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EXHIBIT 1.1
SUMMIT HOLDING SOUTHEAST, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
May 21, 1997
XXXXXXX XXXXX & ASSOCIATES, INC.
ABN AMRO CHICAGO CORPORATION
as Representatives of the Several
Underwriters (the "Representatives")
c/o Raymond Xxxxx & Associates, Inc.
000 Xxxxxxxx Xxxxxxx
Xx. Xxxxxxxxxx, XX 00000
Dear Sirs:
Subject to the terms and conditions stated herein, Summit Holding
Southeast, Inc., a Florida corporation (the "Company"), proposes to issue and
sell shares of its common stock, par value $.01 per share ("Common Stock"), in
connection with the Amended Plan of Conversion and Recapitalization (the "Plan")
of Employers Self Insurers Fund ("ESIF"), pursuant to which ESIF will
simultaneously convert from a Florida group self-insurance fund to a Florida
stock insurance company under the name Bridgefield Employers Insurance Company
("Bridgefield") and become a wholly owned subsidiary of the Company (the
"Conversion"). Pursuant to the Plan, the Company proposes: (1) to issue to
Eligible Policyholders (as defined in the Plan) of ESIF shares of Series A
Preferred Stock, par value $10 per share (the "Preferred Stock"), in partial
exchange for their membership interests in ESIF; (2) to offer to issue and sell
shares of Common Stock to Eligible Policyholders, as well as to certain
directors, officers and employees of the Company and its subsidiaries (the
"Management Group"), pursuant to nontransferable subscription rights (the
"Subscription Offering")(such persons and entities have subscribed for 938,987
shares in the Subscription Offering); and (3) to issue and sell shares of Common
Stock not subscribed and paid for pursuant to the Subscription Offering, a total
of 4,061,013 shares ("Firm Shares") to the Underwriters named in Schedule I (the
"Underwriters"), as provided in this Agreement (the "Public Offering").
Furthermore, at the election of the Underwriters and subject to the terms and
conditions stated herein, the Company proposes to sell to the Underwriters up to
750,000 additional shares of Common Stock (the "Optional Shares"). The Firm
Shares and the Optional Shares that the Underwriters elect to purchase pursuant
to Section 2 hereof are collectively called the "Shares." As used in this
Agreement, unless the context requires otherwise, the term "subsidiaries" refers
to ESIF and its subsidiaries, whether before or after the Company's acquisition
of the Common Stock of ESIF in connection with the Conversion.
1. REPRESENTATIONS AND WARRANTIES
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to, and agrees with, each of the Underwriters that:
(i) A registration statement on Form S-1 (File No. 333-16499)
with respect to the Preferred Stock and Common Stock, including a
prospectus subject to completion, has been filed by the Company with
the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"), and one or more
amendments, including one or more post-effective amendments, to such
registration statement may have been so filed. After the execution of
this Agreement, the Company will file with the Commission, if such
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statement, as it may have been amended, has become effective under the
Act and information has been omitted therefrom (or from any
post-effective amendment thereto) in accordance with Rule 430A under the
Act, a prospectus in the form most recently included in an amendment to
such registration statement (or, if no such amendment shall have been
filed, in such registration statement) with such changes or insertions
as are required by Rule 430A or permitted by Rule 424(b) under the Act
and as have been provided to and approved by the Underwriters. As used
in this Agreement, the term "Registration Statement" means such
registration statement, as amended at the time when it (or the most
recent post-effective amendment thereto) was or is declared effective,
including all financial statement schedules and exhibits thereto and
including any information omitted therefrom pursuant to Rule 430A under
the Act and included in the Prospectus (as hereinafter defined); the
term "Preliminary Prospectus" means each prospectus subject to
completion included in such Registration Statement or any amendment or
post-effective amendment thereto (including the prospectus subject to
completion, if any, included in the Registration Statement (or the most
recent post-effective amendment thereto) at the time it was or is
declared effective); and the term "Prospectus" means the prospectus
first filed with the Commission pursuant to Rule 424(b) under the Act
or, if no prospectus is required to be so filed, such term means the
prospectus included in the Registration Statement. For purposes of the
following representations and warranties, to the extent reference is
made to the Prospectus and at the relevant time the Prospectus is not
yet in existence, such reference shall be deemed to be to the most
recent Preliminary Prospectus.
(ii) No order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus has been issued and no
proceeding for that purpose has been instituted or threatened by the
Commission or the securities authority of any state or other
jurisdiction. No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued and no
proceeding for that purpose has been instituted or, to the knowledge of
the Company, threatened or contemplated by the Commission or the
securities authority of any state or other jurisdiction.
(iii) When any Preliminary Prospectus was filed with the
Commission it (A) contained all statements required to be stated
therein in accordance with, and complied in all material respects with
the requirements of, the Act and the rules and regulations of the
Commission thereunder, and (B) did not include any untrue statement of
a material fact or omit to state any material fact necessary in order
to make the statements therein, in light of the circumstances under
which they were made, not misleading. When the Registration Statement
or any amendment thereto was or is declared effective, and at each Time
of Delivery (as hereinafter defined), it (A) contained or will contain
all statements required to be stated therein in accordance with, and
complied or will comply in all material respects with the requirements
of, the Act and the rules and regulations of the Commission thereunder,
and (B) did not or will not include any untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein not misleading. When the Prospectus or any amendment
or supplement thereto is filed with the Commission pursuant to Rule
424(b) (or, if the Prospectus or such amendment or supplement is not
required to be so filed, when the Registration Statement or the
amendment thereto containing such amendment or supplement to the
Prospectus was or is declared effective) and at each Time of Delivery,
the Prospectus, as amended or supplemented at any such time, (A)
contained or will contain all statements required to be stated therein
in accordance with, and complied or will comply in all material
respects with the requirements of, the Act and the rules and
regulations of the Commission thereunder, and (B) did not or will not
include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
The foregoing provisions of this paragraph (iii) do not apply to
statements or omissions made in any Preliminary Prospectus, the
Registration Statement or any amendment thereto or the Prospectus or
any amendment or supplement thereto in reliance upon and in
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conformity with written information furnished to the Company by any of
the Underwriters specifically for use therein.
(iv) The descriptions in the Registration Statement and the
Prospectus of statutes, legal and governmental proceedings or contracts
and other documents are accurate and fairly present the information
required to be shown; and there are no statutes or legal or governmental
proceedings required to be described in the Registration Statement or
the Prospectus that are not described as required and no contracts or
documents of a character that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement that are not described and filed as required.
(v) The Company and its subsidiaries each has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation and has full power
and authority (corporate and other) to own or lease its properties and
conduct its business as described in the Prospectus. The Company has
full power and authority (corporate and other) to enter into this
Agreement and to perform its obligations hereunder. The Company and each
of its subsidiaries is duly qualified to transact business as a foreign
corporation and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, except where the failure
to so qualify would not have a material adverse effect on the financial
position, results of operations or business of the Company (a "Material
Adverse Effect").
(vi) The Company's authorized, issued and outstanding capital
stock is as set forth in the Prospectus under the caption
"Capitalization." All of the issued shares of capital stock of the
Company and each of its subsidiaries have been duly authorized and
validly issued, are fully paid and nonassessable and the Common Stock
conforms to the description of the Common Stock contained in the
Prospectus. None of the issued shares of capital stock of the Company
and its subsidiaries each has been issued or is owned or held in
violation of any preemptive rights of shareholders, and no person or
entity has any preemptive or other rights to subscribe for any of the
Shares.
(vii) The Plan has been duly adopted by the required vote of
ESIF's Board of Trustees and policyholders and is in compliance with the
insurance laws of the State of Florida applicable to the reorganization
of group self-insurance funds into stock property and casualty insurance
companies. The Department of Insurance of the State of Florida (the
"Florida DOI") has approved the Conversion. The Conversion will become
effective upon the satisfaction of certain conditions identified in the
Plan and upon the Board of Trustees of ESIF declaring the Plan
effective. Other than the conditions to effectiveness set forth in the
Plan, no other approvals are required to be obtained under the Florida
Insurance Code for the effectiveness of the Plan. Prior to or
contemporaneously with each Time of Delivery (as hereinafter defined),
each of the actions required to occur prior to the effectiveness of the
Plan pursuant to the Plan will have occurred.
(viii) The Company does not own, directly or indirectly, any
capital stock or other equity securities of any other corporation or any
ownership interest in any partnership, joint venture or other entity or
association other than those listed on Exhibit 21.1 to the Registration
Statement.
(ix) Except as disclosed in the Prospectus, there are no
outstanding (A) securities or obligations of the Company convertible
into or exchangeable for any capital stock of the Company, (B) warrants,
rights or options to subscribe for or purchase from the Company any such
capital stock or any such convertible or exchangeable securities or
obligations, or (C) obligations of the Company to issue any shares of
capital stock, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or options.
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(x) Since the date of the most recent audited financial
statements included in the Prospectus, neither the Company nor any of
its subsidiaries has sustained any material loss or interference with
its business from fire, explosion, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as disclosed in or
contemplated by the Prospectus.
(xi) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (A) the Company
has not incurred any liabilities or obligations, direct or contingent,
or entered into any transactions, not in the ordinary course of
business, that are material to the Company, (B) the Company has not
purchased any of its outstanding capital stock or declared, paid or
otherwise made any dividend or distribution of any kind on its capital
stock, (C) there has not been any change in the capital stock, or any
material increase or decrease in the long-term debt or short-term debt
of the Company, and (D) there has not been any material adverse change,
or any development involving a prospective material adverse change, in
or affecting the financial position, results of operations or business
of the Company, in each case other than as disclosed in or contemplated
by the Prospectus.
(xii) The Shares to be issued and sold by the Company have
been duly authorized and, when issued and delivered against payment
therefor as provided herein, will be validly issued and fully paid and
nonassessable and will conform to the description of the Common Stock
contained in the Prospectus; and the certificates evidencing the Shares
will comply with all applicable requirements of Florida law.
(xiii) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of
the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered pursuant
to the Registration Statement (unless any such right has been exercised
or effectively waived) or any securities being registered pursuant to
any other registration statement filed by the Company under the Act.
(xiv) All offers and sales of the Company's capital stock
prior to the date hereof were at all relevant times duly registered
under the Act or exempt from the registration requirements of the Act
and were duly registered or the subject of an available exemption from
the registration requirements of the applicable state securities or blue
sky laws.
(xv) The Company and its subsidiaries each is not, nor with
the giving of notice or passage of time or both would be, in violation
of its Certificate of Incorporation or Bylaws or in default under any
indenture, mortgage, deed of trust, loan agreement, lease, or other
agreement or instrument to which the Company or any of its subsidiaries
is a party or to which any of their respective properties or assets is
subject, which default would have a Material Adverse Effect.
(xvi) Subject to the satisfaction of the conditions to the
effectiveness of the Conversion set forth in the Plan, the issue and
sale of the Shares to be issued and sold by the Company and the
performance of this Agreement and the consummation of the transactions
herein contemplated will not conflict with, or (with or without the
giving of notice or the passage of time or both) result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which the Company or any of its
subsidiaries is a party or to which its properties or assets is subject,
nor will such action conflict with or violate any provision of the
Certificate of Incorporation or Bylaws of the Company or any statute,
rule or regulation (assuming compliance with all applicable state
securities or blue sky laws) or any order, judgment or decree of any
court
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or governmental agency or body having jurisdiction over the Company or
any of its properties or assets.
(xvii) The Company and its subsidiaries each has good title to
all personal property owned by it free and clear of all liens, security
interests, pledges, charges, encumbrances, mortgages, and defects,
except such as are disclosed in the Prospectus or such as do not
materially and adversely affect the value of such property and do not
interfere with the use made or proposed to be made of such property by
the Company; and any real property and buildings held under lease by the
Company are held under valid, subsisting and enforceable leases, with
such exceptions as are disclosed in the Prospectus or are not material
and do not interfere with the use made or proposed to be made of such
property and buildings by the Company.
(xviii) No consent, approval, authorization, order or
declaration of or from, or registration, qualification or filing with,
any court or governmental agency or body is required for the sale of the
Shares or the consummation of the transactions contemplated by this
Agreement, except: (1) the approval by the Florida DOI of the Plan,
ESIF's Certificate of Incorporation and by-laws, and ESIF's application
to convert to a stock insurance company, and (2) the registration of the
Shares under the Act and as may be required by the National Association
of Securities Dealers, Inc. or under state securities or blue sky laws
in connection with the offer, sale and distribution of the Shares by the
Underwriters.
(xix) Other than as disclosed in the Prospectus, there is no
litigation, arbitration, claim, proceeding (formal or informal) or
investigation pending or, to the knowledge of the Company, threatened
(or any basis therefor) in which the Company is a party or of which any
of its properties or assets is the subject which, if determined
adversely to the Company, would individually or in the aggregate have a
Material Adverse Effect. The Company is not in violation of, or in
default with respect to, any statute, rule, regulation, order, judgment
or decree, except as described in the Prospectus or such as do not and
will not individually or in the aggregate have a Material Adverse
Effect.
(xx) Ernst & Young LLP and Xxxxxxx & Xxxxxx, who have
certified certain financial statements of ESIF and its subsidiaries for
the fiscal years ended March 31, 1994, 1995 and 1996, and Ernst & Young
LLP who has certified certain financial statements of Summit Holding
Corporation and its subsidiaries (collectively, "SHC") for the fiscal
years ended December 31, 1993, 1994 and 1995 are, and were at all times,
during the periods covered by their reports included in the Registration
Statement and the Prospectus, independent public accountants as required
by the Act and the rules and regulations of the Commission thereunder.
(xxi) The financial statements and schedules (including the
related notes) of ESIF and SHC and their respective subsidiaries
included in the Registration Statement, the Prospectus or any
Preliminary Prospectus were prepared in accordance with generally
accepted accounting principles consistently applied (or, if not
consistently applied, as applied on the basis stated in such financial
statements and schedules or the related notes thereto) throughout the
periods involved and fairly present the financial position and results
of operations of ESIF and SHC and their respective subsidiaries at the
dates and for the periods presented. The selected financial data set
forth under the caption "Selected Financial Data" in the Prospectus
fairly present, on the basis stated in the Prospectus, the information
included therein.
(xxii) This Agreement has been duly authorized, executed and
delivered by the Company.
(xxiii) None of the Company, any of its subsidiaries, or, to the
knowledge of the Company, their respective officers, directors or
affiliates, has (A) taken, directly or indirectly, any action designed
to cause or result in, or that has constituted or might reasonably be
expected to
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constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares
or (B) since the filing of the Registration Statement (1) sold, bid for,
purchased or paid anyone any compensation for soliciting purchases of
the Shares or (2) paid or agreed to pay to any person any compensation
for soliciting another to purchase any other securities of the Company.
(xxiv) The Company has obtained for the benefit of the Company
and the Underwriters from each of the directors and executive officers
of the Company a written agreement that for a period of 180 days from
the date of the Conversion, such director or executive officer will not,
without the prior written consent of Xxxxxxx Xxxxx & Associates, Inc. on
behalf of the Underwriters, offer, pledge, sell, contract to sell, grant
any option for the sale of, or otherwise dispose of (or announce any
offer, pledge, sale, grant of an option to purchase, or other
disposition), directly or indirectly, any shares of Common Stock or
securities convertible into, exercisable, or exchangeable for, shares of
Common Stock.
(xxv) Neither the Company nor any of its subsidiaries, nor, to
the knowledge of the Company or any of its subsidiaries, any other
director, officer, agent, employee or other person associated with or
acting on behalf of the Company or any of its subsidiaries has, directly
or indirectly, used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political
activity; made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or
campaigns from corporate funds; violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or made any bribe, rebate,
payoff, influence payment kickback or other payment, unlawful under the
laws of the United States or any foreign jurisdiction.
(xxvi) The Company and its subsidiaries each is in compliance
in all material respects with all foreign, federal, state, and local
laws, ordinances, rules, and regulations (collectively, "Laws"), and the
Company and its subsidiaries each has all licenses, permits, and
authorizations necessary to operate under all Laws, except where the
failure to have such license, permit, or authorization would not
(individually or in the aggregate with respect to all such failures)
have a Material Adverse Effect and are in compliance in all material
respects with all terms and conditions of such licenses, permits, and
authorizations; neither the Company nor any of its subsidiaries has
authorized, conducted, or has knowledge of the generation,
transportation, storage, use, treatment, disposal or release of any
hazardous substance, hazardous waste, hazardous material, hazardous
constituent, toxic substance, pollutant, contaminant, petroleum product,
natural gas, liquefied gas or synthetic gas defined or regulated under
any environmental law; and there is no pending or, to the knowledge of
the Company and each of its subsidiaries, threatened claim, litigation
or any administrative agency proceeding, nor has the Company or any of
its subsidiaries received any written or oral notice from any
governmental entity or third party, that: (A) alleges a violation of any
Laws by the Company or any of its subsidiaries; (B) alleges the Company
or any of its subsidiaries is a liable party under the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. ss.
9602 et seq. or any state superfund law; or (C) alleges possible
contamination of the environment by the Company or any of its
subsidiaries.
(xxvii) The Company owns or has the right to use all patents,
patent applications, trademarks, trademark applications, trade names,
service marks, copyrights, franchises, trade secrets, proprietary or
other confidential information and intangible properties and assets
(collectively, "Intellectual Property Rights") necessary to conduct its
business as presently conducted and as described in the Prospectus, and
as the Prospectus indicates the Company proposes to conduct its
business, except where the failure to own or have such rights would not
have a Material Adverse Effect; and to the knowledge of the Company, the
Company has not infringed and is not infringing, and the Company has not
received notice of infringement with respect to, asserted Intellectual
Property Rights of others and there is no infringement by others
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of Intellectual Property Rights of the Company, in either case which
might result in a Material Adverse Effect.
(xxviii) The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such
amounts as management of the Company deems prudent and in the best
interests of the Company and its shareholders; and the Company has no
reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business at a comparable cost, except as disclosed in the
Prospectus.
(xxix) The Company and its subsidiaries each makes and keeps
accurate books and records reflecting its assets and maintains internal
accounting controls which provide reasonable assurance that (A)
transactions are executed in accordance with management's authorization,
(B) transactions are recorded as necessary to permit preparation of the
Company's financial statements in accordance with generally accepted
accounting principles and to maintain accountability for the assets of
the Company, (C) access to the assets of the Company is permitted only
in accordance with management's authorization, and (D) the recorded
accountability for assets of the Company is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(xxx) The Company and its subsidiaries each has filed all
foreign, federal, state and local tax returns that are required to be
filed by it and has paid all taxes shown as due on such returns as well
as all other taxes, assessments and governmental charges that are due
and payable; and no deficiency with respect to any such return has been
assessed or, to the knowledge of the Company, proposed.
(xxxi) The Company is not and will not become as a result of
the transactions contemplated hereby, and does not intend to conduct its
business in a manner that would cause it to become, an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940.
(xxxii) The Company and its subsidiaries each has complied with
all provisions of Section 517.075, Florida Statutes, relating to doing
business with the Government of Cuba and certain other persons and
entities.
(xxxiii) As of the date of this Agreement, the Company is not
required to be licensed as an insurance company in any state. ESIF, U.S.
Employers Insurance, Inc. and Bridgefield Casualty Insurance Company
(together, the "Insurance subsidiaries") are the only subsidiaries of
the Company that are insurance companies. Each of the Insurance
subsidiaries holds all licenses, certificates and permits from insurance
departments and all other governmental authorities (collectively, the
"Insurance Licenses") necessary or desirable to conduct its business as
presently conducted or the Company presently contemplates it will
conduct its business in the future. Each of the Insurance subsidiaries
has fulfilled and performed all material obligations necessary to
maintain its Insurance Licenses, and no event or events have occurred
which would result in the impairment, modification, termination, or
revocation of such Insurance Licenses. The Company and the Insurance
subsidiaries each have filed all material reports, registrations and
statements, together with any amendments required to be made with
respect thereto, that they were required to file with any state
insurance commission, agency or authority. As of their respective dates,
such reports, registrations and statements complied in all material
respects with all the laws, statutes, rules, and regulations of each
such jurisdiction, including, without limitation, those rules and
regulations promulgated by the applicable insurance commission, agency,
or authority in any such state.
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(xxxiv) Except as set forth in the Prospectus, no loss
experience has occurred that would require or make it necessary or
appropriate for the Company to change, alter, modify or amend the
Company's methodology or assumptions relating to losses.
(xxxv) All reinsurance treaties, contracts, agreements, and
arrangements to which the Company or any of its subsidiaries is a party
and as to which any of them reported recoverables, premiums due or
other amounts in its financial statements are in full force and effect
and neither the Company nor any of the Insurance subsidiaries is in
violation of, or in default in the performance, observance or
fulfillment of, any material obligation, agreement, covenant or
condition contained therein, which violation or default would,
singularly or in the aggregate, have a Material Adverse Effect on the
condition (financial or other), business, properties, net worth or
results of operations of the Company and the Insurance subsidiaries
taken as a whole. Neither the Company nor any of the Insurance
subsidiaries has any reason to believe that any other party to such
treaties, contracts, agreements or arrangements will not or cannot
perform in any material respect its duties or obligations under such
treaty, contract, agreement, or arrangement, except where the failure
to perform would not have a Material Adverse Effect on the condition
(financial or other), business, properties, net worth or results of
operations of the Company and its subsidiaries taken as a whole.
2. PURCHASE AND SALE OF SHARES. Subject to the terms and
conditions herein set forth, (a) the Company agrees to sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company, at a purchase price of $10.23 per share, the number
of the Firm Shares set forth opposite the name of each Underwriter on Schedule
I.
The Company hereby grants to the Underwriters the right to purchase at
their election in whole or in part up to 750,000 Optional Shares at the purchase
price per share set forth in clause (a) in the paragraph above for the sole
purpose of covering over-allotments in the sale of Firm Shares. If the option
granted hereby is exercised in part, then the respective number of Optional
Shares to be purchased by each of the Underwriters shall be determined by
multiplying the total number of Optional Shares as to which such election shall
have been exercised by the Underwriters by a fraction, the numerator of which is
the maximum number of Optional Shares such Underwriter is entitled to purchase
as set forth opposite the name of such Underwriter in Schedule I hereto and the
denominator of which is the maximum number of Optional Shares that all
Underwriters are entitled to purchase hereunder (with the resulting number to be
adjusted by the Underwriters so as to eliminate fractional shares). Any such
election to purchase Optional Shares may be exercised by written notice from the
Underwriters to the Company, given one time within a period of 30 calendar days
after the date of this Agreement and setting forth the aggregate number of
Optional Shares to be purchased and the date on which such Optional Shares are
to be delivered, which date shall not be less than three or more than ten
business days after such notice is given, as determined by the Underwriters, but
in no event earlier than the First Time of Delivery. The Company shall furnish
or cause to be furnished to the Underwriters the certificates, letters, and
opinions, and to satisfy all conditions, set forth in Section 7 hereof at the
Subsequent Time of Delivery (as such term is defined in Section 4, below).
3. OFFERING BY THE UNDERWRITERS. Upon the authorization by the
Underwriters of the release of the Shares, the several Underwriters propose to
offer the Shares for sale upon the terms and conditions disclosed in the
Prospectus.
4. DELIVERY OF SHARES; CLOSING. Certificates in definitive form
for the Shares to be purchased by each Underwriter hereunder, and in such
denominations and registered in such names as Xxxxxxx Xxxxx & Associates, Inc.
may request upon at least 48 hours prior notice to the Company, shall be
delivered by or on behalf of the Company to the Underwriters for the respective
account of each such Underwriter, against payment by such Underwriter on its
behalf as provided herein. Payment shall be made (i) with respect to the
purchase price for the Firm Shares and any Optional Shares purchased from the
Company if any Optional Shares are purchased hereunder, to the Company by
official bank check or
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checks payable to the order of, or by wire transfer to the account of, the
Company, in same day available funds against delivery of the certificates for
the Firm Shares or Optional Shares purchased from the Company, as the case may
be. The closing of the sale and purchase of the Shares shall be held at the
offices of Xxxxxxx Xxxxx & Associates, Inc., 000 Xxxxxxxx Xxxxxxx, Xx.
Xxxxxxxxxx, Xxxxxxx 00000, except that physical delivery of certificates for the
Shares shall be made at the office of ChaseMellon Shareholder Services, L.L.C.,
000 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other location
designated by Xxxxxxx Xxxxx & Associates, Inc. The time and date of such
delivery and payment shall be, with respect to the Firm Shares, at 10:00 a.m.,
local time, on the third (or if the Firm Shares are priced as contemplated by
Rule 15c6-1(c) of the Commission, after 4:30 p.m., Washington, D.C. time, the
fourth) full business day after this Agreement is executed or at such other time
and date as the Underwriters and the Company may agree upon in writing, and,
with respect to the Optional Shares, 10:00 a.m., local time, on the date
specified by the Underwriters in the written notice given by the Underwriters of
the Underwriters' election to purchase all or part of such Optional Shares, or
at such other time and date as the Underwriters and the Company may agree upon
in writing. Such time and date for delivery of the Firm Shares is herein called
the "First Time of Delivery," and such time and date for delivery of any
Optional Shares, if not the First Time of Delivery, is herein called the
"Subsequent Time of Delivery," and each such time and date for delivery is
herein called a "Time of Delivery." The Company will make certificates for the
Shares available for checking and packaging at least 24 hours prior to each Time
of Delivery at the office of The Depository Trust Company, 00 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 or at such other location in New York, New York specified
by the Underwriters in writing at least 48 hours prior to such Time of Delivery.
5. COVENANTS.
(A) COVENANTS OF THE COMPANY. The Company covenants and agrees
with each of the Underwriters:
(i) If required by the rules and regulations of the
Commission, the Company will file the Prospectus with the Commission
pursuant to and in accordance with subparagraph (1) (or, if applicable
and if consented to by the Underwriters, subparagraph (4)) of Rule
424(b) not later than the earlier of (A) the second business day
following the execution and delivery of this Agreement or (B) the fifth
business day after the date on which a post-effective amendment to the
Registration Statement is declared effective. The Company will advise
the Underwriters promptly of any such filing.
(ii) The Company will not file with the Commission the
Prospectus or the amendment referred to in the second sentence of
Section 1(i) hereof, any amendment or supplement to the Prospectus or
any amendment to the Registration Statement unless the Underwriters have
received a reasonable period of time to review any such proposed
amendment or supplement and consented to the filing thereof, such
consent not to be unreasonably delayed or withheld. The Company will use
its best efforts to cause any such amendment to the Registration
Statement to be declared effective as promptly as possible. Upon the
reasonable request of the Underwriters or counsel for the Underwriters,
the Company will promptly prepare and file with the Commission, in
accordance with the rules and regulations of the Commission, any
amendments to the Registration Statement or amendments or supplements to
the Prospectus that may be necessary or advisable in connection with the
distribution of the Shares by the several Underwriters and will use its
best efforts to cause any such amendment to the Registration Statement
to be declared effective as promptly as possible. If required, the
Company will file any amendment or supplement to the Prospectus with the
Commission in the manner and within the time period required by Rule
424(b) under the Act. The Company will advise the Underwriters, promptly
after receiving notice thereof, of the time when any amendment to the
Registration Statement has been filed or declared effective or the
Prospectus or any amendment or supplement thereto has been filed and
will provide evidence to the Underwriters of each such filing or
effectiveness.
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(iii) The Company will advise the Underwriters promptly after
receiving notice or obtaining knowledge of (A) the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or any part thereof or any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus or
any amendment or supplement thereto (B) the suspension of the
qualification of the Shares for offer or sale in any jurisdiction or of
the initiation or threatening of any proceeding for any such purpose, or
(C) any request made by the Commission or any securities authority of
any other jurisdiction for amending the Registration Statement, for
amending or supplementing the Prospectus or for additional information.
The Company will use its best efforts to prevent the issuance of any
such stop order and, if any such stop order is issued, to obtain the
withdrawal thereof as promptly as possible.
(iv) If during the period when the delivery of a prospectus
relating to the Shares is required under the Act, any events have
occurred as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading, or if for any reason it is necessary during such
same period to amend or supplement the Prospectus to comply with the Act
or the rules and regulations thereunder, the Company will promptly
notify the Underwriters and upon their request (but at the Company's
expense) prepare and file with the Commission an amendment or supplement
to the Prospectus that corrects such statement or omission or effects
such compliance and will furnish without charge to each Underwriter and
to any dealer in securities as many copies of such amended or
supplemented Prospectus as the Underwriters may from time to time
reasonably request. If an Underwriter is required to deliver a
prospectus relating to the Shares at any time after the period when
delivery of a prospectus is required under the Act, upon request of the
Underwriters but at the expense of the Underwriters, the Company will
prepare and deliver to the Underwriters as many copies as the
Underwriters may request of an amended or supplemented Prospectus
complying with Section 10(a)(3) of the Act. Neither the Underwriters'
consent to, nor the Underwriters' delivery of, any such amendment or
supplement shall constitute a waiver of any of the conditions set forth
in Section 7.
(v) The Company promptly from time to time will take such
action as the Underwriters may reasonably request to qualify the Shares
for offering and sale under the securities or blue sky laws of such
jurisdictions as the Underwriters may request and will continue such
qualification in effect for as long as may be necessary to complete the
distribution of the Shares, provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction.
(vi) The Company will promptly provide the Underwriters,
without charge, (A) two manually executed copies of the Registration
Statement as originally filed with the Commission and of each amendment
thereto, (B) for each other Underwriter a conformed copy of the
Registration Statement as originally filed and of each amendment
thereto, without exhibits, and (C) so long as a prospectus relating to
the Shares is required to be delivered under the Act, as many copies of
each Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto as the Underwriters may reasonably request.
(vii) As soon as practicable, but in any event not later than
the 45th day following the end of the fiscal quarter in which occurs the
first anniversary of the effective date of the Registration Statement
(except such date shall be the 90th day rather than the 45th day if such
quarter is then the fourth fiscal quarter of the Company's fiscal year)
after the effective date of the Registration Statement, the Company will
make generally available to its security holders an earnings statement
of the Company covering a period of at least 12 months beginning after
the
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effective date of the Registration Statement (which need not be audited)
complying with Section 11(a) of the Act and the rules and regulations
thereunder.
(viii) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the
Conversion, the Company will not, without the prior written consent of
Xxxxxxx Xxxxx & Associates, Inc., offer, pledge, issue, sell, contract
to sell, grant any option for the sale of, or otherwise dispose of (or
announce any offer, pledge, sale, grant of an option to purchase or
other disposition), directly or indirectly, any shares of Common Stock
or securities convertible into, exercisable or exchangeable for, shares
of Common Stock, except (a) as provided in Section 2 and except for the
issuance of Common Stock upon the exercise of stock options or warrants
outstanding on the date of this Agreement to the extent that such stock
options or warrants were issued pursuant to plans or agreements which
are disclosed in the Prospectus, (b) the grant of options to employees
or directors under existing stock option plans and the issuance of
Common Stock upon the exercise thereof, or (c) as otherwise disclosed or
contemplated by the Prospectus.
(ix) During a period of five years from the effective date of
the Registration Statement, the Company will furnish to the
Underwriters, without charge, (A) copies of all reports or other
communications (financial or other) furnished to shareholders generally,
(B) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or the National
Association of Securities Dealers, Inc. or any national securities
exchange upon which trading in shares of the Common Stock is listed or
reported, and (C) such additional information concerning the business
and financial condition of the Company as the Underwriters may
reasonably request subject to appropriate confidentiality provisions
with respect to material non-public information.
(x) The Company will not (A) take, directly or indirectly,
prior to the termination of the underwriting syndicate contemplated by
this Agreement, any action designed to cause or to result in, or that
might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of any of the Shares, (B) sell, bid for, purchase or
pay anyone any compensation for soliciting purchases of, the Shares, or
(C) pay or agree to pay to any person any compensation for soliciting
another to purchase any other securities of the Company.
(xi) The Company will apply the net proceeds from the
offering in the manner set forth under "Use of Proceeds" in the
Prospectus.
(xii) The Company will use its best efforts to cause the
Shares to be listed on the Nasdaq National Market at each Time of
Delivery and maintain such listing on a continuous basis for at least
one year from the date hereof.
(xiii) If at any time during the period beginning on the date
the Registration Statement becomes effective and ending on the later of
(A) the date 25 days after such effective date (or if the Underwriter's
option granted pursuant to Section 2 hereof has not been exercised by
such date, then 35 days after such effective date) and (B) the date that
is the earlier of (1) the date on which the Company first files with the
Commission a Quarterly Report on Form 10-Q after such effective date and
(2) the date on which the Company first issues a quarterly financial
report to shareholders after such effective date, any rumor, publication
or event relating to or affecting the Company shall occur as a result of
which in the reasonable opinion of the Underwriters the market price of
the Common Stock has been or is likely to be materially affected
(regardless of whether such rumor, publication or event necessitates an
amendment of or supplement to the Prospectus), the Company will, after
written notice from the Underwriters advising the Company to the effect
set forth above, forthwith prepare, consult with the Underwriters
concerning the substance of, and consult with Company counsel to
determine
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whether or not it is advisable, under the circumstances, to disseminate
a press release or other public statement, reasonably satisfactory to
the Underwriters, responding to or commenting on such rumor, publication
or event.
6. EXPENSES. The Company will pay all costs and expenses incident
to the performance of its respective obligations under this Agreement, whether
or not the transactions contemplated hereby are consummated or this Agreement is
terminated pursuant to Section 10 hereof, including, without limitation, all
costs and expenses incident to (i) the fees, disbursements and expenses of the
Company's counsel and accountants in connection with the registration of the
Shares under the Act and all other expenses in connection with the preparation,
printing and, if applicable, filing of the Registration Statement (including all
amendments thereto), any Preliminary Prospectus, the Prospectus and any
amendments and supplements thereto, and any blue sky memoranda; (ii) the
delivery of copies of the foregoing documents and this Agreement to the
Underwriters; (iii) the filing fees of the Commission and the National
Association of Securities Dealers, Inc. relating to the Shares; (iv) the
preparation, issuance and delivery to the Underwriters of any certificates
evidencing the Shares, including transfer agent's and registrar's fees; (v) the
qualification of the Shares for offering and sale under state securities and
blue sky laws, including filing fees and the reasonable fees and disbursements
of counsel for the Underwriters relating thereto; (vi) any listing of the Shares
on the Nasdaq National Market and (vii) any expenses for travel, lodging and
meals incurred by the Company and any of its officers, directors and employees
in connection with any meetings with prospective investors in the Shares.
7. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters hereunder to purchase and pay for the Shares to
be delivered at each Time of Delivery shall be subject, in their discretion, to
the accuracy of the representations and warranties of the Company contained
herein as of the date hereof and as of such Time of Delivery, to the accuracy of
the statements of Company officers made pursuant to the provisions hereof, to
the performance by the Company of their respective covenants and agreements
hereunder, and to the following additional conditions precedent:
(a) If the registration statement as amended to date has not become
effective prior to the execution of this Agreement, such registration statement
shall have been declared effective not later than 5:30 p.m., St. Petersburg
time, on the date of this Agreement or such later date and/or time as shall have
been consented to by the Underwriters in writing. If required, the Prospectus
and any amendment or supplement thereto shall have been filed with the
Commission pursuant to Rule 424(b) within the applicable time period prescribed
for such filing and in accordance with Section 5(a) of this Agreement; no stop
order suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceedings for that purpose shall have
been instituted, or to the knowledge of the Company and the Underwriters,
threatened or contemplated by the Commission; and all requests for additional
information on the part of the Commission shall have been complied with to the
reasonable satisfaction of the Underwriters.
(b) Holland & Knight LLP, counsel for the Underwriters, shall have
furnished to the Underwriters such opinion or opinions, dated such Time of
Delivery, with respect to the incorporation of the Company, the validity of the
Shares being delivered at such Time of Delivery, the Registration Statement, the
Prospectus, and other related matters as the Underwriters may reasonably
request, and the Company shall have furnished to such counsel such documents as
such counsel or the Underwriters request prior to such Time of Delivery for the
purpose of enabling them to pass upon such matters.
(c) The Underwriters shall have received an opinion, dated at each
Time of Delivery, of Xxxxxx & Bird LLP, to the effect that:
(i) The Company and each of its subsidiaries is duly
qualified to transact business as a foreign corporation and is in good
standing under the laws of each other jurisdiction other than Florida in
which it owns or leases property, or conducts any business, so as to
require such qualification, except where the failure to so qualify would
not have a Material Adverse Effect.
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(ii) The Company has no subsidiaries other than those listed
on Exhibit 21.1 to the Registration Statement and, to the knowledge of
such counsel, does not have any ownership interest in any partnership,
joint venture, or other entity or association.
(iii) Except as disclosed in the Prospectus, to the knowledge
of such counsel there are no outstanding (A) securities or obligations
of the Company convertible into or exchangeable for any capital stock of
the Company, (B) warrants, rights or options to subscribe for or
purchase from the Company any such capital stock or any such convertible
or exchangeable securities or obligations, or (C) obligations of the
Company to issue any shares of capital stock, any such convertible or
exchangeable securities or obligations, or any such warrants, rights, or
options.
(iv) Except as disclosed in the Prospectus, to the knowledge
of such counsel there are no contracts, agreements, or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the Act with
respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement (or any
such right has been effectively exercised or waived) or in any
securities being registered pursuant to any other registration statement
filed by the Company under the Act.
(v) All offers and sales of the Company's capital stock
prior to the date hereof were at all relevant times duly registered
under the Act or exempt from the registration requirements of the Act.
(vi) The Company is not, nor with the giving of notice or
passage of time or both, will it be, in violation of its Articles of
Incorporation or Bylaws or in default under any indenture, mortgage,
deed of trust, loan agreement, lease, or other agreement or instrument
to which the Company is a party or to which any of its properties or
assets is subject and which in each instance is an exhibit to the
Registration Statement.
(vii) The issue and sale of the Shares being issued at such
Time of Delivery and the performance of this Agreement and the
consummation of the transactions herein contemplated will not conflict
with, or (with or without the giving of notice or the passage of time or
both) result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any material indenture, mortgage,
deed of trust, loan agreement, lease, or other agreement or instrument
known to such counsel to which the Company is party or to which any of
its properties or assets is subject, nor will such action conflict with
or violate any provision of the Articles of Incorporation or Bylaws of
the Company or any federal statute, rule or regulation normally
applicable to the transactions of the type herein contemplated, or to
the knowledge of such counsel, any other statute, rule or regulation
(assuming compliance with all applicable state securities or blue sky
laws) or, to the extent known to such counsel, any order, judgment, or
decree of any court or governmental agency or body having jurisdiction
over the Company or any of its properties or assets (it being understood
that such counsel need not express any opinion with regard to insurance
regulatory matters or, under this paragraph, compliance with federal
securities laws).
(viii) No consent, approval, authorization, order, or
declaration of or from, or registration, qualification or filing with,
any federal court or governmental agency or body, or to the knowledge of
such counsel, any other court or governmental agency or body, is
required for the issue and sale of the Shares or the consummation of the
transactions contemplated by this Agreement, except such as have been
obtained under the Act and the rules and regulations thereunder and such
as may be required by the National Association of Insurance Dealers,
Inc. or under state securities or blue sky laws in connection with the
offer, sale, and distribution of the
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Shares by the Underwriters (it being understood that such counsel need
not express any opinion with regard to insurance regulatory matters).
(ix) To such counsel's knowledge and other than as disclosed
in or contemplated by the Prospectus, (A) there is no litigation,
arbitration, claim, proceeding (formal or informal) or investigation
pending or threatened (or any reasonable basis therefor) in which the
Company or any of its subsidiaries is a party or of which any of its
properties or assets is the subject which, if determined adversely to
the Company or any of its subsidiaries, would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect; and
(B) neither the Company nor any of its subsidiaries is in violation of,
or in default with respect to, any foreign or domestic statute, rule,
regulation, order, judgment or decree, (excluding any insurance law,
rule, regulation, order, judgment or decree).
(x) This Agreement has been duly authorized, executed and
delivered by the Company.
(xi) The Registration Statement and the Prospectus and each
amendment or supplement thereto (other than the financial statements and
related schedules and other financial and statistical data therein and
the section therein entitled "Underwriting," as to which such counsel
need express no opinion), as of their respective effective or issue
dates, complied as to form in all material respects with the
requirements of the Act and the rules and regulations thereunder. The
descriptions in the Registration Statement and the Prospectus of
statutes, legal and governmental proceedings (excluding insurance and
Florida laws, regulations, and governmental proceedings, as to which
such counsel need not express an opinion), or contracts and other
documents are accurate in all material respects and fairly present the
information required to be shown, and such counsel does not know of any
statutes or legal or governmental proceedings required to be described
in the Registration Statement or Prospectus that are not described as
required or of any contracts or documents of a character required to be
described in the Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement which are not described and filed
as required.
(xii) The Registration Statement is effective under the Act,
any required filing of the Prospectus pursuant to Rule 424(b) has been
made in the manner and within the time period required by Rule 424(b),
and no stop order suspending the effectiveness of the Registration
Statement or any part thereof has been issued and, to such counsel's
knowledge, no proceedings for that purpose have been instituted or
threatened or are contemplated by the Commission.
(xiii) The Company is not, and will not be as a result of the
consummation of the transactions contemplated by this Agreement, an
"investment company," or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deem proper, on warranties, representations and
certificates of responsible officers of the Company and public officials and, as
to matters involving the application of laws of any jurisdiction other than
Georgia or the United States, to the extent satisfactory in form and scope to
counsel for the Underwriters, upon the opinion of local counsel satisfactory to
counsel for the Underwriters, provided that such counsel states such counsel
believes that the Underwriters are justified in relying upon such opinion and
copies of such opinion are delivered to the Underwriters and counsel for the
Underwriters.
In addition, such counsel shall state that (i) based solely upon a
letter from The Nasdaq Stock Market to the Company attached to such counsel's
opinion, the Firm Shares and the Optional Shares have been approved for
quotation on The Nasdaq National Market upon issuance, (ii) based solely upon a
certificate of officers of the Company, no securities of the Company have
previously been offered or sold
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to any person who is not a Florida resident, except in connection with the
transactions contemplated by this Agreement, and (iii) such counsel has
participated in conferences with officers and other representatives of the
Company and the Underwriters and their counsel during which the contents of the
Registration Statement and the Prospectus and related matters were discussed and
reviewed, and, although such counsel has not independently verified and is not
passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus, on the basis of the information that such counsel
developed in the course of the performance of the services referred to above,
considered in the light of such counsel's understanding of the applicable law,
nothing came to their attention that caused them to believe that the
Registration Statement or the Prospectus (other than the financial statements
and schedules and the other financial and statistical data therein, as to which
such counsel need express no belief), on such effective date, contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading.
(d) The Underwriters shall have received an opinion, dated at each
Time of Delivery, of Maida, Xxxxxxxx & Xxxx, P.A., to the effect that:
(i) The Company and each of its subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of Florida and has the corporate power and authority to
own or lease its properties and conduct its business as described in the
Registration Statement and the Prospectus. The Company has the corporate
power and authority to enter into this Agreement and perform its
obligations hereunder.
(ii) The Company's authorized, issued and outstanding capital
stock is set forth in the Prospectus. All of the issued shares of Common
Stock of the Company have been duly authorized and validly issued, are
fully paid and nonassessable and conform to the description of the
Common Stock contained in the Prospectus. None of the issued shares of
capital stock of the Company has been issued or is owned or held in
violation of any preemptive rights of shareholders, and no person or
entity (including any holder of outstanding shares of capital stock of
the Company) has any statutory preemptive or, to the knowledge of such
counsel, other rights to subscribe for any of the Shares. All offers and
sales of the Company's capital stock outstanding prior to the date
hereof were the subject of an available exemption from the registration
or qualification requirements of the Florida securities or blue sky laws
(to the extent such offers and sales were subject to such Florida laws).
(iii) The Shares to be issued and sold by the Company have
been duly authorized and, when issued and delivered against payment
therefor as provided herein, will be validly issued and fully paid and
nonassessable and will conform to the description of the Common Stock
contained in the Prospectus, and the certificates evidencing the Shares
comply with all requirements of applicable law.
(iv) ESIF holds such insurance licenses, certificates and
permits from governmental authorities (including, without limitation,
Insurance Licenses) which are necessary to the conduct of its business
as described in the Prospectus, and the Company and ESIF have fulfilled
and performed all obligations necessary to maintain the Insurance
Licenses. Neither the Company nor ESIF has received any notice of, and
such counsel has no knowledge of, any action, suit, proceeding, or
investigation, and to the best knowledge of such counsel there has been
no threatened action, suit, proceeding or investigation, that could
reasonably be expected to result in the revocation, termination or
suspension of any Insurance Licenses.
(v) The issue and sale of the Shares being issued at such
Time of Delivery and the performance of this Agreement and the
consummation of the transactions herein contemplated will not violate
any Florida statute, rule, or regulation, or to the extent known to such
counsel,
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any order, judgment, or decree of any court or governmental agency or
body having jurisdiction over the Company or any of its properties or
assets related to insurance regulatory matters.
(vi) No consent, approval, authorization, order, or
declaration of or from, or registration, qualification or filing with,
any Florida court or Florida governmental agency or body or to the
knowledge of such counsel from any other court, governmental agency or
body related to insurance regulatory matters is required for the issue
and sale of the Shares or the consummation of the transactions
contemplated by this Agreement, except such as have been obtained under
the Florida Insurance Code and the rules and regulations thereunder.
(vii) The Plan has been duly adopted by the required vote of
ESIF's Board of Trustees and members and is in compliance with the
insurance laws of the State of Florida applicable to the reorganization
of group self-insurance funds into stock property and casualty insurance
companies. Other than the conditions to effectiveness set forth in the
Order or in the Plan, no other approvals are required to be obtained
under the Florida Insurance Code for the effectiveness of the Plan.
Prior to or contemporaneously with the First Time of Delivery (as
hereinafter defined) each of the actions required to occur prior to the
effectiveness of the Plan pursuant to the Order or the Plan will have
occurred.
(viii) To such counsel's knowledge and other than as disclosed
in or contemplated by the Prospectus, neither the Company nor any of its
subsidiaries is in violation of, or in default with respect to, any
Florida statute, rule, regulation, order, judgment or decree, or as to
insurance regulatory matters, any other statute, rule, regulation,
order, judgment or decree.
(ix) The descriptions in the Registration Statement and the
Prospectus of insurance-related and Florida laws and regulations and
governmental proceedings are accurate and fairly present the information
required to be shown, and such counsel does not know of any insurance
related or Florida laws or regulations or governmental proceedings
required to be described in the Registration Statement or Prospectus
that are not described as required.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deem proper, on warranties, representations and
certificates of responsible officers of the Company and public officials.
In addition, such counsel shall state that such counsel has participated
in conferences with officers and other representatives of the Company and the
Underwriters and their counsel during which the contents of the Registration
Statement and the Prospectus and related matters were discussed and reviewed,
and, although such counsel has not independently verified and is not passing
upon and does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus, on the basis of the information that such counsel developed in the
course of the performance of the services referred to above, considered in the
light of such counsel's understanding of the applicable law, nothing came to
their attention that caused them to believe that the Registration Statement or
the Prospectus, on such effective date, contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
(e) The Underwriters shall have received from Ernst & Young LLP and
Xxxxxxx & Xxxxxx letters as of the date hereof and as of the Effective Date and
each Time of Delivery, in form and substance satisfactory to the Underwriters,
to the effect set forth in Annex I and Annex II hereto, respectively. In the
event that the letters referred to in this Section 7(e) set forth any changes,
decreases or increases in the items specified in clause (iii) of Annex I, it
shall be a further condition to the obligations of the Underwriters that (i)
such letters shall be accompanied by a written explanation by the Company as to
the significance thereof, unless the Underwriters deem such explanation
unnecessary, and (ii) such changes, decreases, or increases do not, in the
reasonable judgment of the Underwriters, make it impracticable or
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inadvisable to proceed with the purchase, sale and delivery of the Shares being
delivered at such Time of Delivery as contemplated by the Registration
Statement, as amended as of the date of such letter.
(f) Since the date of the latest audited financial statements
included in the Prospectus, the Company and its subsidiaries shall not have
sustained (i) any loss or interference with their respective businesses from
fire, explosion, flood, hurricane or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as disclosed in or contemplated by the Prospectus, or
(ii) any change, or any development involving a prospective change (including
without limitation a change in management or control of the Company) in or
affecting the position (financial or otherwise), results of operations, net
worth or business prospects of the Company and its subsidiaries, otherwise than
as disclosed in or contemplated by the Prospectus, the effect of which, in
either such case, is in the reasonable judgment of the Underwriters so material
and adverse as to make it impracticable or inadvisable to proceed with the
purchase, sale, and delivery of the Shares being delivered at such Time of
Delivery as contemplated by the Registration Statement, as amended as of the
date hereof.
(g) Subsequent to the date hereof there shall not have occurred any
of the following: (i) any suspension or limitation in trading in securities
generally on the New York Stock Exchange, or any setting of minimum prices for
trading on such exchange or in the Common Stock by the Commission or The Nasdaq
Stock Market; (ii) a moratorium on commercial banking activities in New York or
Florida declared by either federal or state authorities; or (iii) any outbreak
or escalation of hostilities involving the United States, declaration by the
United States of a national emergency or war or any other national or
international calamity or emergency if the effect of any such event specified in
this clause (iii) in the reasonable judgment of the Underwriters makes it
impractical or inadvisable to proceed with the purchase, sale and delivery of
the Shares being delivered at such Time of Delivery as contemplated by the
Registration Statement, as amended as of the date hereof.
(h) The Company shall have furnished to the Underwriters at such
Time of Delivery certificates of officers of the Company, reasonably
satisfactory to the Underwriters, as to the accuracy in all material respects of
the representations and warranties of the Company herein at and as of such Time
of Delivery, as to the performance by the Company of all of their respective
obligations hereunder to be performed at or prior to such Time of Delivery, and
as to such other matters as the Underwriters may reasonably request, and the
Company shall have furnished or caused to be furnished certificates as to the
matters set forth in subsections (a) and (f) of this Section 7, and as to such
other matters as the Underwriters may reasonably request.
(i) The Shares shall have been approved for quotation on the Nasdaq
National Market.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon: (i) any untrue statement or
alleged untrue statement made by the Company in Section 1 of this Agreement;
(ii) any untrue statement or alleged untrue statement of any material fact
contained in (A) the Registration Statement or any amendment thereto, any
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto,
or (B) any application or other document, or any amendment or supplement
thereto, executed by the Company or based upon written information furnished by
or on behalf of the Company filed in any jurisdiction in order to qualify the
Shares under the securities or blue sky laws thereof or filed with the
Commission or any securities association or securities exchange (each an
"Application"); or (iii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto, or any Application a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse each Underwriter for any
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legal or other expenses reasonably incurred by such Underwriter in connection
with investigating, defending against or appearing as a third-party witness in
connection with any such loss, claim, damage, liability or action; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or action arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement or any Amendment thereto, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto or
any Application in reliance upon and in conformity with written information
furnished to the Company by any Underwriter expressly for use therein. The
obligations of the Company to indemnify the Underwriters (or any controlling
person of such Underwriter) pursuant to this indemnity agreement are subject to
the condition that, insofar as such losses, claims, damages, liabilities or
expenses relate to any such untrue statement, alleged untrue statement, omission
or alleged omission made in a Preliminary Prospectus that is corrected in the
Prospectus, such indemnity agreement shall not inure to the benefit of any
Underwriter from whom the person asserting such losses, liabilities, claims,
damages or expenses purchased the Shares in the Offering, if (i) such
Underwriter failed to deliver a copy of the Prospectus to such person at or
prior to the time delivery of the Prospectus as is required by the Act, unless
such failure was due to the failure by the Company to provide copies of the
Prospectus to such Underwriter; and (ii) the delivery of such Prospectus to such
person would have constituted a complete defense to the losses, claims, damages,
liabilities or expenses asserted by such person. The Company will not, without
the prior written consent of each Underwriter, settle or compromise or consent
to the entry of any judgment in any pending or threatened claim, action, suit or
proceeding (or related cause of action or portion thereof) in respect to which
indemnification may be sought hereunder (whether or not such Underwriter is a
party to such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an unconditional release of such Underwriter from
all liability arising out of such claim, action, suit or proceeding (or related
cause of action or portion thereof).
(b) Each Underwriter, severally but not jointly, agrees to indemnify
and hold harmless the Company against any losses, claims, damages or liabilities
to which the Company may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement or any amendment
thereto, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or any Application or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by such
Underwriter expressly for use therein; and will reimburse the Company for any
legal or other expenses reasonably incurred by the Company in connection with
investigating or defending any such loss, claim, damage, liability or action.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided, however,
that if the defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have reasonably concluded
that there may be one or more legal defenses available to it or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnifying party shall not have the right to
assume the defense of such action on behalf of such indemnified party and such
indemnified party shall have the right to select separate counsel to defend such
action on behalf of such indemnified party, provided, further, however, that the
Company shall be liable for the fees and expenses of only one separate firm of
attorneys (in addition to
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local counsel) for all indemnified parties at any time in connection with any
action, suit or proceeding, or in a series of separate but substantially similar
or related actions, suits or proceedings arising out of the same general
allegations and circumstances. After such notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof and
approval by such indemnified party of counsel appointed to defend such action,
the indemnifying party will not be liable to such indemnified party under this
Section 8 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof, unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding sentence
or (ii) the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party. Nothing in this
Section 8(c) shall preclude an indemnified party from participating at its own
expense in the defense of any such action so assumed by the indemnifying party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other from the offering of the Shares. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and the Underwriters on the other in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters. The relative fault shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one hand or
the Underwriters on the other and the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this subsection (d) were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), (i) no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission, and (ii) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters
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may otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company and to each person, if any, who controls the
Company within the meaning of the Act.
9. DEFAULT OF UNDERWRITER.
(a) If any Underwriter defaults in its obligation to purchase Shares
at a Time of Delivery, the Underwriters in their discretion may arrange for
their or another party or other parties to purchase such Shares on the terms
contained herein. If within thirty-six hours after such default by any
Underwriter the Underwriters do not arrange for the purchase of such Shares, the
Company shall be entitled to a further period of thirty-six hours within which
to procure another party or other parties satisfactory to the Underwriters to
purchase such Shares on such terms. In the event that, within the respective
prescribed periods, the Underwriters notify the Company that they have so
arranged for the purchase of such Shares, or the Company notifies the
Underwriters that they have so arranged for the purchase of such Shares, the
Underwriters or the Company shall have the right to postpone a Time of Delivery
for a period of not more than seven days in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus, or in
any other documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus that in the opinion
of the Underwriters may thereby be made necessary. The cost of preparing,
printing and filing any such amendments shall be paid for by the Underwriters.
The term "Underwriter" as used in this Agreement shall include any person
substituted under this Section with like effect as if such person had originally
been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by the Underwriters and
the Company as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased does not exceed one-eleventh of the aggregate
number of Shares to be purchased at such Time of Delivery, then the Company
shall have the right to require each non-defaulting Underwriter to purchase the
number of Shares which such Underwriter agreed to purchase hereunder at such
Time of Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made, but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
10. TERMINATION.
(a) This Agreement may be terminated with respect to (i) the Firm
Shares or (ii) any Optional Shares, in the sole discretion of the Underwriters,
by notice to the Company given prior to the First Time of Delivery or any
Subsequent Time of Delivery, respectively, in the event that (a) any condition
to the obligations of the Underwriters set forth in Section 7 hereof has not
been satisfied, or (b) the Company shall have failed, refused or been unable to
deliver the Shares or to perform all obligations and satisfy all conditions on
its part to be performed or satisfied hereunder at or prior to such Time of
Delivery, in either case other than by reason of a default by any of the
Underwriters. If this Agreement is terminated pursuant to this Section 10(a),
the Company will reimburse the Underwriters severally upon demand for all
out-of-pocket expenses (including reasonable counsel fees and disbursements)
that shall have been reasonably incurred by them in connection with the proposed
purchase and sale of the Shares. The Company shall not in any event be liable to
any of the Underwriters for the loss of expected profits from the transactions
covered by this Agreement.
(b) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter by the Underwriters and the Company as
provided in Section 9(a), the aggregate number of such Shares which remains
unpurchased exceeds one-eleventh of the aggregate number of Shares to be
purchased at such Time of Delivery, or if the Company shall not exercise the
right described in Section 9(b) to require non-defaulting Underwriter to
purchase Shares of a defaulting Underwriter or Underwriters, then this Agreement
(or, with respect to a Subsequent Time of Delivery, the obligations of
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the Underwriters to purchase and of the Company to sell the Optional Shares)
shall thereupon terminate, without liability on the part of any non-defaulting
Underwriter to the Company, except for the expenses to be borne by the Company
and the Underwriters as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
11. SURVIVAL. The respective indemnities, agreements,
representations, warranties and other statements of the Company and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person referred to in
Section 8(e) or the Company or any officer or director or controlling person of
the Company referred to in Section 8(e), and shall survive delivery of and
payment for the Shares. The respective agreements, covenants, indemnities and
other statements set forth in Sections 6 and 8 hereof shall remain in full force
and effect, regardless of any termination or cancellation of this Agreement.
12. NOTICES. All communications hereunder shall be in writing and,
if sent to any of the Underwriters, shall be mailed, delivered or telecopied and
confirmed in writing to the Underwriters in care of Xxxxxxx Xxxxx & Associates,
Inc., 000 Xxxxxxxx Xxxxxxx, Xx. Xxxxxxxxxx, Xxxxxxx 00000, Attention: Xxxx
Xxxxxxx, with a copy to Holland & Knight LLP, 000 Xxxxx Xxxxxx Xxxxx, Xxxxx,
Xxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxxx, Esq.; and if sent to the Company,
shall be mailed, delivered or telecopied and confirmed in writing to the Company
at 0000 X-X Xxxx Xxxx, Xxxxxxxx, Xxxxxxx 00000, Attention: Xxxxxxx X. Xxxx with
a copy to Xxxxxx & Bird LLP, 0000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx
00000-0000, Attention X. Xxxx Xxxxxxxx, Esq.
13. ACTION BY THE UNDERWRITERS. Any action under this Agreement
taken by Xxxxxxx Xxxxx & Associates, Inc. will be binding upon the Underwriters.
14. BINDING EFFECT. This Agreement shall be binding upon, and inure
solely to the benefit of, the Underwriters, the Company and to the extent
provided in Sections 8 and 10 hereof, the officers and directors and controlling
persons referred to therein and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Shares from any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
15. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida without giving effect to any
provisions regarding conflicts of laws.
16. COUNTERPARTS. This Agreement may be executed by any one or more
of the parties hereto in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us one of the counterparts hereof, and upon
the acceptance hereof by Xxxxxxx Xxxxx & Associates, Inc., on behalf of each of
the Underwriters, this letter will constitute a binding agreement among the
Underwriters and the Company. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is pursuant to the authority set
forth in the Master Agreement among Underwriters, a copy of which shall be
submitted to the Company for examination, upon request, but without warranty on
the part of the Underwriters as to the authority of the signers thereof.
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Very truly yours,
SUMMIT HOLDING SOUTHEAST, INC.
By:
------------------------------
Title:
----------------------------
The foregoing Agreement is hereby confirmed and accepted as of the date first
written above at May 21, 1997.
XXXXXXX XXXXX & ASSOCIATES, INC.
By: Xxxxxxx Xxxxx & Associates, Inc.
By:
----------------------------------------------
On behalf of each of the Underwriters
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SCHEDULE I
Number of
Firm Shares
to be
Underwriter Purchased
----------- ---------
Xxxxxxx Xxxxx & Associates, Inc. 1,490,507
ABN AMRO Chicago Corporation 1,490,506
Alex, Xxxxx & Sons Incorporated 110,000
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corp. 110,000
X.X. Xxxxxxx & Sons, Inc. 110,000
Salomon Brothers Inc. 110,000
Xxxxxx X. Xxxxx & Co. Incorporated 70,000
Xxxx Xxxxxxxx Incorporated 70,000
Friedman, Billings, Xxxxxx & Co., Inc. 70,000
Interstate/Xxxxxxx Lane Corporation 70,000
Xxxxxx Xxxxxxxxxx Xxxxx Inc. 70,000
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated 70,000
The Xxxxxxxx-Xxxxxxxx Company, Inc. 70,000
Xxxxx & Company of Florida Inc. 50,000
Xxxxx Xxxxxx & Co., Inc. 50,000
Sandler, X'Xxxxx & Partners, L.P. 50,000
------
TOTAL 4,061,013
=========
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ANNEX I
Pursuant to Section 7(e) of the Underwriting Agreement, Ernst & Young
LLP shall furnish a letter to the Underwriters to the effect that:
(i) they are independent public accountants with respect to the
Company within the meaning the Act and the applicable published rules and
regulations thereunder;
(ii) in their opinion, the financial statements and schedules audited
by them and included in the Prospectus and the Registration Statement comply as
to form in all material respects with the applicable accounting requirements of
the Act and the related published rules and regulations thereunder;
(iii) On the basis of limited procedures, not constituting an audit in
accordance with generally accepted auditing standards, consisting of a reading
of the latest available interim financial statements of the Company, inspection
of the minute books of the Company since the date of the latest audited
financial statements included in the Prospectus, inquiries of officials of the
Company responsible for financial accounting matters and such other inquiries
and procedures as may be specified in such letter, nothing came to their
attention that caused them to believe that:
(A) the unaudited financial statements of the Company
included in the Registration Statement and the Prospectus do not comply
in form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations
thereunder or are not in conformity with generally accepted principles
applied on the basis substantially consistent with that of the audited
financial statements included in the Registration Statement and the
Prospectus;
(B) the unaudited amounts for sales, net revenues and total
and per share amounts of net income included in the Registration
Statement and the Prospectus do not agree with the amounts set forth in
the unaudited financial statements for those same periods or are not in
conformity with generally accepted accounting principles applied on a
basis substantially consistent with that of the corresponding amounts in
the audited financial statements included in the Registration Statement
and the Prospectus;
(C) as of a specified date not more than five days prior to
the date of such letter, there were any changes in the capital stock
(other than the issuance of capital stock upon exercise of options which
were outstanding on the date of the latest balance sheet included in the
Prospectus) or any increase in inventories or the long-term debt or
short-term debt of the Company, or any decreases in net current assets
or net assets or other items specified by the Underwriters, or any
increases in any items specified by the Underwriters, in each case as
compared with amounts shown in the latest balance sheet included in the
Prospectus, except in each case for changes, increases or decreases
which the Prospectus discloses have occurred or may occur or which are
described in such letter;
(D) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred to
in Clause (A) there were any decreases in net sales or operating income
or the total or per share amounts of net income or other items specified
by the Underwriters, or any increases in any items specified by the
Underwriters, in each case as compared with the comparable period of the
preceding year and with any other period of corresponding length
specified by the Underwriters, except in each case for increases or
decreases which the Prospectus discloses have occurred or may occur
which are described in such letter; and
(iv) In addition to the audit referred to in their report(s) included
in the Prospectus and the limited procedures, inspection of minute books,
inquiries and other procedures referred to in paragraph
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(iii) above, they have carried out certain specified procedures, not
constituting an audit in accordance with generally accepted auditing standards,
with respect to certain amounts, percentages and financial information specified
by the Underwriters which are derived from the general accounting records of the
Company, included in the Registration Statement and the Prospectus, or which
appear in Part II of, or in exhibits and schedules to, the Registration
Statement specified by the Underwriters, and have compared certain of such
amounts, percentages and financial information with the accounting records of
the Company and have found them to be in agreement.
References to the Registration Statement and the Prospectus in this
Annex I shall include any amendment or supplement thereto at the date of such
letter.
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ANNEX II
Pursuant to Section 7(e) of the Underwriting Agreement, Xxxxxxx & Xxxxxx
shall furnish a letter to the Underwriters to the effect that:
(i) they are independent public accountants with respect to the
Company within the meaning the Act and the applicable published rules and
regulations thereunder;
(ii) in their opinion, the financial statements and schedules audited
by them and included in the Prospectus and the Registration Statement comply as
to form in all material respects with the applicable accounting requirements of
the Act and the related published rules and regulations thereunder;
(iii) On the basis of limited procedures, not constituting an audit in
accordance with generally accepted auditing standards, consisting of a reading
of the latest available interim financial statements of the Company, inspection
of the minute books of the Company since the date of the latest audited
financial statements included in the Prospectus, inquiries of officials of the
Company responsible for financial accounting matters and such other inquiries
and procedures as may be specified in such letter, nothing came to their
attention that caused them to believe that:
(A) the unaudited financial statements of the Company
included in the Registration Statement and the Prospectus do not comply
in form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations
thereunder or are not in conformity with generally accepted principles
applied on the basis substantially consistent with that of the audited
financial statements included in the Registration Statement and the
Prospectus;
(B) the unaudited amounts for sales, net revenues and total
and per share amounts of net income included in the Registration
Statement and the Prospectus do not agree with the amounts set forth in
the unaudited financial statements for those same periods or are not in
conformity with generally accepted accounting principles applied on a
basis substantially consistent with that of the corresponding amounts in
the audited financial statements included in the Registration Statement
and the Prospectus;
(C) as of a specified date not more than five days prior to
the date of such letter, there were any changes in the capital stock
(other than the issuance of capital stock upon exercise of options which
were outstanding on the date of the latest balance sheet included in the
Prospectus) or any increase in inventories or the long-term debt or
short-term debt of the Company, or any decreases in net current assets
or net assets or other items specified by the Underwriters, or any
increases in any items specified by the Underwriters, in each case as
compared with amounts shown in the latest balance sheet included in the
Prospectus, except in each case for changes, increases or decreases
which the Prospectus discloses have occurred or may occur or which are
described in such letter;
(D) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred to
in Clause (A) there were any decreases in net sales or operating income
or the total or per share amounts of net income or other items specified
by the Underwriters, or any increases in any items specified by the
Underwriters, in each case as compared with the comparable period of the
preceding year and with any other period of corresponding length
specified by the Underwriters, except in each case for increases or
decreases which the Prospectus discloses have occurred or may occur
which are described in such letter; and
(iv) In addition to the audit referred to in their report(s) included
in the Prospectus and the limited procedures, inspection of minute books,
inquiries and other procedures referred to in paragraph
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(iii) above, they have carried out certain specified procedures, not
constituting an audit in accordance with generally accepted auditing standards,
with respect to certain amounts, percentages and financial information specified
by the Underwriters which are derived from the general accounting records of the
Company, included in the Registration Statement and the Prospectus, or which
appear in Part II of, or in exhibits and schedules to, the Registration
Statement specified by the Underwriters, and have compared certain of such
amounts, percentages and financial information with the accounting records of
the Company and have found them to be in agreement.
References to the Registration Statement and the Prospectus in this
Annex I shall include any amendment or supplement thereto at the date of such
letter.
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