Exhibit 1.1
10,000,000 UNITS
WESTERN UNITED FINANCIAL CORPORATION
UNDERWRITING AGREEMENT
----------------------
_________, 0000
Xxxxxxx X'Xxxxx & Partners, L.P.,
as Representative of the several Underwriters
named in Schedule I hereto,
000 Xxxxx Xxxxxx, 0xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Western United Financial Corporation, a Delaware corporation (the
"COMPANY"), proposes, subject to the terms and conditions stated herein, to
issue and sell to the Underwriters named in Schedule I hereto (the
"UNDERWRITERS"), for whom Sandler X'Xxxxx & Partners, L.P. is acting as
representative (the "REPRESENTATIVE"), an aggregate of 10,000,000 units of the
Company (the "FIRM UNITS"), with each unit consisting of one (1) share of the
Company's common stock, par value $0.01 per share (the "COMMON STOCK"), and one
(1) warrant (such warrants being referred to herein collectively as the
"WARRANTS") to purchase Common Stock. The Company also grants to the
Underwriters, subject to the terms and conditions stated herein, an option to
purchase up to 1,500,000 additional Units (the "OPTION UNITS"). The Firm Units
and the Option Units are herein collectively referred to as the "UNITS"; and the
Units, the shares of Common Stock and the Warrants included in the Units, and
the shares of Common Stock issuable upon exercise of the Warrants are herein
referred to as the "SECURITIES". The terms of the Warrants are set forth in the
form of Warrant Agreement (as defined in Section 1(aa) hereof).
1. The Company represents and warrants to, and agrees with, each of
the Underwriters that:
(a) (i) A registration statement on Form S-1 (File No.
333-138263) in respect of the Securities and the Representative's Securities (as
defined in Section 4(b) hereof) has been filed with the Securities and Exchange
Commission (the "COMMISSION"); copies of such registration statement, including
any amendments thereto, the preliminary prospectuses contained therein and the
exhibits, financial statements and schedules, as finally amended and revised,
have heretofore been delivered by the Company to you; such registration
statement, together with any registration statement filed pursuant to Rule
462(b) (the "RULE 462(B) REGISTRATION STATEMENT") under the Securities Act of
1933, as amended (the "ACT"), and including the information contained in the
final prospectus filed with the Commission pursuant to Rule 424(b) under the Act
in accordance with Section 5(a) hereof and deemed by virtue of Rule 430A under
the Act to be part of such registration statement at the time it was declared
effective (the "EFFECTIVE DATE") is referred to herein as the "REGISTRATION
STATEMENT"; each
preliminary prospectus included in the Registration Statement prior to the
Effective Date or filed with the Commission pursuant to Rule 424(a) of the rules
and regulations of the Commission under the Act is hereinafter called a
"PRELIMINARY PROSPECTUS"; the final prospectus relating to the Securities, in
the form filed pursuant to Rule 424(b) under the Act, is hereinafter called the
"PROSPECTUS"; the Registration Statement and any post-effective amendment
thereto, each in the form heretofore delivered to you, and, excluding exhibits
thereto, to each of the other Underwriters, have been declared effective by the
Commission in such form; the Company has complied with all requests of the
Commission for additional or supplemental information; and no stop order
suspending the effectiveness of the Registration Statement, and post-effective
amendment thereto or the Rule 462(b) Registration Statement, if any, has been
issued and no proceeding for that purpose has been initiated or threatened by
the Commission; and
(ii) The Company has filed with the Commission a
registration statement on Form 8-A (File Number 000-_______________) providing
for the registration under the Securities Exchange Act of 1934, as amended (the
"1934 ACT"), of the Units, the Warrants and the Common Stock. The Units, the
Warrants and the Common Stock have been duly listed and admitted and authorized
for trading, subject only to official notice of issuance, on the American Stock
Exchange (sometimes referred to herein as "AMEX"), and the Company knows of no
reason or set of facts which is likely to adversely affect such approval.
(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission. The Prospectus, when
filed with the Commission, will conform in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder. The Prospectus, as of its date and on the applicable Time of
Delivery (as defined in Section 4 hereof), will not, contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED, HOWEVER,
that no representation or warranty is made as to any statements or omissions
made in reliance upon and in conformity with information furnished in writing to
the Company by an Underwriter through the Representative expressly for use
therein, it being agreed that the Underwriters' Information (as defined in
Section 8(a) below) is the only such information.
(c) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration Statement or the
Prospectus will conform, when they became effective or are filed with the
Commission as the case may be, in all material respects to the requirements of
the Act and the rules and regulations of the Commission thereunder; on the
effective date (with respect to the Registration Statement and any further
amendments) and at any Time of Delivery (as defined in Section 4 hereof) (with
respect to the Prospectus and any amendment or supplement thereto), the
Registration Statement did not or will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading; and when
filed and at any Time of Delivery, the Prospectus (together with any supplement
thereto) will not include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that this representation and warranty shall not apply to any statements
or omissions made in reliance upon and in conformity with information furnished
in writing to the Company by an Underwriter through the Representative expressly
for use therein,
2
it being agreed that the Underwriters' Information is the only such information.
Each Preliminary Prospectus and the Prospectus when filed, if filed by
electronic transmission, pursuant to XXXXX (except as may be permitted by
Regulation S-T under the Act), was identical to the copy thereof delivered to
the Underwriters for use in connection with the offer and sale of the Units.
(d) As of the Applicable Time, the Statutory Prospectus and
the information included on Schedule II hereto, considered together
(collectively, the "GENERAL DISCLOSURE PACKAGE") did not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED, HOWEVER,
that no representation or warranty is made as to any statements or omissions
made in reliance upon and in conformity with information furnished in writing to
the Company by an Underwriter through the Representative expressly for use
therein, it being agreed that the Underwriters' Information is the only such
information. As used in this Agreement:
"APPLICABLE TIME" means ___:00 [a/p]m (Eastern time) on the date
of this Agreement; and
"STATUTORY PROSPECTUS" as of any time means the most recent
Preliminary Prospectus relating to the Securities that is
included in the Registration Statement immediately prior to such
time.
(e) The Company has no subsidiaries and owns no interest in
any company, corporation, partnership, joint venture or similar entity.
(f) Since the respective dates as of which information is
given in the Registration Statement, the General Disclosure Package and the
Prospectus, except as set forth or contemplated in the each of the General
Disclosure Package and the Prospectus, (A) there has not been any change in the
capital stock or long-term debt of the Company or any material adverse change,
or any development involving a prospective material adverse change, in or
affecting the general affairs, management, business prospects, financial
position, stockholders' equity or results of operations of the Company (a
"MATERIAL ADVERSE EFFECT"), (B) there have been no transactions entered into by
the Company, other than those in the ordinary course of business, which are
material with respect to the Company, taken as a whole, and (C) there has been
no dividend or distribution of any kind declared, paid or made by the Company on
any class of its capital stock.
(g) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its properties and
conduct its business as described in each of the General Disclosure Package and
the Prospectus, and has been duly qualified as a foreign corporation for the
transaction of business 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.
3
(h) The Company has the authorized capitalization as set
forth in each of the General Disclosure Package and the Prospectus under the
caption "CAPITALIZATION," and all of the issued and outstanding securities of
the Company have been duly and validly authorized and issued, are fully paid and
nonassessable, have been issued in compliance with federal and state securities
laws, and conform to the description of such securities contained in each of the
General Disclosure Package and the Prospectus. The Private Placement Units and
Private Placement Common Stock (each as defined in Section 1(ii) below) have
been duly and validly authorized and, when issued and delivered against payment
therefor, will be fully paid and nonassessable, will be issued in compliance
with federal and state securities laws, and will conform to the description of
such securities contained in each of the General Disclosure Package and the
Prospectus. No such securities were or will be issued in violation of the
preemptive or similar rights of any security holder of the Company, and no
person has any preemptive or similar right to purchase any shares of capital
stock or other securities of the Company. Based on the assumptions stated in the
Registration Statement, the General Disclosure Package and the Prospectus, the
Company will have on the Closing Date the adjusted capitalization set forth
therein.
(i) The Securities to be issued and sold by the Company to
the Underwriters hereunder have been duly and validly authorized. The shares of
Common Stock included as part of the Units and issuable upon exercise of the
Warrants, when issued and delivered against payment therefor as provided in
accordance with the terms thereof, will be duly and validly issued and fully
paid and nonassessable. Each of such Securities will conform to the description
of the Units, Common Stock and Warrants contained in each of the General
Disclosure Package and the Prospectus. The holders thereof are not and will not
be subject to personal liability by reason of being such holders. The forms of
certificates for the Securities conform to the corporate law of the jurisdiction
of the Company's incorporation. The Representative's Purchase Option (as defined
in Section 4(b) below), the Representative's Warrants (as defined in section
4(b) below) and the Warrants, when issued, will constitute valid and binding
obligations of the Company to issue and sell, upon exercise thereof and payment
of the respective exercise prices therefor, the number and type of securities of
the Company called for thereby in accordance with the terms thereof and such
Representative's Purchase Option, the Representative's Warrants and the Warrants
are enforceable against the Company in accordance with their respective terms,
except (i) as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally, (ii) as
enforceability of any indemnification or contribution provision may be limited
under the Federal and state securities laws, and (iii) that the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to the equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
(j) Except as described in each of the General Disclosure
Package and the Prospectus, (A) there are no outstanding rights (contractual or
otherwise), warrants or options to acquire, or instruments convertible into or
exchangeable for, or agreements or understandings with respect to the sale or
issuance of, any shares of capital stock of or other securities in the Company
and (B) 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 or otherwise register any securities of the
Company owned or to be owned by such person.
4
(k) This Agreement, the Warrant Agreement, the Trust
Agreement (as defined in Section 4(a) below), the Subscription Agreement (as
defined in Section 1(ii) below) and the Escrow Agreement (as defined in Section
1(cc) below) have been duly and validly authorized by the Company and
constitute, and the Representative's Purchase Option, has been duly validly
authorized by the Company and, when executed and delivered, will constitute the
valid and binding agreements of the Company, enforceable against the Company in
accordance with their respective terms, except (i) as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, (ii) as enforceability of any indemnification or
contribution provision may be limited under the Federal and state securities
laws, and (iii) that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
(l) The issue and sale of the Securities and the
Representative's Securities by the Company and the compliance by the Company
with all of the provisions of this Agreement, the Warrant Agreement, the
Representative's Purchase Option, the Trust Agreement, the Subscription
Agreement and the Escrow Agreement, and the consummation of the transactions
herein and therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
any contract, indenture, mortgage, deed of trust, loan agreement, note, lease or
other agreement or instrument to which the Company is a party or by which the
Company is bound or to which any of the property or assets of the Company is
subject (collectively, the "AGREEMENTS AND INSTRUMENTS"), nor will any such
action (A) result in any violation of the provisions of the certificate of
incorporation or by-laws of the Company or any law, statute or any order, rule
or regulation of any federal, state, local or foreign court, arbitrator,
regulatory authority or governmental agency or body (each, a "GOVERNMENTAL
ENTITY") having jurisdiction over the Company or any of its properties or (B)
constitute a Repayment Event (as defined below) under, or result in the creation
or imposition of any lien, charge or other encumbrance upon any assets or
operations of the Company pursuant to, any of the Agreements and Instruments
except pursuant to the Trust Agreement and except pursuant to the repayment of
that certain Promissory Note between the Company and Xxxxxxx Xxxxxx, dated
October 18, 2006; and no consent, approval, authorization, order, registration
or qualification of or with any such Governmental Entity is required for the
issue and sale of the Securities or the Representative's Securities or the
consummation by the Company of the transactions contemplated by this Agreement,
the Warrant Agreement, the Representative's Purchase Option, the Trust
Agreement, the Subscription Agreement and the Escrow Agreement, except (i) the
registration under the Act and the 1934 Act, of the Securities, (ii) as may be
required under the rules and regulations of the National Association of
Securities Dealers, Inc. ("NASD") (iii) such consents, approvals,
authorizations, registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and distribution of
the Units by the Underwriters or the purchase and sale of the Representative's
Securities, and (iv) any regulatory approvals required in order for the Company
to consummate the Business Combination. As used herein, a "REPAYMENT EVENT"
means any event or condition which gives the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder's behalf)
the right to require the repurchase, redemption or repayment of all or a portion
of such indebtedness by the Company.
5
(m) The Company is not (A) in violation of its certificate
of incorporation or by-laws or (B) in default in the performance or observance
of any obligation, agreement, covenant or condition contained in any of the
Agreements and Instruments.
(n) The financial statements included in each of the
Registration Statement, the General Disclosure Package and the Prospectus,
together with the supporting schedules, if any, and notes, present fairly the
financial condition of the Company at the dates indicated and the results of
operations and cash flows of the Company for the periods specified. Such
financial statements and supporting schedules, if any, have been prepared in
conformity with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved; such financial statements and
related schedules comply with the applicable accounting requirements of the Act
and the rules and regulations promulgated thereunder. The selected financial
data and the summary financial information included in each of the Registration
Statement, the General Disclosure Package and the Prospectus present fairly the
information shown therein and have been compiled on a basis consistent with that
of the audited financial statements included in the Registration Statement, the
General Disclosure Package and the Prospectus. There are no financial statements
(historical or pro forma) that are required to be included in the Registration
Statement, the General Disclosure Package or the Prospectus that are not
included.
(o) Vavrinek, Trine, Day & Co., LLP ("VTD"), who have
certified the financial statements and supporting schedules of the Company,
included in the Registration Statement, the General Disclosure Package and the
Prospectus are independent registered public accountants as required by the Act
and the rules and regulations of the Commission thereunder and the Public
Company Accounting Oversight Board of the United States ("PCAOB"); and such
accountants are not in violation of the auditor independence requirements of the
Xxxxxxxx-Xxxxx Act of 2002 (the "XXXXXXXX-XXXXX ACT") with respect to the
Company.
(p) The Company maintains a system of accounting controls
sufficient to provide reasonable assurances that (A) transactions are executed
in accordance with the management's general or specific authorization, (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability, (C)
access to assets is permitted only in accordance with the management's general
or specific authorization and (D) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(q) Except as disclosed in each of the General Disclosure
Package and the Prospectus, the Company is conducting its respective businesses
in compliance with all statutes, laws, rules, regulations, judgments, decisions,
directives, orders and decrees of any Governmental Entity applicable to the
Company.
(r) Other than as set forth in each of the General
Disclosure Package and the Prospectus, there are no legal or governmental
actions, suits, investigations or proceedings before or by any Governmental
Entity, now pending or, to the best of the Company's knowledge, threatened or
contemplated by Governmental Entities or threatened by others, to which the
Company is a party or of which any property or asset of the Company is the
subject (A) that are
6
required to be disclosed in the Registration Statement by the Act or by the
rules and regulations of the Commission thereunder and not disclosed therein or
(B) which, if determined adversely to the Company, would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect; and there
are no contracts or documents of the Company that are required to be described
in the Registration Statement or to be filed as exhibits thereto by the Act or
by the rules and regulations of the Commission thereunder which have not been so
described and filed.
(s) The statistical and market related data contained in
each of the General Disclosure Package, the Prospectus or the Registration
Statement are based on or derived from sources which the Company believes are
reliable and accurate.
(t) Except with respect to the letter agreement between
Western United Financial Corporation and the Representative, the form of which
is filed as Exhibit 10.5 to the Registration Statement (the "WARRANT PURCHASE
AGREEMENT"), neither the Company nor any affiliate of the Company nor any person
acting on their behalf has taken, nor will the Company or any affiliate or any
person acting on their behalf take, directly or indirectly, any action which is
designed to or which has constituted or which would be expected to cause or
result in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities; the transactions
contemplated by the Warrant Purchase Agreement will comply with Rule 10b5-1 and
Rule 10b-18 under the 1934 Act and will follow the guidelines of the Division of
Market Regulation as set forth in the SEC No-Action Letter, dated October 12,
2005, to Key Hospitality Acquisition Corporation.
(u) The Company is not and, after giving effect to the
offering and sale of the Securities, and after receipt of payment for the
Securities and the application of such proceeds as described in each of the
General Disclosure Package and the Prospectus, will not be an "investment
company" or an entity "controlled" by an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended (the "INVESTMENT
COMPANY ACT").
(v) Neither the Company nor, to the knowledge of the
Company, any director, officer, agent, employee or other person associated with
or acting on behalf of the Company has (A) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; (B) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee; (C) violated or is in
violation of any provision of the Foreign Corrupt Practices Act of 1977; (D)
made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment; or (E) made any payment of funds to the Company or received or retained
funds in violation of any law, rule or regulation, which payment, receipt or
retention of funds is of a character required to be disclosed in each of the
General Disclosure Package and the Prospectus, that is not described in each of
the General Disclosure Package and the Prospectus as required.
(w) The operations of the Company are and have been
conducted at all times in compliance with applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the money laundering statutes of all jurisdictions, the rules
and regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental agency
7
(collectively, the "MONEY LAUNDERING LAWS") and no action, suit or proceeding by
or before any court or governmental agency, authority or body or any arbitrator
involving the Company with respect to the Money Laundering Laws is pending or,
to the best knowledge of the Company, threatened.
(x) No relationship, direct or indirect, exists between or
among the Company, on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company, on the other, that is required by the Act
to be described in each of the General Disclosure Package and the Prospectus and
that is not so described.
(y) Except as described in each of the General Disclosure
Package and the Prospectus, there are no material off-balance sheet
transactions, arrangements, obligations (including contingent obligations), or
any other relationships with unconsolidated entities or other persons, that may
have a material current or future effect on the Company's financial condition,
changes in financial condition, results of operations, liquidity, capital
expenditures, capital resources, or significant components of revenues or
expenses.
(z) The Company is in compliance with the provisions of the
Xxxxxxxx-Xxxxx Act, applicable to the Company, and the rules and regulations of
the Commission thereunder applicable to the Company and the Company will comply
with those provisions of the Xxxxxxxx-Xxxxx Act that will become effective, if
applicable to the Company, in the future upon their effectiveness; and the
Company is in compliance with the applicable rules and regulations of the
American Stock Exchange. Without limiting the generality of the foregoing, there
is and has been no failure on the part of the Company or any of the Company's
directors or officers, in their capacities as such, to comply with (as and when
applicable), and immediately following the effectiveness of the Registration
Statement the Company will be in compliance with, Sections 301, 402, 802 and
1102 of the Xxxxxxxx-Xxxxx Act and Part 8 of the American Stock Exchange's "AMEX
Company Guide," as amended. Further, there is and has been no failure on the
part of the Company or any of the Company's directors or officers, in their
capacities as such, to comply with (as and when applicable), and immediately
following the effectiveness of the Registration Statement the Company will be in
compliance with, all other provisions of the Xxxxxxxx-Xxxxx Act and the American
Stock Exchange corporate governance requirements set forth in the AMEX Company
Guide, as amended.
(aa) The Company has entered into a warrant agreement with
respect to the Warrants and the Representative's Warrants with Xxxxx Fargo Bank,
National Association ("XXXXX FARGO") substantially in the form of Exhibit 4.4 to
the Registration Statement (the "WARRANT AGREEMENT").
(bb) The Company has obtained the duly executed agreements
filed as Exhibits 10.7 through 10.13 to the Registration Statement (the "INSIDER
LETTERS").
(cc) The Initial Stockholders have entered into an escrow
agreement (the "ESCROW AGREEMENT") with Xxxxx Fargo (the "ESCROW AGENT")
substantially in the form of Exhibit 10.6 to the Registration Statement. To the
Company's knowledge, the Escrow Agreement is enforceable against each of the
Initial Stockholders (except: (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting
8
creditors' rights generally; (ii) as enforceability of any indemnification or
contribution provision may be limited under the federal and state securities
laws; and (iii) that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought) and
will not, with or without the giving of notice or the lapse of time or both,
result in a breach of, or conflict with any of the terms and provisions of, or
constitute a default under, any agreement or instrument to which any of the
Initial Stockholders is a party.
(dd) The Company has entered into the Trust Agreement with
respect to certain proceeds of the offering, as well as the gross proceeds from
the issuance and sale of the Private Placement Common Stock, substantially in
the form of Exhibit 10.3 to the Registration Statement.
(ee) The Company does not have any specific Business
Combination under consideration and the Company has not (nor has anyone on its
behalf) contacted any prospective acquisition candidate or had any discussions,
formal or otherwise, with respect to such a transaction.
(ff) Upon delivery and payment for the Firm Units at the
First Time of Delivery, the Company will not be subject to Rule 419 under the
Act and none of the Company's outstanding securities will be deemed to be a
"xxxxx stock" as defined in Rule 3a-51-12 under the 1934 Act.
(gg) To the Company's knowledge, all information contained in
the questionnaires completed by each of the Initial Stockholders and provided to
the Representative as an exhibit to his or her Insider Letter is true and
correct in all material respects and the Company has not become aware of any
information which would cause the information disclosed in the questionnaires by
each Initial Stockholder to become inaccurate and incorrect in any material
respect.
(hh) Except as described in the Registration Statement, the
General Disclosure Package and the Prospectus, there are no claims, payments,
arrangements, agreements or understandings relating to the payment of a
finder's, consulting or origination fee by the Company or any Initial
Stockholder with respect to the sale of the Securities hereunder or any other
arrangements, agreements or understandings of the Company or, to the Company's
knowledge, any Initial Stockholder that may affect the Underwriters'
compensation, as determined by the NASD. The Company has not made any direct or
indirect payments (in cash, securities or otherwise) to: (i) any person, as a
finder's fee, consulting fee or otherwise, in consideration of such person
raising capital for the Company or introducing to the Company persons who raised
or provided capital to the Company; (ii) to any NASD member; or (iii) to any
person or entity that has any direct or indirect affiliation or association with
any NASD member, within the twelve months prior to the effective date of the
Registration Statement. None of the net proceeds of the offering will be paid by
the Company to any participating NASD member or its affiliates, except as
specifically authorized herein and except as may be paid in connection with an
initial Business Combination and/or one or more other transactions after the
initial Business Combination, including without limitation in connection with
the payment of investment banking fees, fees in connection with fairness
opinions and the like. Based on
9
questionnaires distributed to such persons, no officer, director or any
beneficial owner of the Company's unregistered securities has any direct or
indirect affiliation or association with any NASD member. The Company will
advise the Representative if it learns that any such person is or becomes an
affiliate or associated person of an NASD member participating in the offering.
(ii) The Company and Western United Funding, LLC ("WUF") have
entered into that certain Subscription Agreement (the "SUBSCRIPTION AGREEMENT"),
dated as of October 26, 2006, pursuant to which WUF is irrevocably committed to
purchase from the Company, subject to the terms of the Subscription Agreement,
62,500 Units (the "PRIVATE PLACEMENT UNITS") and up to an aggregate of
$1,000,000 of Common Stock (the "PRIVATE PLACEMENT COMMON STOCK").
2. Subject to the terms and conditions herein set forth, (a) the
Company agrees to issue and 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 per unit of $7.52, which amount is net of discounts and
commissions, the number of Firm Units set forth opposite the name of such
Underwriter in Schedule I hereto and (b) in the event and to the extent that the
Underwriters shall exercise the election to purchase Option Units as provided
below, the Company agrees to issue and sell to each of the Underwriters, and
each of the Underwriters agrees, severally and not jointly, to purchase from the
Company, at the purchase price per share set forth in clause (a) of this Section
2, that portion of the number of Option Units as to which such election shall
have been exercised (to be adjusted by you so as to eliminate fractional shares)
determined by multiplying such number of Option Units by a fraction, the
numerator of which is the maximum number of Option Units which 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 Option
Units that all of the Underwriters are entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to
purchase at their election up to 1,500,000 Option Units, at the purchase price
per share set forth in the paragraph immediately above, for the sole purpose of
covering overallotments in the sale of the Firm Units. Any such election to
purchase Option Units may be exercised in whole or in part only by written
notice from you to the Company, which notice shall be given within a period of
30 calendar days after the date of this Agreement and shall set forth the
aggregate number of Option Units to be purchased and the date on which such
Option Units are to be delivered. In no event shall the Company be obligated to
deliver such Option Units earlier than the First Time of Delivery (as defined in
Section 4 hereof) or, unless you and the Company otherwise agree in writing,
earlier than two or later than ten business days after the date of such notice.
It is understood that each Underwriter has authorized the
Representative, for such Underwriter's account, to accept delivery of, receipt
for, and make payment of the purchase price for, the Firm Units and the Option
Units, if any, which such Underwriter has agreed to purchase. Sandler X'Xxxxx &
Partners, L.P., individually and not as representative of the Underwriters, may
(but shall not be obligated to) make payment of the purchase price for the Firm
Units or the Option Units, if any, to be purchased by any Underwriter whose
funds have not been received by Sandler X'Xxxxx & Partners, L.P. by the relevant
Time of Delivery but such payment shall not relieve such Underwriter from its
obligations hereunder.
10
3. Upon the authorization by you of the release of the Firm Units,
the several Underwriters propose to offer the Firm Units for sale upon the terms
and conditions set forth in the Prospectus.
4. (a) The Units to be purchased by each Underwriter hereunder,
in such authorized denominations and registered in such names as the
Representative may request upon at least forty-eight hours prior notice to the
Company, shall be delivered by or on behalf of the Company to the
Representative, through the facilities of the Depository Trust Company ("DTC"),
for the account of such Underwriter, against payment by or on behalf of such
Underwriter of the purchase price therefor by wire transfer of Federal (same
day) funds payable as follows: (i) with respect to the Firm Units, (A)
$75,500,000 (which amount includes $1,600,000, or $0.16 per Unit, as a deferred
discount to be paid to the Underwriters upon consummation of the initial
Business Combination) shall be deposited in the trust fund established by the
Company for the benefit of the public stockholders as described in the
Registration Statement (the "TRUST FUND") pursuant to the terms of an investment
management trust agreement (the "TRUST AGREEMENT") and (B) $500,000 shall be
paid to the order of the Company, and (ii) with respect to the Option Units,
$7.68 per Option Unit sold shall be deposited in the Trust Fund pursuant to the
Trust Agreement (which amount includes $0.16 per Option Unit to be held in the
Trust Fund as a deferred discount to be paid to the Underwriters upon
consummation of the initial Business Combination). The time and date of such
delivery and payment shall be, with respect to the Firm Units, 9:30 a.m.,
Eastern Time, on _______, 2007 or such other time and date as the Representative
and the Company may agree upon in writing, and, with respect to the Option
Units, 9:30 a.m., New York time, on the date specified by the Representative in
the written notice given by the Representative of the Underwriters' election to
purchase such Option Units, or such other time and date as the Representative
and the Company may agree upon in writing. Such time and date for delivery of
the Firm Units is herein called the "FIRST TIME OF DELIVERY," such time and date
for delivery of the Option Units, if not the First Time of Delivery, is herein
called the "SECOND TIME OF DELIVERY," and each such time and date for delivery,
including delivery of the Representative's Purchase Option, is herein called a
"TIME OF DELIVERY."
(b) The Company hereby agrees to issue and sell to the
Representative on the date hereof an option in substantially the form filed as
Exhibit 4.5 to the Registration Statement ("REPRESENTATIVE'S PURCHASE OPTION")
for the purchase of an aggregate of five hundred thousand (500,000) units (the
"REPRESENTATIVE'S UNITS") for an aggregate purchase price of $100.00. Each of
the Representative's Units is identical to the Firm Units, except that the
Warrants included in the Representative's Units ("REPRESENTATIVE'S WARRANTS")
have an exercise price of seven dollars and fifty cents ($7.50), which is equal
to one hundred twenty-five percent (125%) of the exercise price of warrants sold
to the public. The Representative's Purchase Option shall be exercisable, in
whole or in part, commencing on the later of the consummation of an acquisition
by the Company, through a merger, capital stock exchange, asset acquisition,
exchangeable share transaction, stock purchase or other similar business
combination, of one or more banks, thrifts and their respective holding
companies and other financial services organizations located in and around
California ("BUSINESS COMBINATION"), or one year from the date hereof, and
expiring on the four-year anniversary of the date hereof (or, if earlier, the
date on which the Warrants shall have been redeemed) at an initial exercise
price per Representative's Unit of ten dollars ($10.00). The Representative
understands and agrees that there are restrictions against transferring the
11
Representative's Purchase Option. Delivery and payment for the Representative's
Purchase Option shall be made on the Closing Date. The Company shall deliver to
the Underwriter, upon payment therefor, certificates for the Representative's
Purchase Option in the name or names and in such authorized denominations as the
Representative's may request. The Representative's Purchase Option, the
Representative's Units, the Representative's Warrants and the shares of Common
Stock issuable upon exercise of the Representative's Warrants are hereinafter
referred to collectively as the "REPRESENTATIVE'S SECURITIES."
(c) The documents to be delivered at each Time of Delivery
by or on behalf of the parties hereto pursuant to Section 7 hereof, including
the cross receipt for the Units and any additional documents requested by the
Underwriters pursuant to Section 7(i) hereof, will be delivered at the offices
of Jenkens & Xxxxxxxxx, P.C. in Dallas, Texas (the "CLOSING LOCATION"), and the
Units will be delivered through the facilities of DTC, all at such Time of
Delivery. A meeting will be held at the Closing Location at _____ p.m., Eastern
Time, on the New York Business Day next preceding such Time of Delivery, at
which meeting the final drafts of the documents to be delivered pursuant to the
preceding sentence will be available for review by the parties hereto. For the
purposes of this Section 4, "NEW YORK BUSINESS DAY" shall mean each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in New York are generally authorized or obligated by law or
executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and
to file such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Act; to make no further
amendment or any supplement to the Registration Statement or Prospectus which
you shall not previously have been advised and furnished with a copy and to
which you shall have reasonably objected in writing; to advise you, promptly
after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any supplement to
the Prospectus or any amended Prospectus has been filed and to furnish you with
copies thereof; to advise you, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus, of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement, any Preliminary Prospectus or the Prospectus or
for additional information; and, in the event of the issuance of any stop order
or of any order preventing or suspending the use of any Preliminary Prospectus
or the Prospectus or suspending any such qualification, promptly to use its
reasonable efforts to obtain the withdrawal of such order.
(b) The Company represents and agrees that it has not made
and will not make any offer relating to the Units that would constitute an
"issuer free writing prospectus," as defined in Rule 433 under the Act, or that
would otherwise constitute a "free writing prospectus," as defined in Rule 405
under the Act.
12
(c) Promptly from time to time to take such action as you
may reasonably request to qualify the Securities for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Securities, 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;
(d) On the second New York Business Day succeeding the date
of this Agreement and from time to time, to furnish the Underwriters with copies
of the Prospectus in New York City in such quantities as you may from time to
time reasonably request, and, if the delivery of a prospectus is required at any
time prior to the expiration of nine months after the time of issue of the
Prospectus in connection with the offering or sale of the Units and if at such
time any event shall 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 the light of the circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any other reason it shall be
necessary during such period to amend or supplement the Prospectus in order to
comply with the Act, to notify you and upon your request to prepare and furnish
without charge to each Underwriter and to any dealer in securities as many
copies as you may from time to time reasonably request of an amended Prospectus
or a supplement to the Prospectus which will correct such statement or omission
or effect such compliance, and in case any Underwriter is required to deliver a
prospectus in connection with sales of any of the Units at any time nine months
or more after the time of issue of the Prospectus, upon your request but at the
expense of such Underwriter, to prepare and deliver to such Underwriter as many
copies as you may request of an amended or supplemented Prospectus complying
with Section 10(a)(3) of the Act;
(e) To make generally available to its security holders as
soon as practicable, but in any event not later than fifteen months after the
effective date of the Registration Statement (as defined in Rule 158(c) under
the Act), an earning statement of the Company (which need not be certified or
audited unless required by the Act or the rules and regulations thereunder)
complying with Section 11(a) of the Act and the rules and regulations thereunder
(including, at the option of the Company, Rule 158);
(f) Upon your request, during a period of five years from
the effective date of the Registration Statement, or until such earlier time
upon which the Company is required to be liquidated, to furnish to you copies of
all reports or other communications (financial or other) furnished to security
holders, and to deliver to you (i) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the Commission or
any national securities exchange on which any class of securities of the Company
is listed; and (ii) such additional information concerning the business and
financial condition of the Company as you may from time to time reasonably
request.
(g) For a period of five years from the effective date of
the Registration Statement, or until such earlier time upon which the Company is
required to be liquidated, the Company will use its reasonable efforts to
maintain the registration of the Securities and the Representative's Securities
under the provisions of the Exchange Act. For a period of five years
13
from the effective date of the Registration Statement, or until such earlier
time upon which the Company is required to be liquidated or the Representative
no longer holds the Representative's Purchase Option, the Company will not
deregister the Units under the Exchange Act without the prior written consent of
the Representative.
(h) For a period of five years from the effective date of
the Registration Statement, or until such earlier time upon which the Company is
required to be liquidated, the Company, at its expense, shall cause its
regularly engaged independent registered public accounting firm to review (but
not audit) the Company's financial statements for each of the first three fiscal
quarters prior to the announcement of quarterly financial information and the
filing of the Company's Form 10-Q quarterly report.
(i) Prior to the First Time of Delivery, the Company will
furnish to the Underwriters, as soon as they have been prepared by or are
available to the Company, a copy of any unaudited interim financial statements
of the Company for any period subsequent to the period covered by the most
recent financial statements appearing in the Registration Statement the General
Disclosure Package and the Prospectus;
(j) The Company will not consummate a Business Combination
with any entity which is affiliated with any Initial Stockholder. The Company
shall not pay any Initial Stockholder or any of their affiliates or family
members any fees or compensation from the Company, for services rendered to the
Company prior to, or in connection with, the consummation of an initial Business
Combination; provided that the Initial Stockholders shall be entitled to
reimbursement from the Company for their reasonable out-of-pocket expenses
incurred in connection with seeking and consummating an initial Business
Combination;
(k) Until such time upon which the Company is required to be
liquidated, the Company will use its reasonable efforts to effect and maintain
the listing of the Securities and the Representative's Securities on AMEX.
Unless the Securities are listed or quoted, as the case may be, on the New York
Stock Exchange, the American Stock Exchange or the Nasdaq Global Market, the
Company will apply to be included in Standard & Poor's Daily News and
Corporation Records Corporate Descriptions for a period of five years from the
consummation of a Business Combination and shall take such steps as may be
necessary to obtain a secondary market trading exemption for the Company's
securities in the State of California. Unless the Securities are listed or
quoted, as the case may be, on the New York Stock Exchange, the American Stock
Exchange or the Nasdaq Global Market, the Company shall also take such other
action as may be reasonably requested by the Representative to obtain a
secondary market trading exemption in such other states as may be requested by
the Representative.
(l) The Company will take all necessary actions to ensure
that, upon and at all times after the effectiveness of the Registration
Statement, it will be in compliance with (i) all applicable provisions of the
Xxxxxxxx-Xxxxx Act that are then in effect and shall take such steps as are
necessary to ensure that it will be in compliance with other applicable
provisions of the Xxxxxxxx-Xxxxx Act not currently in effect upon the
effectiveness of such provisions and (ii) the requirements of the American Stock
Exchange's AMEX Company Guide.
14
(m) For a period equal to five years from the date hereof or
until such earlier time upon which the Company is required to be liquidated, the
Company will not take any action or actions which may prevent or disqualify the
Company's use of Form S-1 (or other appropriate form) for the registration of
the Warrants and the Representative's Warrants under the Act.
(n) Except with respect to the Warrant Purchase Agreement,
the Company will not take, directly or indirectly, any action designed to cause
or result in, or that has constituted or might reasonably be expected to
constitute, the stabilization or manipulation of the price of any securities of
the Company.
(o) The Company will maintain a system of internal
accounting controls sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary in order to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(p) To use the net proceeds received by it from the sale of
the Units pursuant to this Agreement in the manner specified in each of the
General Disclosure Package and the Prospectus under the caption "Use of
Proceeds" in all material respects.
(q) The Company will maintain a transfer agent, warrant
agent and, if necessary under the jurisdiction of incorporation of the Company,
a registrar for the Securities.
(r) If the Company elects to rely on Rule 462(b), the
Company shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 p.m., Washington, D.C. time, on the date of
this Agreement, and the Company shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement or give
irrevocable instructions for the payment of such fee pursuant to Rule 111(b)
under the Act.
(s) To file with the Commission such information on Form
10-K or Form 10-Q as may be required by Rule 463 under the Act.
(t) The Company shall, on the date hereof, retain its
independent public accountants to audit the financial statements of the Company
as of the Closing Date (the "AUDITED FINANCIAL STATEMENTS") reflecting the
receipt by the Company of the proceeds of the initial public offering. As soon
as the Audited Financial Statements become available, the Company shall promptly
file a Current Report on Form 8-K with the Commission, which Report shall
contain the Company's Audited Financial Statements.
(u) In the event any person or entity (excluding attorneys,
accountants, engineers, environmental or labor consultants, investigatory firms,
technology consultants and specialists and similar service providers that are
not affiliated or associated with the NASD and are not brokers or finders) is
engaged, in writing, to assist the issuer in finding or evaluating a merger
candidate, the Company will provide the following to the NASD and the
Representative
15
prior to consummation of an initial Business Combination: (i) copies of
agreements governing said services (which details or agreements may be
appropriately redacted to account for privilege or confidentiality concerns),
and (ii) a justification as to why the person or entity providing the merger and
acquisition services should not be considered an "underwriter or related person"
with respect to the Company's initial public offering as such term is defined in
Rule 2710(a)(6) of the NASD Conduct Rules and the Company agrees that proper
disclosure of such arrangement or potential arrangement will be made in the
proxy statement which the Company will file for purposes of soliciting
stockholder approval for the initial Business Combination.
(v) The Company shall cause the portion of the proceeds of
the offering to be held in the Trust Fund to be invested only in "government
securities" or money market funds (as specified in the Trust Agreement) with
specific maturity dates as set forth in the Trust Agreement and disclosed in the
Prospectus. The Company will otherwise use its reasonable efforts to conduct its
business (both prior to and after the consummation of an initial Business
Combination) in a manner so that it will not become subject to the Investment
Company Act.
(w) Other than in connection with the consummation of a
Business Combination, the Company hereby agrees that until the Company
consummates a Business Combination, it shall not issue any shares of Common
Stock or any options or other securities convertible into Common Stock, or any
shares of preferred stock which participate in any manner in the Trust Fund or
which vote as a class with the Common Stock on a Business Combination.
(x) The Company hereby agrees that prior to commencing its
due diligence investigation of any entity which the Company seeks to acquire
(the "TARGET BUSINESS") or obtaining the services of any vendor, it will use its
reasonable efforts to attempt to cause the Target Business or the vendor, as the
case may be, to execute a waiver letter in the form attached hereto as Annexes I
and II, respectively. It is understood that the Company may not be able to
obtain such letters in some or all circumstances and that, nonetheless, the
Company may still proceed with such due diligence investigations and enter into
agreements with, or obtain services from, such parties, as applicable.
Furthermore, each Initial Stockholder, of the Company shall execute a waiver
letter in the form attached hereto as Annex III.
(y) The Company shall not take any action or omit to take
any action that would cause the Company to be in breach or violation of its
certificate of incorporation or by-laws; and
(z) The Company agrees: (i) that, prior to the consummation
of any Business Combination, it will submit such transaction to the Company's
stockholders for their approval (the "INITIAL TRANSACTION VOTE") even if the
nature of the acquisition is such as would not ordinarily require stockholder
approval under applicable state law; and (ii) that, in the event that the
Company does not effect a Business Combination within 24 months from the
consummation of this offering, the Company will be liquidated as described in
the Prospectus. With respect to the Initial Transaction Vote, the Company has
entered into agreements with all of the Initial Stockholders to vote the shares
of Common Stock owned by them immediately prior to this offering, including
without limitation the shares of Common Stock underlying the Private Placement
Units, in accordance with the majority of IPO Shares (as hereinafter defined)
voted, in
16
person or by proxy, at a meeting of the Company's stockholders called for the
purpose of obtaining the Initial Transaction Vote. At the time the Company seeks
approval of any potential Business Combination, the Company will offer each of
the holders of the Company's Common Stock issued in this offering (the "IPO
SHARES") the right to convert such holder's IPO Shares at a per share price
equal to the amount in the Trust Fund (inclusive of any interest income therein,
minus taxes and accrued interest not exceeding $1,000,000 in the aggregate
distributable to the Company as described in the Prospectus, and excluding any
deferred underwriting discounts and commissions) on the record date (the
"CONVERSION PRICE") for determination of stockholders entitled to vote upon the
proposal to approve such Business Combination (the "RECORD DATE") divided by the
total number of IPO Shares (including any shares held by the Initial
Stockholders). If the Company elects to proceed with a Business Combination, it
will convert shares, based upon the Conversion Price, from those holders of IPO
Shares who affirmatively requested such conversion and who voted against the
initial Business Combination. If a majority in interest of the IPO Shares voted
are not voted in favor of any initial Business Combination or the holders of 20%
or more in interest of the IPO Shares vote against approval of any potential
initial Business Combination and exercise their conversion rights, the Company
will not proceed with such initial Business Combination and will not covert such
shares.
(aa) The Company shall advise the NASD if it is aware that
any 5% or greater stockholder of the Company (other than the Representative or
its affiliates) becomes an affiliate or associated person of an NASD member
participating in the distribution of the Securities.
(bb) The Company agrees that it will use its reasonable
efforts to prevent the Company from becoming subject to Rule 419 under the Act
prior to the consummation of any Business Combination, including, but not
limited to, using its reasonable efforts to prevent any of the Company's
outstanding securities from being deemed to be a "xxxxx stock" as defined in
Rule 3a-51-1 under the Exchange Act during such period.
(cc) The Company agrees that the initial Target Business(es)
that it acquires must have an aggregate fair market value equal to at least 80%
of the Company's net assets (excluding deferred underwriting compensation) at
the time of such acquisition. The fair market value of such business(es) must be
determined by the Board of Directors of the Company based upon standards the
Board believes are generally accepted by the financial community. If the Board
of Directors of the Company is not able to independently determine that the
Target Business(es) have an aggregate fair market value of at least 80% of the
Company's net assets valued at the time of such acquisition (excluding deferred
underwriting compensation), the Company will obtain an opinion from an
unaffiliated, independent investment banking firm which is a member of the NASD
with respect to the satisfaction of such criteria. The Company is not required
to obtain an opinion from an investment banking firm as to the fair market value
of the Target Business if the Company's Board of Directors independently
determines that the Target Business(es) does have sufficient fair market value;
(dd) The Company shall, immediately upon receipt, deposit
into the Trust Fund the gross proceeds received from the issuance and sale of
the Private Placement Common Stock. Such amounts shall be held in the Trust Fund
in trust for the benefit of the public stockholders in accordance with the terms
of the Trust Agreement; and
17
(ee) As of the Closing Date, the Company shall have
established a reserve, and at all times until the earlier of the consummation of
an initial Business Combination or the liquidation of the Company shall maintain
such a reserve, of not less than $100,000 for payment of (i) potential claims by
vendors, Target Business(es) and service providers and (ii) costs and expenses
of liquidation and dissolution of the Company.
6. The Company will pay all costs, expenses and fees incident to
the performance of the obligations of the Company under this Agreement,
including, without limiting the generality of the foregoing, the following: (i)
the fees, disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Securities under the Act and all other
expenses of the Company in connection with the preparation, printing and filing
of the Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any agreement among Underwriters, this Agreement, the Blue Sky Memorandum,
closing documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the Units; (iii)
all expenses in connection with the qualification of the Securities for offering
and sale under state securities laws, including the reasonable fees and
disbursements (not to exceed $15,000) of one counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky survey;
(iv) all fees and expenses in connection with listing the Securities on the
American Stock Exchange; (v) the filing fees incident to securing any required
review by the National Association of Securities Dealers, Inc. of the terms of
the sale of the Units; (vii) the cost of preparing stock certificates; (viii)
the cost and charges of any transfer agent or registrar; and (ix) all other
costs and expenses incident to the performance of its obligations hereunder
which are not otherwise specifically provided for in this Section. Without
limiting the generality of the foregoing, the Company further agrees that it
will pay to the Representative a nonaccountable expense allowance equal to 1.0%
of the gross proceeds received by the Company from the sale of the Firm Units
(less any amounts previously paid) by deduction from the proceeds of the
offering contemplated herein.
7. The obligations of the Underwriters hereunder, as to the Units
to be delivered at each Time of Delivery, shall be subject, in their discretion,
to the condition that all representations and warranties and other statements of
the Company herein are, at and as of such Time of Delivery, true and correct,
the condition that the Company shall have performed all of its obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with Section
5(a) hereof (or a post-effective amendment shall have been filed and declared
effective in accordance with the requirements of Rule 430A); if the Company has
elected to rely upon Rule 462(b), the Rule 462(b) Registration Statement shall
have become effective by 10:00 p.m., Eastern Time, on the date of this
Agreement; no stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the Commission; and all
requests for additional information on the part of the Commission shall have
been complied with to your reasonable satisfaction; and the NASD shall
18
have raised no objection to the fairness and reasonableness of the underwriting
terms and arrangements.
(b) Jenkens & Xxxxxxxxx, P.C., counsel for the Underwriters,
shall have furnished to you such written opinion or opinions, dated such Time of
Delivery, with respect to the incorporation of the Company, the validity of the
Securities, the Registration Statement, the Prospectus as amended or
supplemented and other related matters as you may reasonably request, and such
counsel shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters.
(c) Skadden, Arps, Slate, Xxxxxxx & Xxxx, LLP, counsel for
the Company, shall have furnished to you their written opinion, dated such Time
of Delivery, to the effect set forth in Annex IV hereto.
(d) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 9:30 a.m., Eastern Time, on the effective date
of any post-effective amendment to the Registration Statement filed subsequent
to the date of this Agreement and also at each Time of Delivery, VTD shall have
furnished to you a letter or letters, dated the respective dates of delivery
thereof, in form and substance satisfactory to you, to the effect set forth in
Annex V hereto (the executed copy of the letter delivered prior to the execution
of this Agreement is attached as Annex V(a) hereto and a draft of the form of
letter to be delivered on the effective date of any post-effective amendment to
the Registration Statement and as of each Time of Delivery is attached as Annex
I(b) hereto).
(e) Since the respective dates as of which information is
given in each of the General Disclosure Package and the Prospectus, there shall
not have been any change in the capital stock or long-term debt of the Company
or any change, or any development involving a prospective change, in or
affecting the general affairs, management, financial position, stockholders'
equity or results of operations of the Company, otherwise than as set forth or
contemplated in each of the General Disclosure Package and the Prospectus, the
effect of which is in the judgment of the Representative so material and adverse
as to make it impracticable or inadvisable to proceed with the public offering
or the delivery of the Units being delivered at such Time of Delivery on the
terms and in the manner contemplated in each of the General Disclosure Package
and the Prospectus.
(f) On or after the date hereof there shall not have
occurred any of the following: (i) a suspension or material limitation in
trading in securities generally on the New York Stock Exchange or on AMEX; (ii)
a suspension or material limitation in trading in the Company's securities on
AMEX; (iii) general moratorium on commercial banking activities declared by
either Federal, or New York or California State, authorities; or (iv) the
outbreak or escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war or a material
adverse change in general economic, political or financial conditions, including
without limitation as a result of terrorist activities after the date hereof (or
the effect of international conditions on the financial markets in the United
States shall be such), or any other calamity or crisis, if the effect of any
such event specified in this clause (iv); and in each case, in the judgment of
the Representative makes it impracticable or
19
inadvisable to proceed with the public offering or the delivery of the Units
being delivered at such Time of Delivery on the terms and in the manner
contemplated in the Prospectus.
(g) The Securities to be sold at such Time of Delivery shall
have been accepted to be listed on the American Stock Exchange.
(h) The Company shall have complied with the provisions of
Section 5(d) hereof with respect to the furnishing of prospectuses on the New
York Business Day next succeeding the date of this Agreement.
(i) The Company shall have furnished or caused to be
furnished to you at such Time of Delivery certificates of officers of the
Company satisfactory to you as to the accuracy 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 its obligations hereunder to be performed
at or prior to such Time of Delivery, as to the matters set forth in subsections
(a) and (e) of this Section and as to such other matters as you may reasonably
request.
(j) The Company shall have delivered to the Representative
executed copies of the Escrow Agreement, the Trust Agreement, the Warrant
Agreement, Warrant Purchase Agreement, the Subscription Agreement and each of
the Insider Letters.
(k) The Company shall have delivered to the Representative
the Representative's Purchase Option duly executed by the Company.
(l) The Company shall have caused each of the Initial
Stockholders to furnish to you, on or prior to the date of this Agreement, a
letter substantially in the form previously agreed to (the "LOCKUP AGREEMENTS");
and such Lockup Agreements shall be in full force and effect.
(m) The Warrant Purchase Agreement between the
Representative, on the one hand, and WUF on the other hand, substantially in
form as filed as Exhibit 10.5 to the Registration Statement (the "WARRANT
PURCHASE AGREEMENT") shall be in full force and effect.
8. (a) The Company shall indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which they or any of them 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 an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement, the General Disclosure Package or the Prospectus, when
considered together with the General Disclosure Package, or any amendment or
supplement thereto, 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, and will reimburse each
such indemnified party for any legal or other out-of-pocket expenses reasonably
incurred by them in connection with investigating or defending any such action
or claim as such expenses are incurred; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement, the General Disclosure Package or the
Prospectus, when
20
considered together with the General Disclosure Package, or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the Representative expressly
for use therein (provided that the Company and the Underwriters hereby
acknowledge and agree that the only such information is the seventh, thirteenth
and fourteenth paragraphs of the section entitled "Underwriting" in the
Prospectus (collectively, the "UNDERWRITERS' INFORMATION").
(b) Each Underwriter, severally and not jointly, shall
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 an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement, the General Disclosure Package or the Prospectus, when
considered together with the General Disclosure Package, or any amendment or
supplement thereto, 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 any Preliminary
Prospectus, the Registration Statement, the General Disclosure Package or the
Prospectus, when considered together with the General Disclosure Package, or any
such amendment or supplement, in reliance upon and in conformity with the
Underwriters' Information, and will reimburse the Company for any legal or other
out-of-pocket expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(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 (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation; provided, however, that in any action in
which both the indemnified party and the indemnifying party are named as
defendants, the indemnified party shall have the right to employ separate
counsel (but no more than one such separate counsel) to represent the
indemnified party and its controlling persons who may be subject to liability
arising out of any claim in respect of which indemnity may be sought by the
indemnified party against the indemnifying party, with the reasonable fees and
reasonable expenses of such counsel to be paid by such indemnifying party if,
based upon the written opinion of counsel of such indemnified party,
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests
21
between them. No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or claim
in respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to such
action or claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability arising out of
such action or claim and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act, by or on behalf of any indemnified
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) or (b) 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 Units. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (c) above, 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 which 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, in each case as set
forth in the table on the cover page of the Prospectus. 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), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Units 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. 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
22
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 (within the meaning of the Act) any Underwriter, or any of the
respective partners, directors, officers and employees of any Underwriter or any
such controlling person; and the obligations of the Underwriters under this
Section 8 shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each director of the Company (including any person who, with his
or her consent, is named in the Registration Statement as about to become a
director of the Company), each officer of the Company who signs the Registration
Statement and to each person, if any, who controls the Company, within the
meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to
purchase the Units which it has agreed to purchase hereunder at a Time of
Delivery, you may in your discretion arrange for you or another party or other
parties to purchase such Units on the terms contained herein. If within
thirty-six hours after such default by any Underwriter you do not arrange for
the purchase of such Units, then the Company shall be entitled to a further
period of thirty-six hours within which to procure another party or other
parties reasonably satisfactory to you to purchase such Units on such terms. In
the event that, within the respective prescribed periods, you notify the Company
that you have so arranged for the purchase of such Units, or the Company
notifies you that it has so arranged for the purchase of such Units, you or the
Company shall have the right to postpone such 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 which in your opinion
may thereby be made necessary. 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
Units.
(b) If, after giving effect to any arrangements for the
purchase of the Units of a defaulting Underwriter or Underwriters by you and the
Company as provided in subsection (a) above, the aggregate number of such Units
which remains unpurchased does not exceed one-tenth of the aggregate number of
all the Units 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 Units which such Underwriter
agreed to purchase hereunder) of the Units 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.
(c) If, after giving effect to any arrangements for the
purchase of the Units of a defaulting Underwriter or Underwriters by you and the
Company as provided in Section 9(a) hereof, the aggregate number of such Units
which remains unpurchased exceeds one-tenth of the aggregate number of all the
Units to be purchased at such Time of Delivery, or if the Company
23
shall not exercise the right described in Section 9(b) hereof to require
non-defaulting Underwriters to purchase Units of a defaulting Underwriter or
Underwriters, then this Agreement (or, with respect to the Second Time of
Delivery, the obligations of the Underwriters to purchase and of the Company to
sell the Option Units) shall thereupon terminate, without liability on the part
of any non-defaulting Underwriter or the Company, except for the expenses to be
borne by the Company 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.
10. 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 of any Underwriter, or the
Company, or any officer or director or controlling person of the Company, and
shall survive delivery of and payment for the Units.
11. If this Agreement is terminated pursuant to Section 9 hereof,
the Company shall not be under any liability to any Underwriter except as
provided in Sections 6 and 8 hereof; but, if for any other reason, any Units are
not delivered by or on behalf of the Company as provided herein, the Company
will reimburse the Underwriters through you for all out-of-pocket accountable
expenses, including reasonable fees and reasonable disbursements of counsel,
actually incurred by the Underwriters in connection with the transactions
contemplated hereby, including, without limitation, marketing, syndication and
travel expenses incurred by the Underwriters in making preparations for the
purchase, sale and delivery of the Units not so delivered, but the Company shall
then be under no further liability to any Underwriter except as provided in
Sections 6 and 8 hereof.
12. The Company acknowledges and agrees that:
(a) in connection with the sale of the Units, the
Underwriters have been retained solely to act as underwriters, and no
fiduciary, advisory or agency relationship between the Company and the
Underwriters has been created in respect of any of the transactions
contemplated by this Agreement;
(b) the price of the Units set forth in this Agreement was
established following discussions and arms-length negotiations between
the Company and the Underwriters, and the Company is capable of
evaluating and understanding and understands and accepts the terms,
risks and conditions of the transactions contemplated by this Agreement;
(c) it has been advised that the Underwriters and their
respective affiliates are engaged in a broad range of transactions which
may involve interests that differ from those of the Company and that the
Underwriters have no obligation to disclose such interests and
transactions to the Company by virtue of any fiduciary, advisory or
agency relationship; and
(d) it waives, to the fullest extent permitted by law, any
claims it may have
24
against the Underwriters for breach of fiduciary duty or alleged breach
of fiduciary duty and agrees that the Underwriters shall have no
liability (whether direct or indirect) to the Company in respect of such
a fiduciary duty claim or to any person asserting a fiduciary duty claim
on behalf of or in right of the Company, including stockholders,
employees or creditors of the Company.
13. In all dealings hereunder, you shall act on behalf of each of
the Underwriters, and the parties hereto shall be entitled to act and rely upon
any statement, request, notice or agreement on behalf of any Underwriter made or
given by you.
All statements, requests, notices and agreements hereunder shall
be in writing, and if to the Underwriters shall be delivered or sent by mail,
telex or facsimile transmission to you as the Representative at 000 Xxxxx
Xxxxxx, 0xx Xxxxx, Xxx Xxxx, XX 00000, Attention: General Counsel; and if to the
Company, shall be delivered or sent by mail to the address of the Company set
forth in the Registration Statement, Attention: V. Xxxxxxx Xxxxxxx; provided,
however, that any notice to an Underwriter pursuant to Section 8(c) hereof shall
be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its Underwriters' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to the
Company by you upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
14. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters and the Company, and, to the extent provided in
Sections 8 and 10 hereof, the officers and directors of the Company and each
person who controls the Company or any Underwriter, 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 Units from any Underwriter shall be deemed a successor or assign by
reason merely of such purchase.
15. Time shall be of the essence of this Agreement. As used herein,
the term "BUSINESS DAY" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
16. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
17. 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.
25
If the foregoing is in accordance with your understanding, please sign
and return to us four counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement among each of the Underwriters, 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 a form of
agreement among Underwriters, the form of which shall be submitted to the
Company for examination upon request, but without warranty on your part as to
the authority of the signers thereof.
Very truly yours,
WESTERN UNITED FINANCIAL
CORPORATION
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
Accepted as of the date hereof:
SANDLER X'XXXXX & PARTNERS, L.P.,
as Representative of the several Underwriters
By: Sandler X'Xxxxx & Partners Corp.,
the sole general partner
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
26
SCHEDULE I
NUMBER OF OPTIONAL
UNITS TO BE
TOTAL NUMBER OF PURCHASED IF
FIRM UNITS MAXIMUM OPTION
UNDERWRITER TO BE PURCHASED EXERCISED
----------- --------------- ---------
Sandler X'Xxxxx & Partners, L.P.
[NAMES OF OTHER UNDERWRITERS]...........
Total.........................
SCHEDULE II
1. ___________ Firm Units to be sold to the Underwriters.
2. The price per share of the Firm Units to be sold to the Underwriters is
$___.
