each Selling Shareholder hereby agrees with each Underwriter:
(a) to deliver to the Representatives prior to the Closing Time a
properly completed and executed United States Treasury Department Form W-8 (if
the Selling Shareholder is a non-United States person, within the meaning of the
Code) or Form W-9 (if the Selling Shareholder is a United States person, within
the meaning of the Code);
(b) to furnish to the Representatives, prior to the Closing Time, a
Lock-Up Agreement pursuant to which each such person shall agree not to,
directly or indirectly, (1) offer for sale, sell, pledge or otherwise dispose of
(or enter into any transaction or device which is designed to, or could be
expected to, result in the disposition by any person at any time in the future
of) any Common Shares or securities convertible into or exchangeable for Common
Shares, except for the sale of Common Shares by the Selling Shareholders
pursuant to this Agreement, or (2) enter into any swap or other derivatives
transaction that transfers to another, in whole or in part, any of the economic
benefits or risks of ownership of such Common Shares, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Shares or other securities, in cash or otherwise, in each case for a
period of one hundred eighty (180) days from the date of the Prospectus, without
the prior written consent of the Representatives on behalf of the Underwriters;
(c) if, at any time prior to the date on which the distribution of the
Shares as contemplated herein and in the Prospectus has been completed, as
determined by the Representatives, such Selling Shareholder has knowledge of the
occurrence of any event as a result of which the Prospectus or the Registration
Statement, in each case as then amended or supplemented, would include an untrue
statement of a material fact or omit to state any material
- 19 -
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, such Selling Shareholder will
promptly notify the Company and the Representatives; and
(d) such Selling Shareholder agrees to deliver to the Company or the
Underwriters such documentation as the Company or the Underwriters or any of
their respective counsel may reasonably request in order to effectuate any of
the provisions of this Agreement.
7. PAYMENT OF EXPENSES.
(a) The Company agrees to pay all costs and expenses incident to the
performance of its obligations under this Agreement, whether or not the
transactions contemplated hereunder are consummated or this Agreement is
terminated, including expenses, fees and taxes in connection with (i) the
preparation and filing of the Registration Statement, each Preliminary
Prospectus, the Prospectus, and any amendments or supplements thereto, and the
printing and furnishing of copies of each thereof to the Underwriters and to
dealers (including costs of mailing and shipment), (ii) the preparation,
issuance and delivery of the certificates for the Shares to the Underwriters,
including any stock or other transfer taxes or duties payable upon the sale of
the Shares to the Underwriters, (iv) the qualification of the Shares for
offering and sale under state laws that the Company and the Representatives have
mutually agreed are appropriate and the determination of their eligibility for
investment under state law as aforesaid (including the legal fees and filing
fees and other disbursements of counsel for the Underwriters and the printing
and furnishing of copies of any blue sky surveys or legal investment surveys to
the Underwriters and to dealers, (v) filing for review of the public offering of
the Shares by the NASD (including the filing fees relating thereto), (vi) the
fees and expenses of any transfer agent or registrar for the Shares and
miscellaneous expenses referred to in the Registration Statement, (vii) the fees
and expenses incurred in connection with the quotation of the Shares on the
Nasdaq National Market, (viii) the Company's costs and expenses in making road
show presentations with respect to the offering of the Shares, (ix) preparing
and distributing bound volumes of transaction documents for the Representatives
and its legal counsel and (x) the performance of the Company's other obligations
hereunder. Upon the request of the Representatives, the Company will provide
funds in advance for NASD filing fees.
(b) The Selling Shareholders and the Company, jointly and severally,
agree with each Underwriter to pay (directly or by reimbursement) all fees and
expenses incident to the performance of their obligations under this Agreement
which are otherwise specifically provided for herein, including, but not limited
to, (i) fees and expenses of counsel and other advisors for such Selling
Shareholders, (ii) fees and expenses of the Custodian and (iii) expenses and
taxes incident to the sale and delivery of the Shares to be sold by such Selling
Shareholder to the Underwriters hereunder (which taxes, if any, may be deducted
by the Custodian).
(c) If this Agreement shall be terminated by the Underwriters, or any
of them, because of any failure or refusal on the part of the Company or the
Selling Shareholders to comply with the terms or to fulfill any of the
conditions of this Agreement, or if for any reason the Company or the Selling
Shareholders shall be unable to perform its or their obligations under this
Agreement, the Company also will reimburse the Underwriters or such Underwriters
- 20 -
as have so terminated this Agreement with respect to themselves, severally, for
all out-of-pocket expenses (such as printing, facsimile, courier service, direct
computer expenses, accommodations, travel and the fees and disbursements of
Underwriters' counsel) and any other advisors, accountants, appraisers, etc.
reasonably incurred by such Underwriters in connection with this Agreement or
the transactions contemplated herein.
8. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS.
The obligations of the Underwriters hereunder to purchase Shares at the
Closing Time or on each Date of Delivery, as applicable, are subject to the
accuracy of the representations and warranties on the part of the Company and
the Selling Shareholders hereunder and under the Custody Agreement and Power of
Attorney on the date hereof and at the Closing Time and on each Date of
Delivery, as applicable, the performance by the Company and the Selling
Shareholders of their respective obligations hereunder and under the Custody
Agreement and Power of Attorney and to the satisfaction of the following further
conditions at the Closing Time or on each Date of Delivery, as applicable:
(a) The Company shall furnish to the Underwriters at the Closing Time
and on each Date of Delivery an opinion of Xxxxx & Xxxxxxxxx LLP, counsel for
the Company and the Subsidiaries, addressed to the Underwriters and dated the
Closing Time and each Date of Delivery and in form and substance reasonably
satisfactory to Squire, Xxxxxxx & Xxxxxxx L.L.P., counsel for the Underwriters,
including the matters set forth on attached Exhibit C hereto.
(b) The Company shall furnish to the Representatives at the Closing
Time and on each Date of Delivery an opinion of Xxxxxxx, Muething & Xxxxxxx
P.L.L., counsel for the Company and the Subsidiaries, addressed to the
Representatives and dated the Closing Time and each Date of Delivery and in form
and substance satisfactory to Squire, Xxxxxxx & Xxxxxxx L.L.P., counsel for the
Underwriters, including the matters set forth on attached Exhibit D hereto.
(c) Each Selling Shareholder shall furnish to the Underwriters at the
Closing Time an opinion of legal counsel to such Selling Shareholder reasonably
acceptable to the Representatives and their counsel, addressed to the
Underwriters and dated the Closing Time and in form and substance satisfactory
to Squire, Xxxxxxx & Xxxxxxx L.L.P., counsel for the Underwriters, including the
matters set forth on attached Exhibit E hereto.
(d) The Representatives shall have received from KPMG LLP, letters
dated, respectively, as of the date of this Agreement, the Closing Time and each
Date of Delivery, as the case may be, addressed to the Representatives and the
Company, in form and substance satisfactory to the Representatives, relating to
the financial statements, including any pro forma financial statements, of the
Company and the Subsidiaries, and such other matters customarily covered by
"comfort letters" issued in connection with registered public offerings.
(e) The Representatives shall have received at the Closing Time and on
each Date of Delivery the favorable opinion of Xxxxxx Xxxxxxx & Xxxxxxx L.L.P.,
dated the Closing Time or
- 21 -
such Date of Delivery, addressed to the Representatives and in form and
substance satisfactory to the Representatives.
(f) No amendment or supplement to the Registration Statement or
Prospectus shall have been filed to which the Underwriters shall have objected
in writing.
(g) Prior to the Closing Time and each Date of Delivery, (i) no stop
order suspending the effectiveness of the Registration Statement or any order
preventing or suspending the use of any Preliminary Prospectus or Prospectus has
been issued, and no proceedings for such purpose shall have been initiated or
threatened, by the Commission, and no suspension of the qualification of the
Shares for offering or sale in any jurisdiction, or the initiation or
threatening of any proceedings for any of such purposes, has occurred; (ii) all
requests for additional information on the part of the Commission shall have
been complied with to the reasonable satisfaction of the Representatives; and
(iii) the Registration Statement and the Prospectus shall not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(h) All filings with the Commission required by Rule 424 under the
Securities Act to have been filed by the Closing Time shall have been made
within the applicable time period prescribed for such filing by such Rule.
(i) Between the time of execution of this Agreement and the Closing
Time or the relevant Date of Delivery (i) there shall not have been any Material
Adverse Change, and (ii) no transaction which is material and unfavorable to the
Company, other than as described in the Registration Statement, shall have been
entered into by the Company or any of the Subsidiaries, in each case, which in
the Representatives' sole judgment, makes it impracticable or inadvisable to
proceed with the public offering of the Shares as contemplated by the
Registration Statement.
(j) The Shares shall have been approved for listing on the Nasdaq
National Market.
(k) The NASD shall not have raised any objection, which has not been
resolved, with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(l) The Representatives shall have received Lock-Up Agreements from
each officer, director, Selling Shareholder and 1% or greater shareholder of the
Company, in the form of Exhibit B attached hereto, and such Lock-Up Agreements
shall be in full force and effect.
(m) The Company will, at the Closing Time and on each Date of Delivery,
deliver to the Underwriters a certificate of its Chairman of the Board, Chief
Executive Officer, President, Chief Operating Officer or Vice President and
Chief Accounting Officer or Chief Financial Officer, to the effect that:
(i) the representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the date
hereof, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
at or prior to the date hereof;
- 22 -
(ii) no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto has been
issued and no proceedings for that purpose have been instituted or are
pending or threatened under the Securities Act;
(iii) when the Registration Statement became effective and at
all times subsequent thereto up to the date hereof, the Registration
Statement and the Prospectus, and any amendments or supplements thereto
contained all material information required to be included therein by
the Securities Act or the Exchange Act and the applicable rules and
regulations of the Commission thereunder, as the case may be, and in
all material respects conformed to the requirements of the Securities
Act or the Exchange Act and the applicable rules and regulations of the
Commission thereunder, as the case may be; the Registration Statement
and the Prospectus, and any amendments or supplements thereto, did not
and do not include 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, in the light of the circumstances under
which they were made, not misleading; and, since the effective date of
the Registration Statement, there has occurred no event required to be
set forth in an amendment or supplemented Prospectus which has not been
so set forth; and
(iv) subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus,
there has not been (a) any Material Adverse Change, (b) any transaction
that is material to the Company and the Subsidiaries considered as one
enterprise, except transactions entered into in the ordinary course of
business or described in the Prospectus, (c) any obligation, direct or
contingent, that is material to the Company and the Subsidiaries
considered as one enterprise, incurred by the Company or the
Subsidiaries, except obligations incurred in the ordinary course of
business or described in the Prospectus, (d) any change in the capital
stock or outstanding indebtedness of the Company or any Subsidiary that
is material to the Company and the Subsidiaries considered as one
enterprise, (e) any dividend or distribution of any kind declared, paid
or made on the capital stock of the Company or any Subsidiary except as
contemplated in the Prospectus, or (f) any loss or damage (whether or
not insured) to the property of the Company or any subsidiary which has
been sustained or will have been sustained which has a Material Adverse
Effect.
(n) Each Selling Shareholder will, at the Closing Time, deliver to the
Underwriters a certificate, to the effect that:
(i) the representations and warranties of such Selling
Shareholder set forth in this Agreement and in the Custody Agreement
and Power of Attorney are true and correct as of such date; and
(ii) such Selling Shareholder has complied with all the
agreements and satisfied all the conditions on its part to be performed
or satisfied hereunder and
- 23 -
under the Custody Agreement and Power of Attorney at or prior to
the date hereof.
(o) The Company and the Selling Shareholders, as applicable, shall have
furnished to the Underwriters such other documents and certificates as to the
accuracy and completeness of any statement in the Registration Statement and the
Prospectus, the representations, warranties and statements of the Company
contained herein and in the Custody Agreement and Power of Attorney, and the
performance by the Company and the Selling Shareholders of their respective
covenants contained herein and therein, and the fulfillment of any conditions
contained herein or therein, as of the Closing Time or any Date of Delivery, as
the Underwriters may reasonably request.
(p) Neither the Company nor any Subsidiary shall have been downgraded
by the Rating Agency nor have been put on credit watch with negative
implications (or similar action) by the Rating Agency.
9. TERMINATION.
The obligations of the several Underwriters hereunder shall be subject
to termination in the absolute discretion of the Representatives, at any time
prior to the Closing Time or any Date of Delivery, (i) if any of the conditions
specified in Section 8 shall not have been fulfilled when and as required by
this Agreement to be fulfilled, or (ii) if there has been since the respective
dates as of which information is given in the Registration Statement, any
Material Adverse Change, or any development involving a prospective Material
Adverse Change, or material change in management of the Company or any
Subsidiary, whether or not arising in the ordinary course of business, or (iii)
if there has occurred any outbreak or escalation of hostilities or other
national or international calamity or crisis or change in economic, political or
other conditions the effect of which on the financial markets of the United
States is such as to make it, in the judgment of the Representatives,
impracticable to market the Shares or enforce contracts for the sale of the
Shares, or (iv) if trading in any securities of the Company has been suspended
by the Commission or by the Nasdaq National Market, or if trading generally on
the New York Stock Exchange or in the Nasdaq over-the-counter market has been
suspended (including an automatic halt in trading pursuant to market-decline
triggers, other than those in which solely program trading is temporarily
halted), or limitations on prices for trading (other than limitations on hours
or numbers of days of trading) have been fixed, or maximum ranges for prices for
securities have been required, by such exchange or the NASD or the
over-the-counter market or by order of the Commission or any other governmental
authority, or (v) if a banking moratorium has been declared by New York or
federal authority or if any material disruption in commercial banking or
securities settlement or clearance services shall have occurred, or (vi) any
federal or state statute, regulation, rule or order of any court or other
governmental authority has been enacted, published, decreed or otherwise
promulgated which, in the reasonable opinion of the Representatives, materially
adversely affects or will materially adversely affect the business or operations
of the Company, or (vii) any action has been taken by any federal, state or
local government or agency in respect of its monetary or fiscal affairs which,
in the reasonable opinion of the Representatives, has a material adverse effect
on the securities markets in the United States.
- 24 -
If the Representatives elect to terminate this Agreement as provided in
this Section 9, the Company and the Underwriters shall be notified promptly by
telephone, promptly confirmed by facsimile.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply in all material respects with any of the terms of this
Agreement, the Company shall not be under any obligation or liability under this
Agreement (except to the extent provided in Sections 7 and 11 hereof) and the
Underwriters shall be under no obligation or liability to the Company under this
Agreement (except to the extent provided in Section 11 hereof) or to one another
hereunder.
10. INCREASE IN UNDERWRITERS' COMMITMENTS.
If any Underwriter shall default at the Closing Time or on a Date of
Delivery in its obligation to take up and pay for the Shares to be purchased by
it under this Agreement on such date, the Representatives shall have the right,
within thirty-six (36) hours after such default, to make arrangements for one or
more of the non-defaulting Underwriters, or any other underwriters, to purchase
all, but not less than all, of the Shares which such Underwriter shall have
agreed but failed to take up and pay for (the "Defaulted Shares"). Absent the
completion of such arrangements within such 36-hour period, (i) if the total
number of Defaulted Shares does not exceed 10% of the total number of Shares to
be purchased on such date, each non-defaulting Underwriter shall take up and pay
for (in addition to the number of Shares which it is otherwise obligated to
purchase on such date pursuant to this Agreement) the portion of the total
number of Shares agreed to be purchased by the defaulting Underwriter on such
date in the proportion that its underwriting obligations hereunder bears to the
underwriting obligations of all non-defaulting Underwriters; and (ii) if the
total number of Defaulted Shares exceeds 10% of such total, the Representatives
may terminate this Agreement by notice to the Company, without liability of any
party to any other party except that the provisions of Sections 7 and 11 hereof
shall at all times be effective and shall survive such termination.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that it will
not sell any Shares hereunder on such date unless all of the Shares to be
purchased on such date are purchased on such date by the Underwriters (or by
substituted Underwriters selected by the Representatives with the approval of
the Company or selected by the Company with the approval of the
Representatives).
If a new Underwriter or Underwriters are substituted for a defaulting
Underwriter in accordance with the foregoing provision, the Company or the
non-defaulting Underwriters shall have the right to postpone the Closing Time or
the relevant Date of Delivery for a period not exceeding five business days in
order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
The term "Underwriter" as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 10 with the same effect
as if such substituted Underwriter had originally been named in this Agreement.
- 25 -
11. INDEMNITY AND CONTRIBUTION BY THE COMPANY, THE SELLING SHAREHOLDERS
AND THE UNDERWRITERS.
(a) The Company agrees to indemnify, defend and hold harmless each
Underwriter and any person who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any loss, expense, liability, damage or claim (including the reasonable
cost of investigation) which, jointly or severally, any such Underwriter or
controlling person may incur under the Securities Act, the Exchange Act or
otherwise, insofar as such loss, expense, liability, damage or claim arises out
of or is based upon (A) any breach of any representation, warranty or covenant
of the Company contained herein, (B) any failure on the part of the Company to
comply with any applicable law, rule or regulation relating to the offering of
securities being made pursuant to the Prospectus, (C) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof by the Company), the Prospectus (the term Prospectus for the
purpose of this Section 11 being deemed to include any Preliminary Prospectus,
the Prospectus and the Prospectus as amended or supplemented by the Company),
(D) any application or other document, or any amendment or supplement thereto,
executed by the Company or based upon written information furnished by or on
behalf of the Company filed in any jurisdiction (domestic or foreign) in order
to qualify the Shares under the securities or blue sky laws thereof or filed
with the Commission or any securities association or securities exchange (each
an "Application"), or (E) any omission or alleged omission to state a material
fact required to be stated in any such Registration Statement, Prospectus or any
Application or necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading; except insofar as
any such loss, expense, liability, damage or claim arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in and in conformity with information
furnished in writing by the Underwriters through the Representatives to the
Company expressly for use in such Registration Statement, Prospectus or
Application; provided, further, that the foregoing indemnity agreement with
respect to any Preliminary Prospectus shall not inure to the benefit of any
Underwriter who failed to deliver a Prospectus (as then amended or supplemented,
provided by the Company to the several Underwriters in the requisite quantity
and on a timely basis to permit proper delivery on or prior to the Closing Date)
to the person asserting any losses, claims, damages and liabilities and
judgments caused by any untrue statement or alleged untrue statement of a
material fact contained in 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, in the light of the
circumstances under which they are made, not misleading, if such material
misstatement or omission or alleged material misstatement or omission was cured,
as determined by a court of competent jurisdiction in a decision not subject to
further appeal, in such Prospectus and such Prospectus was required by law to be
delivered at or prior to the written confirmation of sale to such person. The
indemnity agreement set forth in this Section 9(a) shall be in addition to any
liability which the Company may otherwise have.
(b) Each Selling Shareholder, severally and not jointly, agrees to
indemnify, defend and hold harmless each Underwriter and any person who controls
any Underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any loss, expense, liability,
damage or claim (including the reasonable cost of
- 26 -
investigation) which, jointly or severally, any such Underwriter or controlling
person may incur under the Securities Act, the Exchange Act or otherwise,
insofar as such loss, expense, liability, damage or claim arises out of or is
based upon (A) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or in the Registration Statement
as amended by any post-effective amendment thereof by the Company), Prospectus
(the term Prospectus for the purpose of this Section 11 being deemed to include
any Preliminary Prospectus, the Prospectus and the Prospectus as amended or
supplemented by the Company), or any Application or (B) any omission or alleged
omission to state a material fact required to be stated in either such
Registration Statement, Prospectus or any Application, or necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading; but only insofar as any such loss, expense, liability,
damage or claim arises out of or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission of a material fact contained in
and in conformity with information furnished in writing by such Selling
Shareholder to the Company expressly for use in such Registration Statement,
Prospectus or Application; provided, however, that the indemnity agreement
contained in this subsection (b) shall not require any such Selling Shareholder
to reimburse the Underwriters for in excess of the gross sale price of the
Shares sold by such Selling Shareholder pursuant to this Agreement; provided,
further, that the foregoing indemnity agreement with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter who failed to
deliver a Prospectus (as then amended or supplemented, provided by the Company
to the several Underwriters in the requisite quantity and on a timely basis to
permit proper delivery on or prior to the Closing Date) to the person asserting
any losses, claims, damages and liabilities and judgments caused by any untrue
statement or alleged untrue statement of a material fact contained in 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, in the light of the circumstances under which they are made,
not misleading, if such material misstatement or omission or alleged material
misstatement or omission was cured, as determined by a court of competent
jurisdiction in a decision not subject to further appeal, in such Prospectus and
such Prospectus was required by law to be delivered at or prior to the written
confirmation of sale to such person. The indemnity agreement set forth in this
Section 11(b) shall be in addition to any liabilities that the Selling
Shareholders may otherwise have.
(c) If any action is brought against an Underwriter or controlling
person in respect of which indemnity may be sought against the Company or any
Selling Shareholder pursuant to subsection (a) above, such Underwriter shall
promptly notify the Company or such Selling Shareholder, as applicable, in
writing of the institution of such action, and the Company or such Selling
Shareholder, as applicable, shall assume the defense of such action, including
the employment of counsel and payment of expenses; provided, however, that any
failure or delay to so notify the Company or such Selling Shareholder, as
applicable, will not relieve the Company or such Selling Shareholder, as
applicable, of any obligation hereunder, except to the extent that its ability
to defend is actually impaired by such failure or delay. Such Underwriter or
controlling person shall have the right to employ its or their own counsel in
any such case, but the fees and expenses of such counsel shall be at the expense
of such Underwriter or such controlling person unless the employment of such
counsel shall have been authorized in writing by the Company or such Selling
Shareholder, as applicable, in connection with the defense of such action, or
the Company or such Selling Shareholder, as applicable, shall not have employed
- 27 -
counsel to have charge of the defense of such action within a reasonable time or
such indemnified party or parties shall have reasonably concluded (based on the
advice of counsel) that there may be material defenses available to it or them
which are different from or additional to those available to the Company or such
Selling Shareholder, as applicable, (in which case neither the Company nor such
Selling Shareholder shall have the right to direct the defense of such action on
behalf of the indemnified party or parties), in any of which events such fees
and expenses shall be borne by the Company or the Selling Shareholder, as
applicable, and paid as incurred (it being understood, however, that neither the
Company nor any Selling Shareholder shall be liable for the expenses of more
than one separate firm of attorneys for the Underwriters or controlling persons
in any one action or series of related actions in the same jurisdiction (other
than local counsel in any such jurisdiction) representing the indemnified
parties who are parties to such action). Anything in this paragraph to the
contrary notwithstanding, neither the Company nor any Selling Shareholder shall
not be liable for any settlement of any such claim or action effected without
its consent.
(d) Each Underwriter agrees, severally and not jointly, to indemnify,
defend and hold harmless the Company and each Selling Shareholder, the Company's
directors, the Company's officers that signed the Registration Statement, and
any person who controls the Company or any Selling Shareholder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any loss, expense, liability, damage or claim (including the
reasonable cost of investigation) which, jointly or severally, the Company, the
Selling Shareholder or any such person may incur under the Securities Act, the
Exchange Act or otherwise, but only insofar as such loss, expense, liability,
damage or claim arises out of or is based upon (A) any untrue statement or
alleged untrue statement of a material fact contained in and in conformity with
information furnished in writing by such Underwriter through the Representatives
to the Company expressly for use in the Registration Statement (or in the
Registration Statement as amended by any post-effective amendment thereof by the
Company), the Prospectus, or any Application, or (B) any omission or alleged
omission to state a material fact in connection with such information required
to be stated either in such Registration Statement, Prospectus or any
Application or necessary to make such information, in the light of the
circumstances under which made, not misleading. The statements set forth under
the caption "Underwriting" in the Preliminary Prospectus and the Prospectus (to
the extent such statements relate to the Underwriters) constitute the only
information furnished by or on behalf of any Underwriter through the
Representatives to the Company for purposes of Section 3(o) and this Section 11.
The indemnity agreement set forth in this Section 11(c) shall be in addition to
any liabilities that such Underwriter may otherwise have.
If any action is brought against the Company, any Selling Shareholder
or any such person in respect of which indemnity may be sought against any
Underwriter pursuant to the foregoing paragraph, the Company, the Selling
Shareholder or such person shall promptly notify the Representatives in writing
of the institution of such action and the Representatives, on behalf of the
Underwriters, shall assume the defense of such action, including the employment
of counsel and payment of expenses. The Company, the Selling Shareholder or such
person shall have the right to employ its own counsel in any such case, but the
fees and expenses of such counsel shall be at the expense of the Company, the
Selling Shareholder or such person unless the employment of such counsel shall
have been authorized in writing by the Representatives in connection with the
defense of such action or the Representatives shall not have employed counsel to
have charge
- 28 -
of the defense of such action within a reasonable time or such indemnified party
or parties shall have reasonably concluded (based on the advice of counsel) that
there may be defenses available to it or them which are different from or
additional to those available to the Underwriters (in which case the
Representatives shall not have the right to direct the defense of such action on
behalf of the indemnified party or parties), in any of which events such fees
and expenses shall be borne by such Underwriter and paid as incurred (it being
understood, however, that the Underwriters shall not be liable for the expenses
of more than one separate firm of attorneys in any one action or series of
related actions in the same jurisdiction (other than local counsel in any such
jurisdiction) representing the indemnified parties who are parties to such
action). Anything in this paragraph to the contrary notwithstanding, no
Underwriter shall be liable for any settlement of any such claim or action
effected without the written consent of the Representatives.
(e) If the indemnification provided for in this Section 11 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a), (b), (c) and (d) of this Section 11 in respect of any losses,
expenses, liabilities, damages or claims referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, expenses, liabilities, damages or claims (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, the Selling Shareholders and the Underwriters from the offering of the
Shares or (ii) if (but only if) the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company, of the Selling Shareholders and of the
Underwriters in connection with the statements or omissions which resulted in
such losses, expenses, liabilities, damages or claims, as well as any other
relevant equitable considerations. The relative benefits received by the
Company, the Selling Shareholders and the Underwriters shall be deemed to be in
the same proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
or the Selling Shareholders, as applicable, bear to the underwriting discounts
and commissions received by the Underwriters. The relative fault of the Company,
of the Selling Shareholders and of the Underwriters shall be determined by
reference to, among other things, whether the untrue statement or alleged untrue
statement of a material fact or omission or alleged omission relates to
information supplied by the Company, by the Selling Shareholders or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, claims, damages and
liabilities referred to above shall be deemed to include any legal or other fees
or expenses reasonably incurred by such party in connection with investigating
or defending any claim or action.
(f) The Company, the Selling Shareholders and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this Section
11 were determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in subsection
(e)(i) and, if applicable (ii), above. Notwithstanding the provisions of this
Section 11, no Underwriter shall be required to contribute any amount in excess
of the underwriting discounts and commissions applicable to the Shares purchased
by such Underwriter and no Selling Shareholder shall be required to contribute
any amount in excess of
- 29 -
the gross sale price of the Shares sold by such Selling Shareholder pursuant to
this Agreement. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 11 are several in proportion to their respective underwriting
commitments and not joint.
12. SURVIVAL.
The indemnity and contribution agreements contained in Section 11 and
the covenants, warranties and representations of the Company and the Selling
Shareholders contained in Sections 3, 4, 5, 6 and 7 of this Agreement shall
remain in full force and effect regardless of any investigation made by or on
behalf of any Underwriter, or any person who controls any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
or by or on behalf of the Company, its directors and officers, the Selling
Shareholders or any person who controls the Company or any Selling Shareholder
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, and shall survive any termination of this Agreement or the sale
and delivery of the Shares. The Company, each Selling Shareholder and each
Underwriter agree promptly to notify the others of the commencement of any
litigation or proceeding against it and, in the case of the Company, against any
of the Company's officers and directors, in connection with the sale and
delivery of the Shares, or in connection with the Registration Statement or
Prospectus.
13. NOTICES.
Except as otherwise herein provided, all statements, requests, notices
and agreements shall be in writing or by telegram and, if to the Underwriters,
shall be sufficient in all respects if delivered to Friedman, Billings, Xxxxxx &
Co., Inc., 0000 00xx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention:
Syndicate Department; if to the Company, shall be sufficient in all respects if
delivered to the Company at the offices of the Company at 0000 Xxxxxxxxx
Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxx, Xxxx 00000, Attention: Xxxxxxx X. Xxxx,
Xx., Chief Financial Officer; or if to a Selling Shareholder, at the address of
such Selling Shareholder set forth in Section 8 of the Custody Agreement and
Power of Attorney executed and delivered by such Selling Shareholder.
14. GOVERNING LAW; HEADINGS.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE COMMONWEALTH OF VIRGINIA, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES. The section headings in this Agreement have been inserted as a
matter of convenience of reference and are not a part of this Agreement.
15. PARTIES AT INTEREST.
The Agreement herein set forth has been and is made solely for the
benefit of the Underwriters, the Company, the Selling Shareholders and the
controlling persons, directors and officers referred to in Sections 11 and 12
hereof, and their respective successors, assigns, executors and administrators.
No other person, partnership, association or corporation (including
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a purchaser, as such purchaser, from any of the Underwriters) shall acquire or
have any right under or by virtue of this Agreement.
16. COUNTERPARTS AND FACSIMILE SIGNATURES.
This Agreement may be signed by the parties in counterparts which
together shall constitute one and the same agreement among the parties. A
facsimile signature shall constitute an original signature for all purposes.
If the foregoing correctly sets forth the understanding among the
Company, the Selling Shareholders and the Underwriters, please so indicate in
the space provided below for the purpose, whereupon this Agreement shall
constitute a binding agreement among the Company, the Selling Shareholders and
the Underwriters.
Very truly yours,
PROCENTURY CORPORATION,
an Ohio Corporation
By:
------------------------------------------------
Xxxxxx X. Xxxxxxx, Chairman of the
Board of Directors, President and Chief Executive
Officer
SELLING SHAREHOLDERS LISTED ON
SCHEDULE I ATTACHED HERETO
By:
------------------------------------------------
------------------------------------------------
Attorney-in-Fact
- 31 -
Accepted and agreed to as
of the date first above written:
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
X. X. XXXXXXX & SONS, INC.
XXXXXXX XXXXX & SONS, INC.
By: Xxxxxxxx Xxxxxxxx, Xxxxxx & Co., Inc.
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
For themselves and as Representatives of the other
Underwriters named on Schedule II hereto.
- 32 -
SCHEDULE I
NUMBER OF INITIAL NUMBER OF OPTION
NAME OF PARTY SELLING SHARES SHARES TO BE SOLD SHARES TO BE SOLD
---------------------------- ----------------- -----------------
ProCentury Corporation 8,000,000 1,335,000
DCB Financial Corp. 450,000 - 0 -
Ohio Valley Banc. Corp. 450,000 - 0 -
--------- ---------
Total 8,900,000 1,335,000
========= =========
SCHEDULE II
NUMBER OF INITIAL
UNDERWRITER SHARES TO BE PURCHASED
----------- ----------------------
Friedman, Billings, Xxxxxx & Co., Inc. [ ]
---------
X.X. Xxxxxxx & Sons, Inc. [ ]
---------
Xxxxxxx Xxxxx & Sons, Inc. [ ]
---------
[INSERT NAMES OF OTHER
UNDERWRITERS] [ ]
---------
Total 8,900,000
=========
