EXHIBIT 1.1
UNDERWRITING AGREEMENT
7,200,000 SHARES
UNIVERSAL AMERICAN FINANCIAL CORP.
COMMON STOCK
UNDERWRITING AGREEMENT
DATED JULY 12, 2001
TABLE OF CONTENTS
PAGE
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Section 1. Representations and Warranties of the Company......................2
A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...........................2
(a) Compliance with Registration Requirements.......................2
(b) Offering Materials Furnished to Underwriters....................2
(c) Distribution of Offering Material by the Company................3
(d) The Underwriting Agreement......................................3
(e) Authorization of the Common Shares..............................3
(f) No Applicable Registration or Other Similar Rights..............3
(g) No Material Adverse Change......................................3
(h) Independent Auditors............................................3
(i) Preparation of the Financial Statements.........................4
(j) Incorporation and Good Standing of the Company and
its Subsidiaries ...............................................4
(k) Capitalization and Other Capital Stock Matters..................4
(l) Stock Exchange Listing..........................................5
(m) Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required............................5
(n) No Material Actions or Proceedings..............................6
(o) Intellectual Property Rights....................................6
(p) All Necessary Permits, etc......................................6
(q) Title to Properties.............................................6
(r) Tax Law Compliance..............................................6
(s) Company Not an "Investment Company".............................7
(t) Insurance.......................................................7
(u) No Price Stabilization or Manipulation..........................7
(v) Related Party Transactions......................................7
(w) No Unlawful Contributions or Other Payments.....................7
(x) Company's Accounting System.....................................8
(y) ERISA Compliance................................................8
(z) Insurance Regulations...........................................8
(aa) Statutory Financial Statements..................................9
(bb) Reinsurance.....................................................9
(cc) Shareholders' Agreement.........................................9
(dd) Brokers Fees....................................................9
(ee) Changes in Law.................................................10
B. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS.............10
(a) The Underwriting Agreement.....................................10
(b) The Power of Attorney and Custody Agreement....................10
(c) Title to Common Shares to be Sold; All Authorizations Obtained.10
(d) Delivery of the Common Shares to be Sold.......................11
(e) Non-Contravention; No Further Authorizations or
Approvals Required ............................................11
(f) No Registration or Other Similar Rights........................11
(g) Disclosure Made by Such Selling Shareholder in the Prospectus..11
(h) No Price Stabilization or Manipulation.........................12
(i) Broker's Fees..................................................12
(i)
Section 2. Purchase, Sale and Delivery of the Common Shares..................12
(a) The Firm Common Shares.........................................12
(b) The First Closing Date.........................................12
(c) The Optional Common Shares; the Second Closing Date............13
(d) Public Offering of the Common Shares...........................13
(e) Payment for the Common Shares..................................14
(f) Delivery of the Common Shares..................................14
(g) Delivery of Prospectus to the Underwriters.....................14
Section 3. Covenants of the Company..........................................15
A. COVENANTS OF THE COMPANY...............................................15
(a) Representatives' Review of Proposed Amendments and Supplements.15
(b) Securities Act Compliance......................................15
(c) Amendments and Supplements to the Prospectus and
Other Securities Act Matters ..................................15
(d) Copies of any Amendments and Supplements to the Prospectus.....16
(e) Blue Sky Compliance............................................16
(f) Use of Proceeds................................................16
(g) Transfer Agent.................................................16
(h) Earnings Statement.............................................16
(i) Periodic Reporting Obligations.................................16
(j) Agreement Not To Offer or Sell Additional Securities...........17
(k) Future Reports to the Representatives..........................17
B. COVENANTS OF THE SELLING SHAREHOLDERS..................................17
(a) Agreement Not to Offer or Sell Additional Securities...........17
(b) Delivery of Forms W-8 and W-9..................................17
Section 4. Payment of Expenses...............................................18
Section 5. Conditions of the Obligations of the Underwriters.................18
(a) Auditors' Comfort Letter.......................................19
(b) Compliance with Registration Requirements; No Stop Order;
No Objection from NASD ........................................19
(c) No Material Adverse Change or Ratings Agency Change............19
(d) Opinion of Counsel for the Company.............................20
(e) Opinion of Counsel for the Underwriters........................20
(f) Officers' Certificate..........................................20
(g) Bring-down Comfort Letter......................................20
(h) Opinion of Counsel for the Selling Shareholders................20
(i) Selling Shareholders' Certificate..............................21
(j) Selling Shareholders' Documents................................21
(k) Lock-Up Agreement from Certain Securityholders of the
Company Other Than Selling Shareholders........................21
(l) Additional Documents...........................................21
(ii)
Section 6. Reimbursement of Underwriters' Expenses...........................22
Section 7. Effectiveness of this Agreement...................................22
Section 8. Indemnification...................................................22
(a) Indemnification of the Underwriters by the Company.............22
(b) Indemnification of the Underwriters by the Selling
Shareholders ..................................................23
(c) Indemnification of the Company and each Selling Shareholder
by the Underwriters ...........................................24
(d) Notifications and Other Indemnification Procedures.............25
(e) Settlements....................................................26
Section 9. Contribution......................................................26
Section 10. Default of One or More of the Several Underwriters...............27
Section 11. Termination of this Agreement....................................28
Section 12. Representations and Indemnities to Survive Delivery..............28
Section 13. Notices..........................................................29
Section 14. Successors.......................................................30
Section 15. Partial Unenforceability.........................................30
Section 16. Governing Law Provisions.........................................30
(a) Governing Law..................................................30
(b) Consent to Jurisdiction........................................30
Section 17. Failure of One or More of the Selling Shareholders to
Sell and Deliver Common Shares ..................................31
Section 18. General Provisions...............................................31
(iii)
UNDERWRITING AGREEMENT
July 12, 0000
XXXX XX XXXXXXX SECURITIES LLC
Xxxxxxx Xxxxx & Associates, Inc.
As Representatives of the Several Underwriters
c/o BANC OF AMERICA SECURITIES LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
INTRODUCTORY. Universal American Financial Corp., a New York
corporation (the "Company), proposes to issue and sell to the several
underwriters named in SCHEDULE A (the "Underwriters") an aggregate of 5,000,000
shares of its Common Stock, par value $.01 per share (the "Common Stock"); and
the shareholders of the Company named in SCHEDULE B (collectively, the "Selling
Shareholders") severally propose to sell to the Underwriters an aggregate of
2,200,000 shares of Common Stock. The 5,000,000 shares of Common Stock to be
sold by the Company and the 2,200,000 shares of Common Stock to be sold by the
Selling Shareholders are collectively called the "Firm Common Shares". In
addition, the Company and some Selling Shareholders have granted to the
Underwriters an option to purchase up to an additional 750,000 shares (the
"Optional Common Shares") of Common Stock, as provided in Section 2. The Firm
Common Shares and, if and to the extent such option is exercised, the Optional
Common Shares are collectively called the "Common Shares". Banc of America
Securities LLC ("BAS") and Xxxxxxx Xxxxx & Associates, Inc. ("Xxxxxxx Xxxxx")
have agreed to act as representatives of the several Underwriters (in such
capacity, the "Representatives") in connection with the offering and sale of the
Common Shares.
The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-3
(File No. 333-62036), which contains a form of prospectus to be used in
connection with the public offering and sale of the Common Shares. Such
registration statement, as amended, including the financial statements, exhibits
and schedules thereto, in the form in which it was declared effective by the
Commission under the Securities Act of 1933, as amended and the rules and
regulations promulgated thereunder (collectively, the "Securities Act"),
including all documents incorporated or deemed to be incorporated by reference
therein and any information deemed to be a part thereof at the time of
effectiveness pursuant to Rule 430A or Rule 434 under the Securities Act or the
Securities Exchange Act of 1934, as amended and the rules and regulations
promulgated thereunder (collectively, the "Exchange Act"), is called the
"Registration Statement". Any registration statement filed by the Company
pursuant to Rule 462(b) under the Securities Act is called the "Rule 462(b)
Registration Statement", and from and after the date and time of filing of the
Rule 462(b) Registration Statement the term "Registration Statement" shall
include the Rule 462(b) Registration Statement. Such prospectus, in the form
first used by the Underwriters to confirm sales of the Common Shares, is called
the "Prospectus"; PROVIDED, HOWEVER, if the Company has, with the consent of
BAS, elected to rely upon Rule 434 under the Securities Act, the term
"Prospectus" shall mean the Company's prospectus subject to completion (each, a
"preliminary prospectus") dated June 15, 2001 (such preliminary prospectus is
called the "Rule 434 preliminary prospectus"), together with the applicable term
sheet (the "Term Sheet") prepared and filed by the Company with the Commission
under Rules 434 and 424(b) under the Securities Act and all references in this
Agreement to the date of the Prospectus shall mean the date of the Term Sheet.
All references in this Agreement to the Registration Statement, the
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Rule 462(b) Registration Statement, a preliminary prospectus, the Prospectus or
the Term Sheet, or any amendments or supplements to any of the foregoing, shall
include any copy thereof filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval System ("XXXXX").
The Company and each of the Selling Shareholders hereby
confirm their respective agreements with the Underwriters as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
A.REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to each Underwriter and each Selling Shareholder as
follows:
(a) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The
Registration Statement and any Rule 462(b) Registration Statement have
been declared effective by the Commission under the Securities Act. The
Company has complied to the Commission's satisfaction with all requests
of the Commission for additional or supplemental information. No stop
order suspending the effectiveness of the Registration Statement or any
Rule 462(b) Registration Statement is in effect and no proceedings for
such purpose have been instituted or are pending or, to the best
knowledge of the Company, are contemplated or threatened by the
Commission.
Each preliminary prospectus and the Prospectus when filed complied
in all material respects with the Securities Act and, if filed by
electronic transmission pursuant to XXXXX (except as may be permitted
by Regulation S-T under the Securities Act), was identical to the copy
thereof delivered to the Underwriters for use in connection with the
offer and sale of the Common Shares. Each of the Registration
Statement, any Rule 462(b) Registration Statement and any
post-effective amendment thereto, at the time it became effective and
at all subsequent times, complied and will comply in all material
respects with the Securities Act and did not and will not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. The Prospectus, as amended or supplemented, as
of its date and at all subsequent times, did not and will not contain
any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The
representations and warranties set forth in the two immediately
preceding sentences do not apply to statements in or omissions from the
Registration Statement, any Rule 462(b) Registration Statement, or any
post-effective amendment thereto, or the Prospectus, or any amendments
or supplements thereto, made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in
writing by the Representatives expressly for use therein. There are no
contracts or other documents required to be described in the Prospectus
or to be filed as exhibits to the Registration Statement which have not
been described or filed as required.
(b) OFFERING MATERIALS FURNISHED TO UNDERWRITERS. The Company
has delivered to the Representatives two complete manually signed
copies of the Registration Statement and of each consent and
certificate of experts filed as a part thereof, and conformed copies of
the Registration Statement (without exhibits) and preliminary
prospectuses and the Prospectus, as amended or supplemented, in such
quantities and at such places as the Representatives have reasonably
requested for each of the Underwriters.
(c) DISTRIBUTION OF OFFERING MATERIAL BY THE COMPANY. The
Company has not distributed and will not distribute, prior to the later
of the Second Closing Date (as defined below) and the completion of the
Underwriters' distribution of the Common Shares, any offering material
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in connection with the offering and sale of the Common Shares other
than a preliminary prospectus, the Prospectus or the Registration
Statement.
(d) THE UNDERWRITING AGREEMENT. This Agreement has been duly
authorized, executed and delivered by, and is a valid and binding
agreement of, the Company, enforceable in accordance with its terms,
except as rights to indemnification hereunder may be limited by
applicable law and except as the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the rights and remedies of creditors or
by general equitable principles.
(e) AUTHORIZATION OF THE COMMON SHARES. The Common Shares to
be purchased by the Underwriters from the Company have been duly
authorized for issuance and sale pursuant to this Agreement and, when
issued and delivered by the Company and paid for by the Underwriters
pursuant to this Agreement, will be validly issued, fully paid and
nonassessable.
(f) NO APPLICABLE REGISTRATION OR OTHER SIMILAR RIGHTS. Except
for the parties to the registration rights agreement described in the
Prospectus, there are no persons with registration or other similar
rights to have any equity or debt securities registered for sale under
the Registration Statement or included in the offering contemplated by
this Agreement, other than the Selling Shareholders with respect to the
Common Shares included in the Registration Statement, except for such
rights as have been duly waived.
(g) NO MATERIAL ADVERSE CHANGE. Except as otherwise disclosed
in the Prospectus, subsequent to the respective dates as of which
information is given in the Prospectus: (i) there has been no material
adverse change, or any development that could reasonably be expected to
result in a material adverse change, in the condition, financial or
otherwise, or in the earnings, business, operations, whether or not
arising from transactions in the ordinary course of business, of the
Company and its subsidiaries, considered as one entity (any such change
is called a "Material Adverse Change"); (ii) the Company and its
subsidiaries, considered as one entity, have not incurred any material
liability or obligation, indirect, direct or contingent, not in the
ordinary course of business nor entered into any material transaction
or agreement not in the ordinary course of business; and (iii) there
has been no dividend or distribution of any kind declared, paid or made
by the Company or, except for dividends paid to the Company or other
subsidiaries, any of its subsidiaries on any class of capital stock or
repurchase or redemption by the Company or any of its subsidiaries of
any class of capital stock.
(h) INDEPENDENT AUDITORS. Ernst & Young LLP, who have
expressed their opinion with respect to the December 31, 2000 financial
statements (which term as used in this Agreement includes the related
notes thereto) filed with the Commission as a part of the Registration
Statement and included in the Prospectus, are independent certified
public accountants or independent auditors as required by the
Securities Act and the Exchange Act.
(i) PREPARATION OF THE FINANCIAL STATEMENTS. The financial
statements, including the notes thereto, filed with the Commission as a
part of the Registration Statement and included in the Prospectus
present fairly, in all material respects, the consolidated financial
position of the Company and its subsidiaries as of and at the dates
indicated and the results of their operations and cash flows for the
periods specified. Such financial statements, unless noted otherwise
therein, have been prepared in conformity with generally accepted
accounting principles as applied in the United States applied on a
consistent basis throughout the periods involved, except as may be
expressly stated in the related notes thereto. No other financial
statements or supporting schedules are required to be included in the
Registration Statement. The income statement data, balance sheet data
and earnings
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per share data for the five fiscal years ended December 31, 2000 as set
forth in the Prospectus under the captions "Summary Financial and
Operating Data" and "Selected Financial and Operating Data" fairly
present the information set forth therein on a basis consistent with
that of the audited financial statements contained in the Registration
Statement. The income statement data and earnings per share data for
the fiscal quarters ended March 2000 and 2001 and balance sheet data as
of March 31, 2001 as set forth in the Prospectus under the captions
"Summary Financial and Operating Data" and "Selected Financial and
Operating Data" fairly present the information as set forth therein on
a basis consistent with that of the unaudited financial statements
contained in the Registration Statement. The actual data for the fiscal
quarter ended March 31, 2001 as set forth in the Prospectus under the
caption "Capitalization" fairly presents the information as set forth
therein on a basis consistent with that of the unaudited financial
statements contained in the Registration Statement.
(j) INCORPORATION AND GOOD STANDING OF THE COMPANY AND ITS
SUBSIDIARIES. Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation and has
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus and, in the
case of the Company, to enter into and perform its obligations under
this Agreement. The Company and each subsidiary is duly qualified as a
foreign corporation to transact business and is in good standing in
each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except for such jurisdictions where the failure to
so qualify or to be in good standing would not, individually or in the
aggregate, result in a Material Adverse Change. All of the issued and
outstanding capital stock of each subsidiary has been duly authorized
and validly issued, is fully paid and nonassessable and is owned by the
Company, directly or through subsidiaries. Except for the capital stock
of certain operating subsidiaries that is pledged as security to
lenders under the Company's current $80 million credit facility
described in the Prospectus, the Company owns, directly or through
subsidiaries, the issued and outstanding capital stock of each
subsidiary free and clear of any security interest, mortgage, pledge,
lien, encumbrance or claim. The Company does not own or control,
directly or indirectly, any corporation, association or other entity
other than the subsidiaries listed in Exhibit 22 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2000
and such other entities which are not required to be so listed.
(k) CAPITALIZATION AND OTHER CAPITAL STOCK MATTERS. The
authorized, issued and outstanding capital stock of the Company is as
set forth in the Prospectus under the caption "Capitalization" (other
than for subsequent issuances, if any, pursuant to employee benefit
plans described in the Prospectus or upon exercise of outstanding
options described in the Prospectus). The Common Stock (including the
Common Shares) conforms in all material respects to the description
thereof contained in the Prospectus. All of the issued and outstanding
shares of Common Stock (including the shares of Common Stock owned by
Selling Shareholders) have been duly authorized and validly issued, are
fully paid and nonassessable and have been issued in compliance with
federal and state securities laws. None of the outstanding shares of
Common Stock were issued in violation of any preemptive rights, rights
of first refusal or other similar rights to subscribe for or purchase
securities of the Company. There are no authorized or outstanding
options, warrants, preemptive rights, rights of first refusal or other
rights to purchase, or equity or debt securities convertible into or
exchangeable or exercisable for, any capital stock of the Company or
any of its subsidiaries other than those accurately described in the
Prospectus. The description of the Company's stock option, stock bonus
and other stock plans or arrangements, and the options or other rights
granted thereunder, set forth in the Prospectus accurately and fairly
presents, in all material respects, the information required to be
shown with respect to such plans, arrangements, options and rights.
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(l) STOCK EXCHANGE LISTING. The Common Shares have been
approved for inclusion on the Nasdaq National Market.
(m) NON-CONTRAVENTION OF EXISTING INSTRUMENTS; NO FURTHER
AUTHORIZATIONS OR APPROVALS REQUIRED. Neither the Company nor any of
its subsidiaries is in violation of its charter or by-laws or is in
default (or, with the giving of notice or lapse of time, would be in
default) ("Default") under any indenture, mortgage, loan or credit
agreement, note, contract, franchise, lease or other instrument to
which the Company or any of its subsidiaries is a party or by which it
or any of them may be bound, or to which any of the property or assets
of the Company or any of its subsidiaries is subject (each, an
"Existing Instrument"), except for such Defaults as would not,
individually or in the aggregate, reasonably be expected to result in a
Material Adverse Change. The Company's execution, delivery and
performance of this Agreement and consummation of the transactions
contemplated hereby and by the Prospectus (i) have been duly authorized
by all necessary corporate action and will not result in any violation
of the provisions of the charter or by-laws of the Company or any
subsidiary, (ii) will not conflict with or constitute a breach of, or
Default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
of its subsidiaries pursuant to, or require the consent of any other
party to, any Existing Instrument, except for such conflicts, breaches,
Defaults, liens, charges or encumbrances as would not, individually or
in the aggregate, result in a Material Adverse Change and (iii) will
not result in any violation of any law, administrative regulation or
administrative or court decree applicable to the Company or any
subsidiary which violation could reasonably be expected to result in a
Material Adverse Change or adversely affect the consummation of the
transactions contemplated by this Agreement. No consent, approval,
authorization or other order of, or registration or filing with, any
court or other governmental or regulatory authority or agency, is
required for the Company's execution, delivery and performance of this
Agreement and consummation of the transactions contemplated hereby and
by the Prospectus, except such as have been obtained or made by the
Company and are in full force and effect under the Securities Act, the
Exchange Act, applicable state securities or blue sky laws and from the
National Association of Securities Dealers, Inc. (the "NASD") and such
consents and approvals the failure of which to obtain would not
reasonably be expected to result in a Material Adverse Change or
adversely affect the consummation of the transactions contemplated by
this Agreement.
(n) NO MATERIAL ACTIONS OR PROCEEDINGS. There are no legal or
governmental actions, suits or proceedings pending or, to the Company's
knowledge, threatened (i) against or affecting the Company or any of
its subsidiaries, (ii) which has as the subject thereof any officer or
director of, or property owned or leased by, the Company or any of its
subsidiaries or (iii) relating to environmental or discrimination
matters, where in any such case (A) there is a reasonable possibility
that such action, suit or proceeding might be determined adversely to
the Company or such subsidiary and (B) any such action, suit or
proceeding, if so determined adversely, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse
Change or adversely affect the consummation of the transactions
contemplated by this Agreement. No material labor dispute with the
employees of the Company or any of its subsidiaries exists or, to the
Company's knowledge, is threatened or imminent.
(o) INTELLECTUAL PROPERTY RIGHTS. The Company and its
subsidiaries own or possess sufficient trademarks, trade names, patent
rights, copyrights, licenses, approvals, trade secrets and other
similar rights (collectively, "Intellectual Property Rights")
reasonably necessary to conduct their businesses as now conducted; and
the expected expiration of any of such Intellectual Property Rights
would not, individually or in the aggregate, result in a Material
Adverse Change. Neither the Company nor any of its subsidiaries has
received any notice of infringement or conflict with asserted
Intellectual
5
Property Rights of others, which infringement or conflict, if the
subject of an unfavorable decision, would result in a Material Adverse
Change.
(p) ALL NECESSARY PERMITS, ETC. The Company and each
subsidiary possess such valid and current certificates, authorizations
or permits issued by the appropriate state, federal or foreign
regulatory agencies or bodies necessary to conduct their respective
businesses, and neither the Company nor any subsidiary has received any
notice of proceedings relating to the revocation or modification of, or
non-compliance with, any such certificate, authorization or permit
which, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, could reasonably be expected
to result in a Material Adverse Change.
(q) TITLE TO PROPERTIES. The Company and each of its
subsidiaries has good and marketable title to all the properties
reflected as owned in the financial statements referred to in Section
1(A)(i) above (or elsewhere in the Prospectus), in each case free and
clear of any security interests, mortgages, liens, encumbrances,
equities, claims and other defects, except such as do not materially
and adversely affect the value of such property and do not materially
interfere with the use made or proposed to be made of such property by
the Company or such subsidiary. The real property, improvements,
equipment and personal property held under lease by the Company or any
subsidiary are held under valid and enforceable leases, with such
exceptions as are not material and do not materially interfere with the
use made or proposed to be made of such real property, improvements,
equipment or personal property by the Company or such subsidiary.
(r) TAX LAW COMPLIANCE. The Company and its consolidated
subsidiaries and its other subsidiaries have filed all necessary
federal, state and foreign income and franchise tax returns or have
properly requested extensions thereof and have paid all taxes required
to be paid by any of them and, if due and payable, any related or
similar assessment, fine or penalty levied against any of them. The
Company has made adequate charges, accruals and reserves in the
applicable financial statements referred to in Section 1(A)(i) above in
respect of all federal, state and foreign income and franchise taxes
for all periods as to which the tax liability of the Company or any of
its consolidated subsidiaries or any of its other subsidiaries has not
been finally determined.
(s) COMPANY NOT AN "INVESTMENT COMPANY". The Company has been
advised of the rules and requirements under the Investment Company Act
of 1940, as amended (the "Investment Company Act"). The Company is not,
and after receipt of payment for the Common Shares and the application
of such proceeds as described in the Prospectus will not be required to
register as an "investment company" within the meaning of Investment
Company Act and will conduct its business in a manner so that it will
not become subject to the Investment Company Act.
(t) INSURANCE. Each of the Company and its subsidiaries is
insured by recognized, financially sound and reputable institutions
with policies in such amounts and with such deductibles and covering
such risks as are generally deemed adequate and customary for their
businesses including, but not limited to, policies covering real and
personal property owned or leased by the Company and its subsidiaries
against theft, damage, destruction, acts of vandalism and earthquakes.
The Company has no reason to believe that it or any subsidiary will not
be able (i) to renew its existing insurance coverage as and when such
policies expire or (ii) to obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its business
as now conducted and at a cost that would not reasonably be expected,
individually or in the aggregate, to result in a Material Adverse
Change. Neither of the Company nor any subsidiary has been denied any
insurance coverage which it has sought or for which it has applied.
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(u) NO PRICE STABILIZATION OR MANIPULATION. The Company has
not taken and will not take, directly or indirectly, any action
designed to or that might be reasonably expected to cause or result in
stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Common Shares.
(v) RELATED PARTY TRANSACTIONS. There are no business
relationships or related-party transactions involving the Company or
any subsidiary or any other person required to be described in the
Prospectus which have not been described as required in the Prospectus.
(w) NO UNLAWFUL CONTRIBUTIONS OR OTHER PAYMENTS. Neither the
Company nor any of its subsidiaries nor, to the Company's knowledge,
any employee or agent of the Company or any subsidiary in his/her
capacity as an employee or agent of the Company or any subsidiary, has
made any contribution or other payment to any official of, or candidate
for, any federal, state or foreign office in violation of any law or of
the character required to be disclosed in the Prospectus.
(x) COMPANY'S ACCOUNTING SYSTEM. The Company maintains a
system of 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 to permit preparation of financial statements in
conformity with generally accepted accounting principles as applied in
the United States 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.
(y) ERISA COMPLIANCE. Any "employee benefit plan" (as defined
under the Employee Retirement Income Security Act of 1974, as amended,
and the regulations and published interpretations thereunder
(collectively, "ERISA")) established or maintained by the Company, its
subsidiaries or their "ERISA Affiliates" (as defined below) are in
compliance in all material respects with ERISA. "ERISA Affiliate"
means, with respect to the Company or a subsidiary, any member of any
group of organizations described in Sections 414(b),(c),(m) or (o) of
the Internal Revenue Code of 1986, as amended, and the regulations and
published interpretations thereunder (the "Code") of which the Company
or such subsidiary is a member. No "reportable event" (as defined under
ERISA) has occurred or is reasonably expected to occur with respect to
any "employee benefit plan" established or maintained by the Company,
its subsidiaries or any of their ERISA Affiliates. No "employee benefit
plan" established or maintained by the Company, its subsidiaries or any
of their ERISA Affiliates, if such "employee benefit plan" were
terminated, would have any "amount of unfunded benefit liabilities" (as
defined under ERISA). Neither the Company, its subsidiaries nor any of
their ERISA Affiliates has incurred or reasonably expects to incur any
liability under (i) Title IV of ERISA with respect to termination of,
or withdrawal from, any "employee benefit plan" or (ii) Sections 412,
4971, 4975 or 4980B of the Code. Each "employee benefit plan"
established or maintained by the Company, its subsidiaries or any of
their ERISA Affiliates that is intended to be qualified under Section
401(a) of the Code is so qualified and nothing has occurred, whether by
action or failure to act, which would cause the loss of such
qualification.
(z) INSURANCE REGULATIONS. The Company has made all required
filings under applicable insurance holding company statutes, and has
received approvals of acquisition of control and/or affiliate
transactions, in each jurisdiction in which such filings or approvals
are required, except where the failure to have made such filings or
receive such approvals in any such jurisdiction would not result,
individually or in the aggregate, in a Material Adverse Change. Each of
the Company and its subsidiaries: (A) holds such permits, licenses,
consents, exemptions, franchises, authorizations and other approvals
from insurance departments and other governmental or regulatory
authorities (each,
7
an "Authorization") (including, without limitation, insurance licenses
from the insurance regulatory agencies of the various states or other
jurisdictions where it conducts business (the "Insurance Licenses")),
and has made all filings with and notices to, all governmental or
regulatory authorities and self-regulatory organizations and all courts
and other tribunals, as are necessary to own, lease, license and
operate its respective properties and to conduct business, except where
the failure to have any Authorization or Insurance License or to make
any such filing or notice would not reasonably be expected,
individually or in the aggregate, to result in a Material Adverse
Change, and (B) has fulfilled and performed all material obligations
necessary to maintain such Authorizations and Insurance Licenses.
Except as would not reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Change (A) each such
Authorization and Insurance License is valid and in full force and
effect and each of the Company and its subsidiaries is in compliance
with all the terms and conditions thereof and with the rules and
regulations of the authorities and governing bodies having jurisdiction
with respect thereto; and (B) no event has occurred (including, without
limitation, the receipt of any notice from any authority or governing
body, the execution, delivery and performance of this Agreement by the
Company, the sale and delivery of the Common Shares and the compliance
by the Company with all of the provisions hereof and the consummation
by the Company and its subsidiaries of the transactions contemplated in
this Agreement) which allows or, after notice or lapse of time of both,
would allow, revocation, suspension or termination of any such
Authorization or Insurance License or results or, after notice or lapse
of time or both, would result in any impairment of the rights of the
holder of any such Authorization or Insurance License. Except as
disclosed in the Prospectus, no insurance regulatory agency or body has
issued any order or decree impairing, restricting or prohibiting the
payment of dividends of any Company subsidiary to its respective parent
which would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Change.
(aa) STATUTORY FINANCIAL STATEMENTS. The statutory financial
statements of the subsidiaries that are insurance companies (the
"Insurance Subsidiaries"), from which certain ratios and other
statistical data filed as a part of the Registration Statement or
included or incorporated in the Prospectus have been derived: (A) have
for each relevant period been prepared in conformity with statutory
accounting practices required or permitted by the National Association
of Insurance Commissioners and by the insurance laws of their
respective states of domicile, and the rules and regulations
promulgated thereunder, and such statutory accounting practices have
been applied on a consistent basis throughout the periods involved,
except as may otherwise be indicated therein or in the notes thereto;
and (B) present fairly in all material respects the statutory financial
position of the Insurance Subsidiaries as at the dates thereof, and the
statutory basis results of operations of the Insurance Subsidiaries for
the periods covered thereby.
(bb) REINSURANCE. Neither the Company nor any of its Insurance
Subsidiaries is in violation of, or in default in the performance,
observance or fulfillment of, any obligation, agreement, covenant or
condition contained in reinsurance treaties, contracts, agreements and
arrangements to which the Company or any of its Insurance Subsidiaries
is a party, except for such violations or defaults which would not
reasonably be expected to, individually or in the aggregate, result in
a Material Adverse Change; neither the Company nor any of its Insurance
Subsidiaries has received any notice from any of the other parties to
such treaties, contracts, agreements or arrangements that such other
party intends not to perform its obligations thereunder and none of
them has any reason to believe that any of the other parties to such
treaties, contracts, agreements or arrangements will be unable to
perform its obligations thereunder, except to the extent that such
nonperformance would not reasonably be expected to, individually or in
the aggregate, result in a Material Adverse Change.
8
(cc) SHAREHOLDERS' AGREEMENT. All consents and approvals
required by the Shareholders' Agreement dated July 30, 1999 among the
Company and the Shareholders named therein in order to issue and sell
the Common Shares pursuant to this Agreement have been obtained.
(dd) BROKERS FEES. Except as disclosed in the Prospectus,
there are no contracts, agreements or understandings between the
Company and any person that would give rise to a valid claim against
the Company, or any Underwriter, for a brokerage commission, finder's
fee or other like payment.
(ee) CHANGES IN LAW. To the knowledge of the Company and its
subsidiaries, no change in any law or regulation is pending that would
reasonably be expected to result, individually or in the aggregate, in
a Material Adverse Change, except as described in the Prospectus.
Any certificate signed by an officer of the Company and delivered to
the Representatives or to counsel for the Underwriters shall be deemed
to be a representation and warranty by the Company to each Underwriter
as to the matters set forth therein.
B. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS.
Each Selling Shareholder, severally and not jointly, represents and warrants to
each Underwriter as follows:
(a) THE UNDERWRITING AGREEMENT. This Agreement has been duly
authorized, executed and delivered by or on behalf of such Selling
Shareholder and is a valid and binding agreement of such Selling
Shareholder, enforceable in accordance with its terms, except as rights
to indemnification and contribution hereunder may be limited by
applicable law and except as the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the rights and remedies of creditors or
by general equitable principles.
(b) THE POWER OF ATTORNEY AND CUSTODY AGREEMENT. The Power of
Attorney and Custody Agreement (the "Power of Attorney and Custody
Agreement") signed by such Selling Shareholder relating to (i) the
deposit of the Common Shares to be sold by such Selling Shareholder
with American Stock Transfer & Trust Company, as custodian (the
"Custodian") and (ii) the appointment of certain individuals named
therein as such Selling Shareholder's attorneys-in-fact (each, an
"Attorney-in-Fact") to the extent set forth therein relating to the
transactions contemplated hereby and by the Prospectus, of such Selling
Shareholder has been duly authorized, executed and delivered by such
Selling Shareholder and is a valid and binding agreement of such
Selling Shareholder, enforceable in accordance with its terms, except
as rights to indemnification and contribution thereunder may be limited
by applicable law and except as the enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the rights and remedies of creditors or
by general equitable principles.
(c) TITLE TO COMMON SHARES TO BE SOLD; ALL AUTHORIZATIONS
OBTAINED. Such Selling Shareholder has, and on the First Closing Date
and the Second Closing Date (as defined below) (if any Optional Common
Shares are to be delivered on such Second Closing Date) will have,
valid title to all of the Common Shares which may be sold by such
Selling Shareholder pursuant to this Agreement, as set forth on
SCHEDULE B hereto, on such date and the legal right and power, and all
authorizations and approvals required by law and under its charter or
by-laws, partnership agreement, or other applicable organizational
documents to enter into this Agreement and its respective Power of
Attorney and Custody Agreement, to sell, transfer and deliver all of
the Common Shares which may be sold by such Selling Shareholder
pursuant to this Agreement and to comply with its other obligations
hereunder and thereunder.
9
(d) DELIVERY OF THE COMMON SHARES TO BE SOLD. Assuming the
Underwriters purchase the Common Shares to be sold by such Selling
Shareholder without notice of any adverse claim (within the meaning of
Section 8-105 of the Uniform Commercial Code of the State of New York),
delivery of the Common Shares which are sold by such Selling
Shareholder and the payment by the Underwriters for such Common Shares,
pursuant to this Agreement will pass valid title to such Common Shares,
free and clear of any adverse claim (within the meaning of such Section
8-105).
(e) NON-CONTRAVENTION; NO FURTHER AUTHORIZATIONS OR APPROVALS
REQUIRED. The execution and delivery by such Selling Shareholder of,
and the performance by such Selling Shareholder of its obligations
under, this Agreement, its respective Power of Attorney and Custody
Agreement will not contravene or conflict with, result in a breach of,
or constitute a default under, or require the consent of any other
party to, the charter or by-laws, partnership agreement, or other
organizational documents of such Selling Shareholder or any other
agreement or instrument to which such Selling Shareholder is a party or
by which it is bound or under which it is entitled to any right or
benefit, any provision of applicable law or any judgment, order, decree
or regulation applicable to such Selling Shareholder of any court,
regulatory body, administrative agency, governmental body or arbitrator
having jurisdiction over such Selling Shareholder, except as could not
reasonably be expected to adversely affect the consummation of the
transactions contemplated by this Agreement. No consent, approval,
authorization or other order of, or registration or filing with, any
court or other governmental authority or agency, is required for the
consummation by such Selling Shareholder of the transactions
contemplated in this Agreement where the failure to obtain such
consents and approvals would reasonably be expected to adversely affect
the consummation of the transactions contemplated by this Agreement,
except such as have been obtained or made and are in full force and
effect or may be required under the Securities Act, applicable state
securities or blue sky laws and from the NASD.
(f) NO REGISTRATION OR OTHER SIMILAR RIGHTS. Such Selling
Shareholder does not have any registration or other similar rights to
have any equity or debt securities registered for sale by the Company
under the Registration Statement or included in the offering
contemplated by this Agreement, except for such rights as are described
in the Prospectus under the caption "Risk Factors-Risks Related to our
Common Stock and the Offering".
(g) DISCLOSURE MADE BY SUCH SELLING SHAREHOLDER IN THE
PROSPECTUS. All information furnished by or on behalf of such Selling
Shareholder in writing expressly for use in the Prospectus is, and on
the First Closing Date and the Second Closing Date will be, true,
correct, and complete in all material respects, and does not, and on
the First Closing Date and the Second Closing Date will not, contain
any untrue statement of a material fact or omit to state any material
fact necessary to make such information not misleading in light of the
circumstances under which they were made. All information furnished by
or on behalf of such Selling Shareholder in writing expressly for use
in each of the Registration Statement, any Rule 462(b) Registration
Statement and any post-effective amendment thereto, at the time it
became effective did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
Such Selling Shareholder confirms as accurate the number of shares of
Common Stock set forth opposite such Selling Shareholder's name in the
Prospectus under the caption "Principal and Selling Shareholders" (both
prior to and after giving effect to the sale of the Common Shares).
(h) NO PRICE STABILIZATION OR MANIPULATION. Such Selling
Shareholder has not taken and will not take, directly or indirectly,
any action designed to or that might be reasonably expected to cause or
result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Common Shares.
10
(i) BROKER'S FEES. Except as disclosed in the Prospectus,
there are no contracts, agreements or understandings between such
Selling Shareholder and any person that would give rise to a valid
claim against the Company or any Underwriter for a brokerage
commission, finder's fee or other like payment in connection with the
sale by such Selling Shareholder of the Common Shares to the
Underwriters.
Any certificate signed by or on behalf of any Selling
Shareholder and delivered to the Representatives or to counsel for the
Underwriters shall be deemed to be a representation and warranty by such Selling
Shareholder to each Underwriter as to the matters covered thereby.
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE COMMON SHARES.
(a) THE FIRM COMMON SHARES. Upon the terms herein set forth,
(i) the Company agrees to issue and sell to the several Underwriters an
aggregate of 5,000,000 Firm Common Shares and (ii) the Selling
Shareholders agree to sell to the several Underwriters an aggregate of
2,200,000 Firm Common Shares, each Selling Shareholder selling the
number of Firm Common Shares set forth opposite such Selling
Shareholder's name on SCHEDULE B. On the basis of the representations,
warranties and agreements herein contained, and upon the terms but
subject to the conditions herein set forth, the Underwriters agree,
severally and not jointly, to purchase from the Company and the Selling
Shareholders the respective number of Firm Common Shares set forth
opposite their names on SCHEDULE A. The purchase price per Firm Common
Share to be paid by the several Underwriters to the Company and the
Selling Shareholders shall be $4.6813 per share.
(b) THE FIRST CLOSING DATE. Delivery of the Firm Common Shares
to be purchased by the Underwriters and payment therefor shall be made
at the offices of LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P., 000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, XX 00000 (or such other place as may be agreed to by
the Company and the Representatives) at 10:00 a.m. New York time, on
July 18, 2001, or such other time and date not later than 1:30 p.m. New
York time, on July 26, 2001 as the Representatives shall designate by
notice to the Company (the time and date of such closing are called the
"First Closing Date"). The Company and the Selling Shareholders hereby
acknowledge that circumstances under which the Representatives may
provide notice to postpone the First Closing Date as originally
scheduled include, but are in no way limited to, any determination by
the Company, the Selling Shareholders or the Representatives to
recirculate to the public copies of an amended or supplemented
Prospectus or a delay as contemplated by the provisions of Section 10.
(c) THE OPTIONAL COMMON SHARES; THE SECOND CLOSING DATE. In
addition, on the basis of the representations, warranties and
agreements herein contained, and upon the terms but subject to the
conditions herein set forth, the Company and the Selling Shareholders
selling Optional Common Shares as indicated on SCHEDULE B hereto each
hereby grant an option to the several Underwriters to purchase,
severally and not jointly, up to an aggregate of 750,000 Optional
Common Shares from the Company and the Selling Shareholders selling
Optional Common Shares as indicated on SCHEDULE B hereto at the
purchase price per share to be paid by the Underwriters for the Firm
Common Shares, with the Company selling up to 720,000 Optional Common
Shares and each such Selling Shareholder selling up to the number of
Optional Common Shares set forth opposite its name on SCHEDULE B
hereto. The options granted hereunder are for use by the Underwriters
solely in covering any over-allotments in connection with the sale and
distribution of the Firm Common Shares. The options granted hereunder
may be exercised at any time (but not more than once) upon notice by
the Representatives to the Company and to each of the Selling
Shareholders selling Optional Common Shares as indicated on SCHEDULE B
hereto, which notice may be given at any time within 30 days from the
date of this Agreement. Such notice shall set forth (i) the aggregate
number of Optional Common
11
Shares as to which the Underwriters are exercising pursuant to the
options, (ii) the names and denominations in which the certificates for
the Optional Common Shares are to be registered and (iii) the time,
date and place at which such shares will be delivered (which time and
date may be simultaneous with, but not earlier than, the First Closing
Date; and in such case the term "First Closing Date" shall refer to the
time and date of delivery of the Firm Common Shares and the Optional
Common Shares). Such time and date of delivery, if subsequent to the
First Closing Date, is called the "Second Closing Date" and shall be
determined by the Representatives and shall not be earlier than three
nor later than five full business days after delivery of such notice of
exercise. If any Optional Common Shares are to be purchased, (a) each
Underwriter agrees, severally and not jointly, to purchase the number
of Optional Common Shares (subject to such adjustments to eliminate
fractional shares as the Representatives may determine) that bears the
same proportion to the total number of Optional Common Shares to be
purchased as the number of Firm Common Shares set forth on SCHEDULE A
opposite the name of such Underwriter bears to the total number of Firm
Common Shares from the Company and the Selling Shareholders selling
Optional Common Shares as indicated on SCHEDULE B hereto in such
proportions as the number of Optional Common Shares to be sold by the
Company (720,000) and the number of Optional Common Shares set forth
opposite the respective Selling Shareholder's name on SCHEDULE B hereto
respectively bear to the aggregate number of Optional Common Shares,
(b) the Company agrees to sell up to an aggregate of 720,000 Optional
Common Shares (subject to such adjustments to eliminate fractional
shares as the Representatives may determine) to such Underwriters in
such respective amounts as described above and (c) such Selling
Shareholders selling Optional Common Shares as indicated on SCHEDULE B
hereto agree to sell up to an aggregate of 30,000 Optional Common
Shares (subject to such adjustments to eliminate fractional shares as
the Representatives may determine) to such Underwriters in such
respective amounts as described above and on SCHEDULE B hereto. The
Representatives may cancel the options described above at any time
prior to their expiration by giving written notice of such cancellation
to the Company and each of the Selling Shareholders selling Optional
Common Shares as indicated on SCHEDULE B hereto.
(d) PUBLIC OFFERING OF THE COMMON SHARES. The Representatives
hereby advise the Company and the Selling Shareholders that the
Underwriters intend to offer for sale to the public, as described in
the Prospectus, their respective portions of the Common Shares as soon
after this Agreement has been executed and the Registration Statement
has been declared effective as the Representatives, in their sole
judgment, have determined is advisable and practicable.
(e) PAYMENT FOR THE COMMON SHARES. Payment for the Common
Shares to be sold by the Company shall be made at the First Closing
Date (and, if applicable, at the Second Closing Date) by wire transfer
of immediately available funds to the order of the Company. Payment for
the Common Shares to be sold by the Selling Shareholders shall be made
at the First Closing Date (and, if applicable, at the Second Closing
Date) by wire transfer of immediately available funds to the order of
each Selling Shareholder who provides sufficient wire transfer
instructions pursuant to the Power of Attorney and Custody Agreement of
such Selling Shareholder and with respect to any Selling Shareholder
who does not provide such instructions, to the order of the Custodian
on behalf of and for the account of such respective Selling
Shareholder.
It is understood that the Representatives have been authorized, for
their own account and the accounts of the several Underwriters, to
accept delivery of and receipt for, and make payment of the purchase
price for, the Firm Common Shares and any Optional Common Shares the
Underwriters have agreed to purchase. BAS or Xxxxxxx Xxxxx,
individually and not as a Representative of the Underwriters, may (but
shall not be obligated to) make payment for any Common Shares to be
purchased by any Underwriter whose funds shall not have been received
by the Representatives by the First Closing Date or the Second Closing
Date, as the case may be, for the account of such
12
Underwriter, but any such payment shall not relieve such Underwriter
from any of its obligations under this Agreement.
Each Selling Shareholder hereby agrees that it will pay all stock
transfer taxes, stamp duties and other similar taxes, if any, payable
upon the sale or delivery of the Common Shares to be sold by such
Selling Shareholder to the several Underwriters, or otherwise in
connection with the performance of such Selling Shareholder's
obligations hereunder.
(f) DELIVERY OF THE COMMON SHARES. The Company and the Selling
Shareholders shall deliver, or cause to be delivered, to the
Representatives for the accounts of the several Underwriters the Firm
Common Shares to be sold by them at the First Closing Date, against the
irrevocable release of a wire transfer of immediately available funds
for the amount of the purchase price therefor. The Company and the
Selling Shareholders (if any Optional Common Shares are to be sold by
Selling Shareholders) shall also deliver, or cause to be delivered, to
the Representatives for the accounts of the several Underwriters, the
Optional Common Shares the Underwriters have agreed to purchase from
them at the First Closing Date or the Second Closing Date, as the case
may be, against the irrevocable release of a wire transfer of
immediately available funds for the amount of the purchase price
therefor. The Common Shares shall be registered in such names and
denominations as the Representatives shall have requested at least two
full business days prior to the First Closing Date (or the Second
Closing Date, as the case may be). Time shall be of the essence, and
delivery at the time and place specified in this Agreement is a further
condition to the obligations of the Underwriters.
(g) DELIVERY OF PROSPECTUS TO THE UNDERWRITERS. Not later than
12:00 p.m. on the second business day following the date the Common
Shares are first released by the Underwriters for sale to the public,
the Company shall deliver or cause to be delivered, copies of the
Prospectus in such quantities and at such places as the Representatives
shall reasonably request.
SECTION 3. COVENANTS OF THE COMPANY.
A. COVENANTS OF THE COMPANY. The Company further covenants and
agrees with each Underwriter as follows:
(a) REPRESENTATIVES' REVIEW OF PROPOSED AMENDMENTS AND
SUPPLEMENTS. During such period beginning on the date hereof and ending
on the later of the First Closing Date or such date, as in the opinion
of counsel for the Underwriters, the Prospectus is no longer required
by law to be delivered in connection with sales by an Underwriter or
dealer (the "Prospectus Delivery Period"), prior to amending or
supplementing the Registration Statement (including any registration
statement filed under Rule 462(b) under the Securities Act) or the
Prospectus (including any amendment or supplement through incorporation
by reference of any report filed under the Exchange Act), the Company
shall furnish to the Representatives and each Selling Shareholder for
review a copy of each such proposed amendment or supplement, and the
Company shall not file any such proposed amendment or supplement to
which the Representatives reasonably objects.
(b) SECURITIES ACT COMPLIANCE. After the date of this
Agreement, the Company shall promptly advise the Representatives and
each Selling Shareholder in writing (i) of the receipt of any comments
of, or requests for additional or supplemental information from, the
Commission, (ii) of the time and date of any filing of any
post-effective amendment to the Registration Statement or any amendment
or supplement to any preliminary prospectus or the Prospectus, (iii) of
the time and date that any post-effective amendment to the Registration
Statement becomes effective and (iv) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration
13
Statement or any post-effective amendment thereto or of any order
preventing or suspending the use of any preliminary prospectus or the
Prospectus, or of any proceedings to remove, suspend or terminate from
listing or quotation the Common Stock from any securities exchange upon
which it is listed for trading or included or designated for quotation,
or of the threatening or initiation of any proceedings for any of such
purposes. If the Commission shall enter any such stop order at any
time, the Company will use its best efforts to obtain the lifting of
such order at the earliest possible moment. Additionally, the Company
agrees that it shall comply with the provisions of Rules 424(b), 430A
and 434, as applicable, under the Securities Act and will use its
reasonable efforts to confirm that any filings made by the Company
under such Rule 424(b) were received in a timely manner by the
Commission.
(c) AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS AND OTHER
SECURITIES ACT MATTERS. If, during the Prospectus Delivery Period, any
event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if in the
opinion of the Representatives or counsel for the Underwriters it is
otherwise necessary to amend or supplement the Prospectus to comply
with law, the Company agrees to promptly prepare (subject to Section
3(A)(a) hereof), file with the Commission and furnish at its own
expense to the Underwriters and to dealers, amendments or supplements
to the Prospectus so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the circumstances
when the Prospectus is delivered to a purchaser, be misleading or so
that the Prospectus, as amended or supplemented, will comply with law.
(d) COPIES OF ANY AMENDMENTS AND SUPPLEMENTS TO THE
PROSPECTUS. The Company agrees to furnish the Representatives, without
charge, during the Prospectus Delivery Period, with as many copies of
the Prospectus and any amendments and supplements thereto as the
Representatives may reasonably request.
(e) BLUE SKY COMPLIANCE. The Company shall cooperate with the
Representatives and counsel for the Underwriters to qualify or register
the Common Shares for sale under (or obtain exemptions from the
application of) the state securities or blue sky laws or Canadian
provincial securities laws of those jurisdictions designated by the
Representative, shall comply with such laws and shall maintain such
qualifications, registrations and exemptions in effect so long as
required for the distribution of the Common Shares. The Company shall
not be required to qualify as a foreign corporation or to take any
action that would subject it to general service of process in any such
jurisdiction where it is not presently qualified or where it would be
subject to taxation as a foreign corporation. The Company will advise
the Representatives promptly of the suspension of the qualification or
registration of (or any such exemption relating to) the Common Shares
for offering, sale or trading in any jurisdiction or any initiation or
threat of any proceeding for any such purpose, and in the event of the
issuance of any order suspending such qualification, registration or
exemption, the Company shall use its best efforts to obtain the
withdrawal thereof at the earliest possible moment.
(f) USE OF PROCEEDS. The Company shall apply the net proceeds
from the sale of the Common Shares sold by it in the manner described
under the caption "Use of Proceeds" in the Prospectus.
(g) TRANSFER AGENT. The Company shall engage and maintain, at
its expense, a registrar and transfer agent for the Common Stock.
14
(h) EARNINGS STATEMENT. As soon as practicable, the Company
will make generally available to its security holders and to the
Representatives an earnings statement (which need not be audited) that
satisfies the provisions of Section 11(a) of the Securities Act
including, at the option of the Company, Rule 158 thereunder.
(i) PERIODIC REPORTING OBLIGATIONS. During the Prospectus
Delivery Period the Company shall file, on a timely basis, with the
Commission and the Nasdaq National Market all reports and documents
required to be filed under the Exchange Act.
(j) AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES.
During the period of 180 days following the date of the Prospectus, the
Company will not, without the prior written consent of BAS (which
consent may be withheld at the sole discretion of BAS), directly or
indirectly, sell, offer, contract or grant any option to sell, pledge,
transfer or establish an open "put equivalent position" within the
meaning of Rule 16a-1(h) under the Exchange Act, or otherwise dispose
of or transfer, or announce the offering of, or file any registration
statement under the Securities Act in respect of, any shares of Common
Stock, options or warrants to acquire shares of the Common Stock or
securities exchangeable or exercisable for or convertible into shares
of Common Stock (other than as contemplated by this Agreement with
respect to the Common SHARES); PROVIDED, HOWEVER, that the Company may
issue shares of its Common Stock or options to purchase its Common
Stock, or Common Stock upon exercise of options, pursuant to any stock
option, stock bonus or other stock plan or arrangement described in the
Prospectus.
(k) FUTURE REPORTS TO THE REPRESENTATIVES. During the period
of five years hereafter the Company will furnish to the Representatives
at 0 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000 Attention: Xxxxxxx Xxxxxx:
(i) as soon as practicable after the end of each fiscal year, copies of
the Annual Report of the Company containing the balance sheet of the
Company as of the close of such fiscal year and statements of income,
Shareholders' equity and cash flows for the year then ended and the
opinion thereon of the Company's independent auditors or independent
certified public accountants; (ii) as soon as practicable after the
filing thereof, copies of each proxy statement, Annual Report on Form
10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or
other report filed by the Company with the Commission, the NASD or any
securities exchange; and (iii) as soon as available, copies of any
report or communication of the Company mailed generally to holders of
its capital stock.
BAS, on behalf of the several Underwriters, may, in its sole
discretion, waive in writing the performance by the Company of any one
or more of the foregoing covenants or extend the time for their
performance.
B. COVENANTS OF THE SELLING SHAREHOLDERS. Each Selling
Shareholder further covenants and agrees with each Underwriter:
(a) AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES. Such
Selling Shareholder will not, without the prior written consent of BAS
(which consent may be withheld in its sole discretion), directly or
indirectly, sell, offer, contract or grant any option to sell
(including without limitation any short sale), pledge, transfer,
establish an open "put equivalent position" within the meaning of Rule
16a-1(h) under the Exchange Act, or otherwise dispose of any shares of
Common Stock, options or warrants to acquire shares of Common Stock, or
securities exchangeable or exercisable for or convertible into shares
of Common Stock currently or hereafter owned either of record or
beneficially (as defined in Rule 13d-3 under Securities Exchange Act of
1934, as amended) by such Selling Shareholder, or publicly announce the
undersigned's intention to do any of the foregoing, for a period
15
commencing on the date hereof and continuing through the close of
trading on the date 180 days after the date of the Prospectus.
(b) DELIVERY OF FORMS W-8 AND W-9. To deliver to the
Representatives prior to the First Closing Date a properly completed
and executed United States Treasury Department Form W-8 (if the Selling
Shareholder is a non-United States person) or Form W-9 (if the Selling
Shareholder is a United States Person).
BAS, on behalf of the several Underwriters, may, in its sole
discretion, waive in writing the performance by any Selling Shareholder
of any one or more of the foregoing covenants or extend the time for
their performance.
SECTION 4. PAYMENT OF EXPENSES. The Company agrees to pay all
costs, fees and expenses incurred in connection with the performance of its
obligations hereunder and in connection with the transactions contemplated
hereby, including without limitation (i) all expenses incident to the issuance
and delivery of the Common Shares (including all printing and engraving costs),
(ii) all fees and expenses of the registrar and transfer agent of the Common
Stock, (iii) all necessary issue, transfer and other stamp taxes in connection
with the issuance and sale of the Common Shares to the Underwriters, (iv) all
fees and expenses of the Company's counsel, independent certified public
accountants or independent auditors and other advisors, (v) all costs and
expenses incurred in connection with the preparation, printing, filing, shipping
and distribution of the Registration Statement (including financial statements,
exhibits, schedules, consents and certificates of experts), each preliminary
prospectus and the Prospectus, and all amendments and supplements thereto, and
this Agreement, (vi) all filing fees, attorneys' fees and expenses incurred by
the Company or the Underwriters in connection with qualifying or registering (or
obtaining exemptions from the qualification or registration of) all or any part
of the Common Shares for offer and sale under the state securities or blue sky
laws or the provincial securities laws of Canada, and, if requested by the
Representative, preparing and printing a "Blue Sky Survey" or memorandum, and
any supplements thereto, advising the Underwriters of such qualifications,
registrations and exemptions, (vii) the filing fees incident to, and the
reasonable fees and expenses of counsel for the Underwriters in connection with,
the NASD's review and approval of the Underwriters' participation in the
offering and distribution of the Common Shares, (viii) the fees and expenses
associated with including the Common Shares on the Nasdaq National Market, and
(ix) all other fees, costs and expenses referred to in Item 14 of Part II of the
Registration Statement. Except as provided in this Section 4, Section 6, Section
8 and Section 9 hereof, the Underwriters shall pay their own expenses, including
the fees and disbursements of their counsel.
To the extent that the Company fails to pay the fees and
expenses as provided for in the Registration Rights Agreement dated as of July
30, 1999, each Selling Shareholder agrees with each Underwriter to pay (directly
or by reimbursement) all fees and expenses incident to the performance of its
obligations under this Agreement which are not otherwise specifically provided
for herein, including but not limited to (i) fees and expenses of counsel and
other advisors for such Selling Shareholder, (ii) its pro rata portion (based on
the number of Common Shares being sold by each Selling Shareholder) of the fees
and expenses of the Custodian and (iii) its pro rata portion (based on the
number of Common Shares being sold by each Selling Shareholder) of the expenses
and taxes incident to the sale and delivery of the Common Shares to be sold by
such Selling Shareholder to the Underwriters hereunder.
This Section 4 shall not affect or modify any separate, valid
agreement relating to the allocation of payment of expenses between the Company,
on the one hand, and the Selling Shareholders, on the other hand.
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SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS.
The obligations of the several Underwriters to purchase and pay for the Common
Shares as provided herein on the First Closing Date and, with respect to the
Optional Common Shares, the Second Closing Date, shall be subject to the
accuracy of the representations and warranties on the part of the Company and
the Selling Shareholders set forth in Sections 1(A) and 1(B) hereof as of the
date hereof and as of the First Closing Date as though then made and, with
respect to the Optional Common Shares, as of the Second Closing Date as though
then made, to the timely performance by the Company and the Selling Shareholders
of their respective covenants and other obligations hereunder, and to each of
the following additional conditions:
(a) AUDITORS' COMFORT LETTER. On the date hereof, the
Representatives shall have received from Ernst & Young LLP, independent
certified public accountants or independent auditors for the Company, a
letter dated the date hereof addressed to the Underwriters, in form and
substance reasonably satisfactory to the Representatives, containing
statements and information of the type ordinarily included in auditors'
"comfort letters" to underwriters, delivered according to Statement of
Auditing Standards No. 72, with respect to the audited and unaudited
financial statements and certain financial information contained in the
Registration Statement and the Prospectus (and the Representatives
shall have received an additional 2 conformed copies of such comfort
letter for each of the several Underwriters).
(b) COMPLIANCE WITH REGISTRATION REQUIREMENTS; NO STOP ORDER;
NO OBJECTION FROM NASD. For the period from and after effectiveness of
this Agreement and prior to the First Closing Date and, with respect to
the Optional Common Shares, the Second Closing Date:
(i) the Company shall have filed the Prospectus with the
Commission (including the information required by Rule 430A under the
Securities Act) in the manner and within the time period required by
Rule 424(b) under the Securities Act; or the Company shall have filed a
post-effective amendment to the Registration Statement containing the
information required by such Rule 430A, and such post-effective
amendment shall have become effective; or, if the Company elected to
rely upon Rule 434 under the Securities Act and obtained the
Representatives' consent thereto, the Company shall have filed a Term
Sheet with the Commission in the manner and within the time period
required by such Rule 424(b);
(ii) no stop order suspending the effectiveness of the
Registration Statement, any Rule 462(b) Registration Statement, or any
post-effective amendment to the Registration Statement, shall be in
effect and no proceedings for such purpose shall have been instituted
or threatened by the Commission; and
(iii)the NASD shall have raised no objection to the
fairness and reasonableness of the underwriting terms and arrangements.
(c) NO MATERIAL ADVERSE CHANGE OR RATINGS AGENCY CHANGE. For
the period from and after the date of this Agreement and prior to the
First Closing Date and, with respect to the Optional Common Shares, the
Second Closing Date: (i) in the judgment of the Representatives there
shall not have occurred any Material Adverse Change; and (ii) there
shall not have occurred any downgrading, nor shall any notice have been
given of any intended or potential downgrading or of any review for a
possible change that does not indicate the direction of any possible
change, in the rating accorded any securities, or in the financial
strength or claims paying ability rating, of the Company or any of its
subsidiaries by any "nationally recognized statistical rating
organization" as such term is defined by the Commission for purposes of
Rule 436(g)(2) under the Securities Act.
17
(d) OPINION OF COUNSEL FOR THE COMPANY. On each of the First
Closing Date and the Second Closing Date the Representatives shall have
received the favorable opinion of (i) Xxxx, Weiss, Rifkind, Xxxxxxx &
Xxxxxxxx, counsel for the Company, dated as of such Closing Date, the
form of which is attached as EXHIBIT A-1 and (ii) Xxxxx Kusev, Esq.,
Chief Compliance Officer for the Company, dated the Closing Date, the
form of which is attached as EXHIBIT A-2 (and the Representatives shall
have received an additional 2 conformed copies of such legal opinions
for each of the several Underwriters).
(e) OPINION OF COUNSEL FOR THE UNDERWRITERS. On each of the
First Closing Date and the Second Closing Date the Representatives
shall have received the favorable opinion of LeBoeuf, Lamb, Xxxxxx &
XxxXxx, L.L.P., counsel for the Underwriters, dated as of such Closing
Date, with respect to the matters as the Representatives may reasonably
request (and the Representatives shall have received an additional 2
conformed copies of such counsel's legal opinion for each of the
several Underwriters).
(f) OFFICERS' CERTIFICATE. On each of the First Closing Date
and the Second Closing Date the Representatives shall have received a
written certificate executed by the Chairman of the Board, Chief
Executive Officer or President of the Company and the Chief Financial
Officer or Chief Accounting Officer of the Company, dated as of such
Closing Date, to the effect set forth in subsection (b)(ii) of this
Section 5, and further to the effect that:
(i) for the period from and after the date of this
Agreement and prior to such Closing Date, there has not occurred any
Material Adverse Change;
(ii) the representations, warranties and covenants of the
Company set forth in Section 1(A) of this Agreement are true and
correct with the same force and effect as though expressly made on and
as of such Closing Date; and
(iii)the Company has complied with all the agreements
hereunder and satisfied all the conditions on its part to be performed
or satisfied hereunder at or prior to such Closing Date.
(g) BRING-DOWN COMFORT LETTER. On each of the First Closing
Date and the Second Closing Date the Representatives shall have
received from Ernst & Young LLP, independent certified public
accountants or independent auditors for the Company, a letter dated
such date, in form and substance reasonably satisfactory to the
Representatives, to the effect that they reaffirm the statements made
in the letter furnished by them pursuant to subsection (a) of this
Section 5, except that the specified date referred to therein for the
carrying out of procedures shall be no more than three business days
prior to the First Closing Date or Second Closing Date, as the case may
be (and the Representatives shall have received an additional 2
conformed copies of such comfort letter for each of the several
Underwriters).
(h) OPINION OF COUNSEL FOR THE SELLING SHAREHOLDERS. With
respect to each Selling Shareholder on each of the First Closing Date
and the Second Closing Date (if any of the Optional Common Shares are
to be sold by such Selling Shareholder on such date) the
Representatives shall have received the favorable opinion of, counsel
for such Selling Shareholder, dated as of such Closing Date, in the
respective forms which are attached as EXHIBIT B (and the
Representatives shall have received an additional 2 conformed copies of
such counsel's legal opinion for each of the several Underwriters).
(i) SELLING SHAREHOLDERS' CERTIFICATE. On each of the First
Closing Date and the Second Closing Date (if any of the Optional Common
Shares are to be sold by such Selling Shareholder on
18
such date) the Representatives shall have received a written
certificate executed by such Selling Shareholder or the
Attorney-in-Fact of such Selling Shareholder, dated as of such Closing
Date, to the effect that:
(i) the representations and warranties of such Selling
Shareholder set forth in Section 1(B) of this Agreement are true and
correct with the same force and effect as though expressly made by such
Selling Shareholder on and as of such Closing Date; and
(ii) such Selling Shareholder has complied with all the
agreements and satisfied all the conditions on its part to be performed
or satisfied at or prior to such Closing Date.
(j) SELLING SHAREHOLDERS' DOCUMENTS. On the date hereof, the
Company and the Selling Shareholders shall have furnished for review by
the Representatives copies of the Power of Attorney and Custody
Agreements executed by each of the Selling Shareholders and such
further information, certificates and documents as the Representatives
may reasonably request.
(k) LOCK-UP AGREEMENT FROM CERTAIN SECURITYHOLDERS OF THE
COMPANY OTHER THAN SELLING SHAREHOLDERS. On the date hereof, the
Company shall have furnished to the Representatives an agreement in the
form of EXHIBIT C hereto from its executive officers and directors and
Xxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxx Xxxxxxx, and Xxxx Xxxxxxxxx, and such
agreement shall be in full force and effect on each of the First
Closing Date and the Second Closing Date.
(l) ADDITIONAL DOCUMENTS. On or before each of the First
Closing Date and the Second Closing Date, the Representatives and
counsel for the Underwriters shall have received such information,
documents and opinions as they may reasonably require for the purposes
of enabling them to pass upon the issuance and sale of the Common
Shares as contemplated herein, or in order to evidence the accuracy of
any of the representations and warranties, or the satisfaction of any
of the conditions or agreements, herein contained.
If any condition specified in this Section 5 is not satisfied
when and as required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company and the Selling Shareholders at any
time on or prior to the First Closing Date and, with respect to the Optional
Common Shares, at any time prior to the Second Closing Date, which termination
shall be without liability on the part of any party to any other party, except
that Section 4, Section 6, Section 8 and Section 9 shall at all times be
effective and shall survive such termination.
SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If this
Agreement is terminated by the Representatives pursuant to Section 5, Section 7,
or Section 11 or Section 17, or if the sale to the Underwriters of the Common
Shares on the First Closing Date is not consummated because of any refusal,
inability or failure on the part of the Company or any of the Selling
Shareholders to perform any agreement herein or to comply with any provision
hereof, the Company agrees to reimburse the Representatives and the other
Underwriters (or such Underwriters as have terminated this Agreement with
respect to themselves), severally, upon demand for all out-of-pocket expenses
that shall have been reasonably incurred by the Representatives and the
Underwriters in connection with the proposed purchase and the offering and sale
of the Common Shares, including but not limited to reasonable fees and
disbursements of counsel, printing expenses, travel expenses, postage, facsimile
and telephone charges.
19
SECTION 7. EFFECTIVENESS OF THIS AGREEMENT.
This Agreement shall not become effective until the later of
(i) the execution of this Agreement by each of the parties hereto and (ii)
notification by the Commission to the Company and the Representatives of the
effectiveness of the Registration Statement under the Securities Act.
Prior to such effectiveness, this Agreement may be terminated
by any party by notice to each of the other parties hereto, and any such
termination shall be without liability on the part of (a) the Company or the
Selling Shareholders to any Underwriter, except that the Company and the Selling
Shareholders shall be obligated to reimburse the expenses of the Representatives
and the Underwriters pursuant to Sections 4 and 6 hereof, (b) of any Underwriter
to the Company or the Selling Shareholders, or (c) of any party hereto to any
other party except that the provisions of Section 8 and Section 9 shall at all
times be effective and shall survive such termination.
SECTION 8. INDEMNIFICATION.
(a) INDEMNIFICATION OF THE UNDERWRITERS BY THE COMPANY. The
Company agrees to indemnify and hold harmless each Underwriter, its
officers and employees, and each person, if any, who controls any
Underwriter within the meaning of the Securities Act and the Exchange
Act against any loss, claim, damage, liability or expense, as incurred,
to which such Underwriter or such controlling person may become
subject, under the Securities Act, the Exchange Act or other federal or
state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is
effected with the written consent of the Company), insofar as such
loss, claim, damage, liability or expense (or actions in respect
thereof as contemplated below) arises out of or is based (i) upon any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, or any amendment thereto,
including any information deemed to be a part thereof pursuant to Rule
430A or Rule 434 under the Securities Act, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading; or (ii) upon
any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; or (iii) in whole or in part upon any inaccuracy in the
representations and warranties of the Company contained herein; or (iv)
in whole or in part upon any failure of the Company to perform its
obligations hereunder or under law; or (v) upon any act or failure to
act or any alleged act or failure to act by any Underwriter in
connection with, or relating in any manner to, the Common Stock or the
offering contemplated hereby, and which is included as part of or
referred to in any loss, claim, damage, liability or action arising out
of or based upon any matter covered by clause (i) or (ii) above,
PROVIDED that the Company shall not be liable under this clause (v) to
the extent that a court of competent jurisdiction shall have determined
by a final judgment that such loss, claim, damage, liability or action
resulted directly from any such acts or failures to act undertaken or
omitted to be taken by such Underwriter through its bad faith or
willful misconduct; and to reimburse each Underwriter and each such
controlling person for any and all expenses (including the fees and
disbursements of counsel chosen by BAS or Xxxxxxx Xxxxx) as such
expenses are reasonably incurred by such Underwriter or such
controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage,
liability, expense or action; PROVIDED, HOWEVER, that the foregoing
indemnity agreement shall not apply to any loss, claim, damage,
liability or expense to the extent, but only to the extent, arising out
of or based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in conformity
with written information furnished to the Company by the
Representatives expressly for use in the
20
Registration Statement, any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto); and provided, further, that
with respect to any preliminary prospectus, the foregoing indemnity
agreement shall not inure to the benefit of any Underwriter from whom
the person asserting any loss, claim, damage, liability or expense
purchased Common Shares, or any person controlling such Underwriter, if
copies of the Prospectus were timely delivered to the Underwriter
pursuant to Section 2 and a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the
Common Shares to such person (it being understood that if at the time
of any such claim such Underwriter shall certify that it has sent or
given the Prospectus as then amended or supplemented to any person
making such claim at or prior to the written confirmation of such sale,
it shall be presumed that such Prospectus has been so sent or given
unless the Company shall have sustained the burden of proving, in a
court of competent jurisdiction by a final and nonappealable order,
that the facts are otherwise), and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss,
claim, damage, liability or expense. The indemnity agreement set forth
in this Section 8(a) shall be in addition to any liabilities that the
Company may otherwise have.
(b) INDEMNIFICATION OF THE UNDERWRITERS BY THE SELLING
SHAREHOLDERS. Each Selling Shareholder agrees, severally and not
jointly, to indemnify and hold harmless each Underwriter, its officers
and employees, and each person, if any, who controls such Underwriter
within the meaning of the Securities Act or the Exchange Act, against
any loss, claim, damage, liability or expense, as incurred, to which
such Underwriter or controlling persons may become subject, under the
Securities Act, the Exchange Act, or other federal or state statutory
law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the
written consent of such Selling Shareholder), insofar as such loss,
claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based (i) upon any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement, or any amendment thereto, including any
information deemed to be a part thereof pursuant to Rule 430A or Rule
434 under the Securities Act, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading; or (ii) upon any untrue
statement or alleged untrue statement of a material fact contained in
any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
or (iii) in whole or in part upon any inaccuracy in the representations
and warranties of such Selling Shareholder contained herein; or (iv) in
whole or in part upon any failure of such Selling Shareholder to
perform its obligations hereunder or under law; in each case under
clauses (i) and (ii) immediately above to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in the Registration Statement,
any preliminary prospectus, the Prospectus (or any amendment or
supplement thereto), in reliance upon and in conformity with written
information furnished to the Company by such Selling Shareholder
expressly for use therein; and to reimburse the Underwriters, or any
such director, officer or controlling person for any legal and other
expense reasonably incurred by the Underwriters, or any such director,
officer or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; PROVIDED HOWEVER, that with
respect to any preliminary prospectus, the foregoing indemnity
agreement shall not inure to the benefit of any Underwriter from whom
the person asserting any loss, claim, damage, liability or expense
purchased Common Shares, or any person controlling such Underwriter, if
copies of the Prospectus were timely delivered to the Underwriter
pursuant to Section 2 and a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by
21
or on behalf of such Underwriter to such person, if required by law so
to have been delivered, at or prior to the written confirmation of the
sale of the Common Shares to such person (it being understood that if
at the time of any such claim such Underwriter shall certify that it
has sent or given the Prospectus as then amended or supplemented to any
person making such claim at or prior to the written confirmation of
such sale, it shall be presumed that such Prospectus has been so sent
or given unless the Selling Shareholder shall have sustained the burden
of proving, in a court of competent jurisdiction by a final and
nonappealable order, that the facts are otherwise), and if the
Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage, liability or expense. The
Underwriters, hereby acknowledge that the only information that the
Selling Shareholders have furnished to the Company expressly for use in
the Registration Statement, any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) are the statements
set forth in the Prospectus under the caption "Principal and Selling
Shareholders"; and the Selling Shareholders confirm that such
statements are correct. The indemnity agreement set forth in this
Section 8(b) shall be limited to an amount equal to the total initial
public offering price of the Common Shares sold by such Selling
Shareholder, less the underwriting discount, as set forth on the front
cover page of the Prospectus.
(c) INDEMNIFICATION OF THE COMPANY AND EACH SELLING
SHAREHOLDER BY THE UNDERWRITERS. Each Underwriter agrees, severally and
not jointly, to indemnify and hold harmless the Company and each
Selling Shareholder, each of their respective directors, each of their
respective officers who signed the Registration Statement, and each
person, if any, who controls the Company or a Selling Shareholder,
against any loss, claim, damage, liability or expense, as incurred, to
which the Company or a Selling Shareholder, or any such director,
officer, or controlling person may become subject, under the Securities
Act, the Exchange Act, or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of
any litigation, if such settlement is effected with the written consent
of such Underwriter), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises
out of or is based upon any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto),
or arises out of or is 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
the Registration Statement, any preliminary prospectus, the Prospectus
(or any amendment or supplement thereto), in reliance upon and in
conformity with written information furnished to the Company and by the
Representatives expressly for use therein; and to reimburse the Company
and each Selling Shareholder, or any such director, officer, or
controlling person for any legal and other expense reasonably incurred
by the Company or any Selling Shareholder, or any such director,
officer, controlling person, in connection with investigating,
defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action. The Company and each Selling
Shareholder, hereby acknowledge that the only information that the
Underwriters have furnished to the Company expressly for use in the
Registration Statement, any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto) are the statements set forth
in the table in the first paragraph, in the third paragraph with
respect to selling concessions and the eleventh, twelfth, thirteenth
and fourteenth paragraphs describing the types of activities the
Underwriters may engage in that would stabilize the price of the Common
Stock, each under the caption "Underwriting" in the Prospectus; and the
Underwriters confirm that such statements are correct. The indemnity
agreement set forth in this Section 8(c) shall be in addition to any
liabilities that each Underwriter may otherwise have.
(d) NOTIFICATIONS AND OTHER INDEMNIFICATION PROCEDURES.
Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such
22
indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party under this Section 8, notify the
indemnifying party in writing of the commencement thereof, but the
omission to so notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party for
contribution or otherwise under the indemnity agreement contained in
this Section 8 to the extent it is not prejudiced as a proximate result
of such failure. In case any such action is brought against any
indemnified party and such indemnified party seeks or intends to seek
indemnity from an indemnifying party, the indemnifying party will be
entitled to participate in, and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by
written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume
the defense thereof with counsel reasonably satisfactory to such
indemnified party; PROVIDED, HOWEVER, 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 a
conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or
that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice by
the indemnifying party of such indemnified party's election to assume
the defense of such action and approval by the indemnifying party of
the counsel selected by the indemnified party, the indemnifying party
will not be liable to such indemnified party under this Section 8 for
any legal or other expenses 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 preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the expenses of more
than one separate counsel (together with local counsel), approved by
the indemnifying party (BAS in the case of Section 8(c) and Section 9),
representing the indemnified parties who are parties to such action) or
(ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the
action, in each of which cases the fees and expenses of counsel shall
be at the expense of the indemnifying party.
(e) SETTLEMENTS. The indemnifying party under this Section 8
shall not be liable for any settlement of any proceeding effected
without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party
agrees to indemnify the indemnified party against any loss, claim,
damage, liability or expense by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by
Section 8(d) hereof, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request
and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request (other than those
fees and expenses that are being contested in good faith) prior to the
date of such settlement. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement,
compromise or consent to the entry of judgment in any pending or
threatened action, suit or proceeding in respect of which any
indemnified party is or could have been a party and indemnity was or
could have been sought hereunder by such indemnified party, unless such
settlement, compromise or consent includes an unconditional release of
such indemnified party from all liability on claims that are the
subject matter of such action, suit or proceeding.
23
SECTION 9. CONTRIBUTION.
If the indemnification provided for in Section 8 is for any
reason held to be unavailable to or otherwise insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount paid or payable by such indemnified party, as incurred, as
a result of any losses, claims, damages, liabilities or expenses referred to
therein (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Shareholders, on the one hand,
and the Underwriters, on the other hand, from the offering of the Common Shares
pursuant to this Agreement or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company and the Selling Shareholders, on the one
hand, and the Underwriters, on the other hand, in connection with the statements
or omissions or inaccuracies in the representations and warranties herein which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company and the Selling Shareholders, on the one hand, and the Underwriters,
on the other hand, in connection with the offering of the Common Shares pursuant
to this Agreement shall be deemed to be in the same respective proportions as
the total net proceeds from the offering of the Common Shares pursuant to this
Agreement (before deducting expenses) received by the Company and the Selling
Shareholders, and the total underwriting discount received by the Underwriters,
in each case as set forth on the front cover page of the Prospectus (or, if Rule
434 under the Securities Act is used, the corresponding location on the Term
Sheet) bear to the aggregate initial public offering price of the Common Shares
as set forth on such cover. The relative fault of the Company and the Selling
Shareholders, on the one hand, and the Underwriters, on the other hand, shall be
determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact or any such inaccurate or alleged inaccurate
representation or warranty relates to information supplied by the Company or the
Selling Shareholders, on the one hand, or the Underwriters, on the other hand,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in Section 8(d), any
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. The provisions set forth in
Section 8(d) with respect to notice of commencement of any action shall apply if
a claim for contribution is to be made under this Section 9; PROVIDED, HOWEVER,
that no additional notice shall be required with respect to any action for which
notice has been given under Section 8(d) for purposes of indemnification.
The Company, the Selling Shareholders and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 9 were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in this
Section 9.
Notwithstanding the provisions of this Section 9, (i) no
Underwriter shall be required to contribute any amount in excess of the
underwriting commissions received by such Underwriter in connection with the
Common Shares underwritten by it and distributed to the public and (ii) no
Selling Shareholder shall be required to contribute any amount in excess of the
total initial public offering price of the Common Sharers sold by such Selling
Shareholder, less the underwriting discounts applicable to such Selling
Shareholder. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
24
Section 9 are several, and not joint, in proportion to their respective
underwriting commitments as set forth opposite their names in SCHEDULE A. The
Selling Shareholders' obligations to contribute pursuant to this Section 9 are
several and not joint. For purposes of this Section 9, each officer and employee
of an Underwriter and each person, if any, who controls an Underwriter within
the meaning of the Securities Act and the Exchange Act shall have the same
rights to contribution as such Underwriter, and each director of the Company,
each officer of the Company who signed the Registration Statement, and each
person, if any, who controls the Company with the meaning of the Securities Act
and the Exchange Act shall have the same rights to contribution as the Company.
SECTION 10. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS.
If, on the First Closing Date or the Second Closing Date, as the case may be,
any one or more of the several Underwriters shall fail or refuse to purchase
Common Shares that it or they have agreed to purchase hereunder on such date,
and the aggregate number of Common Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase does not exceed 10% of the
aggregate number of the Common Shares to be purchased on such date, the other
Underwriters shall be obligated, severally, in the proportions that the number
of Firm Common Shares set forth opposite their respective names on SCHEDULE A
bears to the aggregate number of Firm Common Shares set forth opposite the names
of all such non-defaulting Underwriters, or in such other proportions as may be
specified by the Representatives with the consent of the non-defaulting
Underwriters, to purchase the Common Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date. If, on the
First Closing Date or the Second Closing Date, as the case may be, any one or
more of the Underwriters shall fail or refuse to purchase Common Shares and the
aggregate number of Common Shares with respect to which such default occurs
exceeds 10% of the aggregate number of Common Shares to be purchased on such
date, and arrangements satisfactory to the Representatives and the Company for
the purchase of such Common Shares are not made within 48 hours after such
default, this Agreement shall terminate without liability of any party to any
other party except that the provisions of Section 4, Section 6, Section 8 and
Section 9 shall at all times be effective and shall survive such termination. In
any such case either the Representatives or the Company shall have the right to
postpone the First Closing Date or the Second Closing Date, as the case may be,
but in no event for longer than seven days in order that the required changes,
if any, to the Registration Statement and the Prospectus or any other documents
or arrangements may be effected.
As used in this Agreement, the term "Underwriter" shall be
deemed to include any person substituted for a defaulting Underwriter under this
Section 10. Any action taken under this Section 10 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
SECTION 11. TERMINATION OF THIS AGREEMENT. Prior to the First
Closing Date this Agreement may be terminated by the Representatives by notice
given to the Company and the Selling Shareholders if at any time (i) trading or
quotation in any of the Company's securities shall have been suspended or
limited by the Commission or by the Nasdaq National Market or trading in
securities generally on the Nasdaq Stock Market or the New York Stock Exchange
shall have been suspended or limited, or minimum or maximum prices shall have
been generally established on any of such stock exchanges by the Commission or
the NASD; (ii) a general banking moratorium shall have been declared by any of
federal, New York or California authorities; (iii) there shall have occurred any
outbreak or escalation of national or international hostilities or any crisis or
calamity, or any change in the United States or international financial markets,
or any substantial change or development involving a prospective substantial
change in United States' or international political, financial or economic
conditions, as in the judgment of the Representatives is material and adverse
and makes it impracticable to market the
25
Common Shares in the manner and on the terms described in the Prospectus or to
enforce contracts for the sale of securities; (iv) in the judgment of the
Representatives there shall have occurred any Material Adverse Change; or (v)
the Company shall have sustained a loss by strike, fire, flood, earthquake,
accident or other calamity of such character as in the judgment of the
Representatives may interfere materially with the conduct of the business and
operations of the Company regardless of whether or not such loss shall have been
insured. Any termination pursuant to this Section 11 shall be without liability
on the part of (a) the Company or the Selling Shareholders to any Underwriter,
except that the Company and the Selling Shareholders shall be obligated to
reimburse the expenses of the Representatives and the Underwriters pursuant to
Sections 4 and 6 hereof, (b) any Underwriter to the Company or the Selling
Shareholders, or (c) of any party hereto to any other party except that the
provisions of Section 8 and Section 9 shall at all times be effective and shall
survive such termination.
SECTION 12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY.
The respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of the Selling Shareholders and of
the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or the Company or any of its or their partners,
officers or directors or any controlling person, or the Selling Shareholders, as
the case may be, and will indefinitely survive delivery of and payment for the
Common Shares sold hereunder and any termination of this Agreement.
SECTION 13. NOTICES. All communications hereunder shall be in
writing and shall be mailed, hand delivered or telecopied and confirmed to the
parties hereto as follows:
If to the Representatives:
Banc of America Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Equity Capital Markets
with copies to:
Banc of America Securities LLC
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxx, Esq.
LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxx, Esq.
26
If to the Company:
Universal American Financial Corp.
Xxx Xxxxxxxxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Chief Financial Officer
If to a Selling Shareholder, to the address of such Selling Shareholder on
SCHEDULE B hereto.
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
SECTION 14. SUCCESSORS. This Agreement will inure to the benefit
of and be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 10 hereof, and to the benefit of the employees, officers and
directors and controlling persons referred to in Section 8 and Section 9, and in
each case their respective successors, and no other person will have any right
or obligation hereunder. The term "successors" shall not include any purchaser
of the Common Shares from any of the Underwriters merely by reason of such
purchase.
SECTION 15. PARTIAL UNENFORCEABILITY. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
SECTION 16. GOVERNING LAW PROVISIONS.
(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
(b) CONSENT TO JURISDICTION. Any legal suit, action or
proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby ("Related Proceedings") may be
instituted in the federal courts of the United States of America
located in the City and County of New York or the courts of the State
of New York in each case located in the City and County of New York
(collectively, the "Specified Courts"), and each party irrevocably
submits to the exclusive jurisdiction (except for proceedings
instituted in regard to the enforcement of a judgment of any such court
(a "Related Judgment"), as to which such jurisdiction is non-exclusive)
of such courts in any such suit, action or proceeding. Service of any
process, summons, notice or document by mail to such party's address
set forth herein shall be effective service of process for any suit,
action or other proceeding brought in any such court. The parties
irrevocably and unconditionally waive any objection to the laying of
venue of any suit, action or other proceeding in the Specified Courts
and irrevocably and unconditionally waive and agree not to plead or
claim in any such court that any such suit, action or other proceeding
brought in any such court has been brought in an inconvenient forum.
Each party not located in the United States irrevocably appoints CT
Corporation System, which currently maintains a New York office at 000
Xxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Xxxxxx Xxxxxx of America, as its
agent to receive service of process or
27
other legal summons for purposes of any such suit, action or proceeding
that may be instituted in any state or federal court in the City and
County of New York.
SECTION 17. FAILURE OF ONE OR MORE OF THE SELLING SHAREHOLDERS TO
SELL AND DELIVER COMMON SHARES. If one or more of the Selling Shareholders shall
fail to sell and deliver to the Underwriters the Common Shares to be sold and
delivered by such Selling Shareholders at the First Closing Date pursuant to
this Agreement, then the Underwriters may at their option, by written notice
from the Representatives to the Company and the Selling Shareholders, either (i)
terminate this Agreement without any liability on the part of any Underwriter
or, except as provided in Sections 4, 6, 8 and 9 hereof, the Company or the
Selling Shareholders, or (ii) purchase the shares which the Company and other
Selling Shareholders have agreed to sell and deliver in accordance with the
terms hereof. If one or more of the Selling Shareholders shall fail to sell and
deliver to the Underwriters the Common Shares to be sold and delivered by such
Selling Shareholders pursuant to this Agreement at the First Closing Date or the
Second Closing Date, then the Underwriters shall have the right, by written
notice from the Representatives to the Company and the Selling Shareholders, to
postpone the First Closing Date or the Second Closing Date, as the case may be,
but in no event for longer than seven days in order that the required changes,
if any, to the Registration Statement and the Prospectus or any other documents
or arrangements may be effected.
SECTION 18. GENERAL PROVISIONS. This Agreement constitutes the
entire agreement of the parties to this Agreement and supersedes all prior
written or oral and all contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof. This Agreement may be
executed in two or more counterparts, each one of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement may not be amended or modified unless in writing by
all of the parties hereto, and no condition herein (express or implied) may be
waived unless waived in writing by each party whom the condition is meant to
benefit. The Table of Contents and the Section headings herein are for the
convenience of the parties only and shall not affect the construction or
interpretation of this Agreement.
[Signature Pages Follow]
28
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to the Company and the Custodian the
enclosed copies hereof, whereupon this instrument, along with all counterparts
hereof, shall become a binding agreement in accordance with its terms.
Very truly yours,
UNIVERSAL AMERICAN FINANCIAL CORP.
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Chief Executive Officer
SELLING SHAREHOLDERS:
X.X. XXXXXX PARTNERS (BHCA) L.P.
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Attorney-in-Fact
MIDLAND NATIONAL LIFE INSURANCE COMPANY
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Attorney-in-Fact
CAPITAL Z FINANCIAL SERVICES FUND II, L.P.
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Attorney-in-Fact
CAPITAL Z FINANCIAL SERVICES PRIVATE
FUND II, L.P.
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Attorney-in-Fact
UAFC, L.P.
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Attorney-in-Fact
SELLING SHAREHOLDERS:
WAND/UNIVERSAL INVESTMENTS I L.P.
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Attorney-in-Fact
WAND/UNIVERSAL INVESTMENTS II L.P.
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Attorney-in-Fact
The foregoing Underwriting Agreement is hereby confirmed and
accepted by the Representatives in New York, New York as of the date first above
written.
BANC OF AMERICA SECURITIES LLC
XXXXXXX XXXXX & ASSOCIATES, INC.
Acting as Representatives of the several Underwriters named in the attached
Schedule A.
BY: BANC OF AMERICA SECURITIES LLC
By: /s/ Xxxxxxx Xxxxxx, Xx.
----------------------------------
Name: Xxxxxxx Xxxxxx, Xx.
Title: Managing Director
SCHEDULE A
NUMBER OF
FIRM COMMON
SHARES
UNDERWRITERS TO BE PURCHASED
Banc of America Securities LLC ................. 5,414,400
Xxxxxxx Xxxxx & Associates, Inc. ............... 1,353,600
Xxxx, Xxxx & Co., Inc. ......................... 144,000
Xxxxxxx Xxxxxx Xxxxxx .......................... 144,000
Sandler X'Xxxxx & Partners L.P. ................ 144,000
Total.................................. 7,200,000
Schedule A
SCHEDULE B
NUMBER OF
NUMBER OF FIRM OPTIONAL COMMON SHARES TO BE
COMMON SHARES SOLD IF OPTIONS ARE EXERCISED
SELLING SHAREHOLDER TO BE SOLD IN FULL
Capital Z Financial Services Fund II, L.P. 484,741 0
00 Xxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxx
Capital Z Financial Services Private Fund II, L.P. 2,575
00 Xxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxx
UAFC, L.P. 660,053 0
00 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxx
X.X. Xxxxxx Partners (BHCA), L.P. 252,631 0
1221 Avenue of the Americas
Xxx Xxxx, XX 00000
Attention:
Midland National Life Insurance Company 500,000 0
Xxx Xxxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000-0000
Attention: E. Xxxx Xxxxxxx
Wand/Universal Investments I L.P. 240,000 24,000
c/o Wand Partners Inc.
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Wand/Universal Investments II L.P. 60,000 6,000
c/o Wand Partners Inc.
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Total:........................................... 2,200,000 30,000
========= ======
Schedule B - Page 1
EXHIBIT A-1
[OPINION OF XXXX, WEISS, RIFKIND, XXXXXXX & XXXXXXXX
COUNSEL FOR THE COMPANY]
July __, 0000
XXXX XX XXXXXXX SECURITIES LLC
XXXXXXX XXXXX & ASSOCIATES, INC.
As Representatives of the Several Underwriters
c/o BANC OF AMERICA SECURITIES
LLC 0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
UNIVERSAL AMERICAN FINANCIAL CORP.
Ladies and Gentlemen:
We have acted as special counsel to Universal American
Financial Corp., a New York corporation (the "Company"), in connection with the
Underwriting Agreement (the "Underwriting Agreement"), dated July 12, 2001, by
and among Banc of America Securities LLC, Xxxxxxx Xxxxx & Associates, Inc. and
the Underwriters named on Schedule A thereto (the "Underwriters"), for whom you
are acting as representatives, the Company and the Selling Shareholders named on
Schedule B thereto (the "Selling Shareholders"), relating to the purchase today
by the Underwriters of (a) an aggregate of 5,000,000 shares of common stock, par
value $.01, of the Company (the "Common Stock") from the Company (the "Company
Shares"), (b) an aggregate of 2,200,000 shares of Common Stock from the Selling
Shareholders (the "Selling Shareholder Shares") and (c) an aggregate of
750,000 additional shares of Common Stock from the Company and certain Selling
Shareholders (the "Over-Allotment Shares") in accordance with the exercise of
the option granted to the Underwriters pursuant to the terms of Section 2 of the
Underwriting Agreement. The Company Shares, Selling Shareholder Shares and
Over-Allotment Shares are collectively referred to herein as the "Shares." This
opinion is being furnished at the request of the Company as contemplated by
Section 5(d) of the Underwriting Agreement. Capitalized terms used and not
otherwise defined in this letter have the respective meanings given those terms
in the Underwriting Agreement.
EXHIBIT A-1
The Company has filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-3 (File No.
333-62036) under the Securities Act of 1933, as amended (the "Act"). The
Registration Statement was filed on May 30, 2001, was amended on June 18, 2001,
was further amended on July 11, 2001 and, we were advised orally by the
Commission, that the Registration Statement was declared effective by the
Commission at 12:00 p.m. noon on July 12, 2001. In this opinion, the
Registration Statement at the time it became effective under the Act, including
the documents incorporated by reference, is called the "Registration Statement;"
the prospectus included as part of the Registration Statement is referred to as
the "430A Prospectus;" and the final prospectus as filed as required by Rule
424(b) under the Act is referred to as the "final Prospectus" (the 430A
Prospectus and the final Prospectus are collectively referred to as the
"Prospectus").
A notification form for the listing of additional shares of
Common Stock was filed with the Nasdaq National Market on June 19, 2001.
In connection with the furnishing of this opinion, we have
examined originals, or copies certified or otherwise identified to our
satisfaction, of the following documents:
1. the Registration Statement;
2. the Prospectus;
3. the Underwriting Agreement;
4. a specimen certificate for the Shares; and
5. those documents incorporated by reference in the
Registration Statement set forth on Schedule I.
In addition, we have examined: (i) such corporate records of the Company as we
have considered appropriate, including a copy of the certificate of
incorporation, as amended, and by-laws, as amended, of the Company certified by
the Company as in effect on the date of this letter (collectively, the "Charter
Documents") and copies of resolutions of the board of directors of the Company
relating to the issuance of the Shares certified by the Company; and (ii) such
other certificates, agreements and documents as we deemed relevant and necessary
as a basis for the opinions expressed below. We have also relied upon the
EXHIBIT A-1
factual matters contained in the representations and warranties of the Company
made in the Underwriting Agreement and upon certificates of public officials and
the Company.
In our examination of the documents referred to above, we have
assumed, without independent investigation, the genuineness of all signatures,
the legal capacity of all individuals who have executed any of the documents
reviewed by us, the authenticity of all documents submitted to us as originals,
the conformity to the originals of all documents submitted to us as certified,
photostatic, reproduced or conformed copies of valid existing agreements or
other documents, the authenticity of the latter documents and that the
statements regarding matters of fact in the certificates, records, agreements,
instruments and documents that we have examined are accurate and complete.
Whenever we indicate that our opinion is based upon our
knowledge or words of similar import, our opinion is based solely on the actual
knowledge of the attorneys in this firm who are representing the Company in
connection with the Underwriting Agreement and without any independent
verification.
Based upon the foregoing, and subject to the assumptions,
exceptions and qualifications set forth in this letter, we are of the opinion
that:
1. The Company is a subsisting corporation in good
standing under the laws of the State of New York. The Company has all necessary
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and to enter
into and perform its obligations under the Underwriting Agreement.
2. The Shares to be purchased by the Underwriters from
the Company have been duly authorized by all necessary corporate action on the
part of the Company and, when issued and delivered by the Company pursuant to
the Underwriting Agreement against payment of the consideration set forth
therein, will be validly issued, fully paid and nonassessable.
3. The Common Stock of the Company conforms in all
material respects to the description set forth in the Prospectus under the
caption "Description of Common Stock". The form of certificate used to evidence
the Common Stock is in due and proper form and complies in all material
EXHIBIT A-1
respects with all applicable requirements of the charter and by-laws of the
Company and the Business Corporation Law of the State of New York (the "BCL").
The description of the Company's stock option, stock bonus and other stock plans
or arrangements, and the options or other rights granted and exercised
thereunder, set forth in the Prospectus accurately and fairly presents and
summarizes, in all material respects, the information required to be shown with
respect to such plans, arrangements, options and rights.
4. Except as otherwise disclosed in the Prospectus, no
shareholder of the Company or any other person has any preemptive right, right
of first refusal or other similar right to subscribe for or purchase Common
Stock of the Company arising by operation of the Charter Documents or the BCL or
to our knowledge, in any agreement or other outstanding instrument to which the
Company is a party.
5. The Underwriting Agreement has been duly authorized,
executed and delivered by the Company.
6. The statements (i) in the Prospectus under the
captions "Risk Factors - Change of Control provisions may adversely affect the
value of our common stock," and (ii) in Item 15 of the Registration Statement,
insofar as such statements constitute matters of law, summaries of legal
matters, the Charter Documents, documents or legal proceedings, or legal
conclusions, have been reviewed by us and fairly present and summarize, in all
material respects, the matters referred to therein.
7. Each of the Registration Statement and the
Prospectus, as of their respective effective or issue dates, appears on its face
to be appropriately responsive in all material respects with the applicable
requirements of the Act and the rules and regulations of the Commission under
the Act (the "Rules and Regulations"), except for the financial statements,
financial statement schedules, other financial data and statistical data derived
from financial statements included therein or in exhibits to or excluded from
either of them, as to which we express no opinion; and each document listed on
Schedule I hereto filed under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and incorporated by reference in the Registration
Statement and Prospectus (except for financial statements, financial statement
schedules, other financial data and statistical data derived from financial
statements
EXHIBIT A-1
included in either of them, as to which we express no opinion) appears on its
face to be appropriately responsive in all material respects when so filed to
the requirements of the Exchange Act and the rules and regulations under the
Exchange Act.
For the purposes of this opinion, we have assumed that the
statements made in the Registration Statement and Prospectus are complete and
correct.
8. To our knowledge, there are no Existing Instruments
required by the Act and the Rules and Regulations to be described or referred to
in the Registration Statement or to be filed as exhibits thereto, other than
those described or referred to therein or filed or incorporated by reference as
exhibits thereto.
9. The execution and delivery of the Underwriting
Agreement by the Company and the performance by the Company of its obligations
thereunder (other than performance by the Company of its obligations under the
indemnification section of the Underwriting Agreement, as to which we express no
opinion) (i) have been duly authorized by all necessary corporate action on the
part of the Company; (ii) will not result in any violation of the provisions of
the Charter Documents; (iii) will not constitute a breach of, or default under,
or result in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any of its subsidiaries pursuant to,
(A) the Company's Revolving Credit Facility with The Chase Manhattan Bank, as
lender, or (B) to our knowledge, any other material Existing Instrument; or (iv)
to our knowledge, will not result in any violation of any Applicable Law or any
judgment, order or decree of any court or arbitrator known to us, except (in the
case of clauses (iii) and (iv) above) where the breach or violation would not
have a material adverse effect on the Company and its subsidiaries taken as a
whole or adversely affect the consummation of the transactions contemplated by
the Underwriting Agreement. For purposes of this opinion, the term "Applicable
Law" means the BCL and those laws, rules and regulations of the United States of
America and the State of New York, in each case which in our experience are
normally applicable to the transactions of the type contemplated by the
Underwriting Agreement.
EXHIBIT A-1
10. No consent, approval, authorization or other order
of, or registration or filing with any Governmental Authority, which has not
been obtained, taken or made, is required under any Applicable Law for the
Company's execution, delivery and performance of the Underwriting Agreement and
consummation of the transactions contemplated thereby (except as required under
any state securities laws, as to which we express no opinion). For purposes of
this opinion, the term "Governmental Authority" means any executive,
legislative, judicial, administrative or regulatory body of the State of New
York or the United States of America.
11. The Company is not, and after receipt of payment for
the Shares will not be, required to be registered as an "investment company"
within the meaning of Investment Company Act of 1940, as amended, and the rules
and regulations of the Commission promulgated thereunder.
12. To our knowledge, there are no legal or governmental
actions, suits or proceedings pending or overtly threatened which are required
to be disclosed in the Registration Statement, other than those disclosed
therein.
13. Any required filing of the Prospectus pursuant to
Rule 424(b) under the Act has been made in the manner and within the time period
required by such Rule 424(b).
14. Except as disclosed in the Prospectus, to our
knowledge, there are no persons with registration or other similar rights to
have any equity or debt securities registered for sale under the Registration
Statement or included in the offering contemplated by the Underwriting
Agreement, other than the Selling Shareholders, except for such rights as have
been duly waived.
* * *
We have been advised orally by the staff of the Commission
that no stop order suspending the effectiveness of the Registration Statement
has been issued and to our knowledge no proceedings for that purpose have been
initiated or are pending or are threatened by the Commission.
We have participated in the preparation of the Registration
Statement and the Prospectus and, although we have not undertaken to investigate
or verify independently, and do not assume responsibility for, the accuracy or
completeness of the statements contained in either of them (other than
EXHIBIT A-1
as explicitly stated in paragraphs 3 and 6 above), based upon such participation
(and relying as to materiality as to factual matters to the extent we deemed
reasonable on officers, employees and other representatives of the Company), no
facts have come to our attention to lead us to believe that (a) the Registration
Statement or any amendment (except for the financial statements, financial
statement schedules, other financial data or statistical data derived from
financial statements included or incorporated by reference in or omitted from
those documents, as to which we express no such belief), at the time it became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or (b) the Prospectus or any amendment or
supplement (except for the financial statements, financial statement schedules,
other financial data or statistical data derived from financial statements
included or incorporated by reference in or omitted from those documents, as to
which we express no such belief), at the time the Prospectus was issued or on
the date of this letter, included or includes an untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
The opinions expressed above are limited to the laws of the
State of New York and the federal laws of the United States of America. Our
opinions are rendered only with respect to the laws, and the rules, regulations
and orders under those laws, that are currently in effect. This letter is
furnished by us solely for your benefit in connection with the transactions
referred to in the Underwriting Agreement and may not be circulated to, or
relied upon by, any other person without our prior written consent.
Very truly yours,
XXXX, WEISS, RIFKIND, XXXXXXX & XXXXXXXX
EXHIBIT A-1
SCHEDULE I
----------
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
(1) Annual Report on Form 10-K for the fiscal year ended December 31, 2000;
(2) Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
2001; and
(3) The description of the Common Stock contained in the Registration
Statement on Form 8-A, filed July 11, 1983.
EXHIBIT A-2
[OPINION OF XXXXX KUSEV,
CHIEF COMPLIANCE OFFICER OF THE COMPANY]
July __, 0000
XXXX XX XXXXXXX SECURITIES LLC
XXXXXXX XXXXX & ASSOCIATES, INC.
As Representatives of the Several Underwriters
c/o BANC OF AMERICA SECURITIES
LLC 0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
UNIVERSAL AMERICAN FINANCIAL CORP.
----------------------------------
Ladies and Gentlemen:
I am the Chief Compliance Officer of Universal American
Financial Corp., a New York corporation (the "Company") and have acted as
counsel to the Company, in connection with the Underwriting Agreement (the
"Underwriting Agreement"), dated July 12, 2001, by and among Banc of America
Securities LLC, Xxxxxxx Xxxxx & Associates, Inc. and the Underwriters named on
Schedule A thereto (the "Underwriters"), for whom you are acting as
representatives, the Company and the Selling Shareholders named on Schedule B
thereto (the "Selling Shareholders"), relating to the purchase today by the
Underwriters of (a) an aggregate of 5,000,000 shares of common stock, par value
$.01, of the Company (the "Common Stock") from the Company (the "Company
Shares"), (b) an aggregate of 2,200,000 shares of Common Stock from the Selling
Shareholders (the "Selling Shareholder Shares") and (c) an aggregate of 750,000
additional shares of Common Stock from the Company and certain Selling
Shareholders (the "Over-Allotment Shares") in accordance with the exercise of
the option granted to the Underwriters pursuant to the terms of Section 2 of the
Underwriting Agreement. The Company Shares, Selling Shareholder Shares and
Over-Allotment Shares are collectively referred to herein as the "Shares." This
opinion is being furnished at the request of the Company as contemplated by
Section 5(d) of the Underwriting Agreement. Capitalized terms used and not
otherwise defined in this letter have the respective meanings given those terms
in the Underwriting Agreement.
In connection with the furnishing of this opinion, I have
examined originals, or copies certified or otherwise identified to my
satisfaction, of the following documents:
1. the Registration Statement (No. 333-62036), including
a prospectus, filed by the Company with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the "Act"), as
it became effective under the Act (such Registration Statement, as amended at
the date hereof and including documents incorporated therein by reference, being
hereafter referred to as the "Registration Statement"),
EXHIBIT A-2
2. the prospectus included as part of the Registration
Statement and the prospectus supplement to such prospectus dated July 12, 2001
(such prospectus supplement, together with the prospectus included in the
Registration Statement and the documents incorporated therein by reference, are
referred to as the "Prospectus"), and
3. the Underwriting Agreement.
In addition, I have examined: (i) such corporate records of
the Company as I have considered appropriate, including a copy of the
certificate of incorporation, as amended, and by-laws, as amended, of the
Company certified by the Company as in effect on the date of this letter
(collectively, the "Charter Documents") and copies of resolutions of the board
of directors of the Company relating to the issuance of the Shares certified by
the Company; and (ii) such other certificates, agreements and documents as I
deemed relevant and necessary as a basis for the opinions expressed below. I
have also relied upon the factual matters contained in the representations and
warranties of the Company made in the Underwriting Agreement and upon
certificates of public officials and the Company.
In my examination of the documents referred to above, I have
assumed, without independent investigation, the genuineness of all signatures,
the legal capacity of all individuals who have executed any of the documents
reviewed by me, the authenticity of all documents submitted to me as originals,
the conformity to the originals of all documents submitted to me as certified,
photostatic, reproduced or conformed copies of valid existing agreements or
other documents, the authenticity of the latter documents and that the
statements regarding matters of fact in the certificates, records, agreements,
instruments and documents that I have examined are accurate and complete.
Based upon the foregoing, and subject to the assumptions,
exceptions and qualifications set forth in this letter, I am of the opinion
that:
1. Each significant subsidiary of the Company (as
defined in Rule 405 under the Securities Act) has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Prospectus and, to the best of my knowledge, each of it and the Company is duly
qualified as a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business, except for
such jurisdictions where the failure to so qualify or to be in good standing
would not, individually or in the aggregate, result in a Material Adverse
Change.
2. All of the issued and outstanding capital stock of
each significant subsidiary of the Company (as defined in Rule 405 under the
Securities Act) has been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Company, directly or through subsidiaries,
free and clear of, to the best of my knowledge, any pending or threatened claim.
Except as otherwise set forth in the Registration Statement, such capital stock
is owned by the Company free and clear of any security interest, mortgage,
pledge, lien or encumbrance.
3. To the best of my knowledge, there are no material
legal or governmental actions, suits or proceedings pending or threatened which
are required to be disclosed in the Registration Statement, other than those
disclosed therein.
4. To the best of my knowledge, there are no Existing
Instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto, other than those
EXHIBIT A-2
described or referred to therein or filed or incorporated by reference as
exhibits thereto, and the descriptions thereof and references thereto are
correct in all material respects.
5. To the best of my knowledge, there are no licenses,
franchises, contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described in the Registration Statement or to
be filed as an exhibit thereto other than those described therein or filed or
incorporated by reference as exhibits thereto.
6. To the best of my knowledge, neither the Company nor
any subsidiary is in violation of its charter or by-laws or any law,
administrative regulation or administrative or court decree applicable to the
Company or any subsidiary or is in Default in the performance or observance of
any obligation, agreement, covenant or condition contained in any material
Existing Instrument, except in each such case for such violations or Defaults as
would not, individually or in the aggregate, result in a Material Adverse
Change.
7. All of the issued and outstanding shares of Common
Stock of the Company have been duly authorized and validly issued, are fully
paid and nonassessable and have been issued in compliance with the registration
and qualification requirements of federal and state securities laws; the
capitalization of the Company conforms to the description set forth in the
Prospectus.
8. The Company has made all required filings under
applicable insurance holding company statutes, and has received approvals of
acquisition of control and/or affiliate transactions, in each jurisdiction in
which such filings or approvals are required, except where the failure to have
made such filings or receive such approvals in any such jurisdiction would not
result individually or in the aggregate, in a Material Adverse Change. Each of
the Company and its subsidiaries: (A) holds such permits, licenses, consents,
exemptions, franchises, authorizations and other approvals from insurance
departments and other governmental or regulatory authorities (each, an
"Authorization") (including, without limitation, insurance licenses from the
insurance regulatory agencies of the various states or other jurisdictions where
it conducts business (the "Insurance Licenses")), and has made all flings with
and notices to, all governmental or regulatory authorities and self-regulatory
organizations and all courts and other tribunals, including, without limitation,
under any applicable environmental laws (as defined below), as are necessary to
own, lease, license and operate its respective properties and to conduct
business, except where the failure to have any Authorization or Insurance
License or to make any such filing or notice would not, individually or in the
aggregate, result in a Material Adverse Change, and (B) has fulfilled and
performed all material obligations necessary to maintain such Authorizations and
Insurance Licenses. Except as would not, individually or in the aggregate,
result in a Material Adverse Change (A) each such Authorization and Insurance
License is valid and in full force and effect and each of the Company and its
subsidiaries is in compliance with all the terms and conditions thereof and with
the rules and regulations of the authorities and governing bodies having
jurisdiction with respect thereto; and (B) no event has occurred (including,
without limitation, the receipt of any notice from any authority or governing
body, the execution, delivery and performance of this Agreement by the Company,
the sale and delivery of the Common Shares and the compliance by the Company
with all of the provisions hereof and the consummation by the Company and its
subsidiaries of the transactions contemplated in this Agreement) which allows
or, after notice or lapse of time of both, would allow, revocation, suspension
or termination of any such Authorization or Insurance License or results or,
after notice or lapse of time or both, would result in any impairment of the
rights of the holder of any such Authorization or Insurance License. Except as
disclosed in the Prospectus, no insurance regulatory agency or body has issued
any order or decree impairing, restricting or prohibiting the payment of
dividends of any Company subsidiary to its respective parent which would have
individually or in the aggregate, a Material Adverse Change.
EXHIBIT A-2
My opinions are rendered only with respect to the laws, and
the rules, regulations and orders under those laws, that are currently in
effect. This letter is furnished by me solely for your benefit in connection
with the transactions referred to in the Underwriting Agreement and may not be
circulated to, or relied upon, by any other person without my prior written
consent.
Very truly yours,
--------------------------------------------
Name: J. Xxxxx Kusev, X.X.
Title: SVP and Chief Compliance Officer,
Universal American Financial Corp.
EXHIBIT B
[OPINION OF XXXX, WEISS,
RIFKIND, XXXXXXX & XXXXXXXX,
NEW YORK COUNSEL TO CERTAIN
SELLING SHAREHOLDERS]
EXHIBIT B
[OPINION OF SKADDEN, ARPS, SLATE, XXXXXXX & XXXX LLP,
COUNSEL TO WAND/UNIVERSAL INVESTMENT I L.P. AND
WAND/UNIVERSAL INVESTMENTS II L.P.]
EXHIBIT B
[OPINION OF X'XXXXXXXX LLP, COUNSEL TO
X.X. XXXXXX PARTNERS (BHCA), L.P.]
EXHIBIT B
[OPINION OF SIDLEY XXXXXX XXXXX & XXXX,
COUNSEL TO UAFC, L.P.]
EXHIBIT B
[OPINION OF XXXXXXX, XXXXXXXX & XXXXX,
COUNSEL TO CAPITAL FINANCIAL SERVICES FUND II, LP
AND TO CAPITAL Z FINANCIAL SERVICES PRIVATE FUND II, L.P.
EXHIBIT B
[OPINION OF GENERAL COUNSEL OF
MIDLAND NATIONAL LIFE INSURANCE COMPANY]
EXHIBIT C
LOCK UP AGREEMENT
Universal American Financial Corp.
Xxx Xxxxxxxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Banc of America Securities LLC
Xxxxxxx Xxxxx & Associates, Inc.
As Representatives of the Several Underwriters
c/o Banc of America Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Re: Universal American Financial Corp. (the "Company")
Ladies and Gentlemen:
The undersigned is an owner of record or beneficially of
certain shares of common stock, par value $0.01, of the Company or securities
convertible into or exchangeable or exercisable for common stock (collectively,
"Securities"). The Company proposes to carry out a public offering of common
stock (the "Offering") for which Banc of America Securities LLC and Xxxxxxx
Xxxxx & Associates, Inc. will act as the representatives (the "Representatives")
of the underwriters. The undersigned recognizes that the Offering will be of
benefit to the undersigned and will benefit the Company by, among other things,
raising additional capital for its operations. The undersigned acknowledges that
the Company, the Representatives and the other underwriters are relying on the
representations and agreements of the undersigned contained in this letter in
carrying out the Offering and in entering into underwriting arrangements with
the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby
agrees that the undersigned will not, without the prior written consent of Banc
of America Securities LLC, directly or indirectly, sell, offer, hedge, contract
or grant any option to sell (including without limitation any short sale),
pledge, transfer, establish an open "put equivalent position" within the meaning
of Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or otherwise dispose of any shares of Securities, options or
warrants to acquire Securities, or enter into a transaction which would have the
same effect, currently or hereafter owned either of record or beneficially (as
defined in Rule 13d-3 under the Exchange Act) by the undersigned, or publicly
announce the undersigned's intention to do any of the foregoing, for a period
commencing on the date hereof and continuing to a date 180 days after the first
date any of the common stock to be sold in the Offering is released by you for
sale to the public (the "Public Offering Date").
The foregoing paragraph shall not apply to (a) any securities
to be sold in the Offering, (b) the exercise of an option to purchase common
stock or the surrender of shares of common stock or of an option to purchase
shares of common stock in connection with the exercise of an option, in each
case, pursuant to an employee benefit plan of the Company (it being understood
that any shares of common stock issued to the undersigned pursuant to an
employee benefit plan of the Company shall be subject to the terms of this lock
up agreement), (c) transfers by way of testate or intestate succession or by
operation of law, (d) transfers to members of the immediate family of the
undersigned or to a trust, partnership, limited liability company or other
entity, all of the beneficial interests which are held by the undersigned,
EXHIBIT C
and (e) transfers to charitable organizations; provided that, in the case of
transfers pursuant to clauses (c), (d) and (e) of this sentence, the transferee
shall have agreed to be bound by the restrictions on transfer contained in this
letter.
The undersigned also agrees and consents to the entry of stop
transfer instructions with the Company's transfer agent and registrar against
the transfer of shares of Securities held by the undersigned except in
compliance with the foregoing restrictions.
Any Securities received upon exercise of options granted to
the undersigned will also be subject to this agreement. Any Securities acquired
by the undersigned in the open market will not be subject to this agreement.
This agreement is irrevocable and will be binding on the
undersigned and the respective successors, heirs, personal representatives, and
assigns of the undersigned. This agreement shall lapse and become null and void
if the Public Offering Date shall not have occurred on or before December 31,
2001.
Dated: ___________, 2001.
____________________________________________
Printed Name of Holder
By: _______________________________________
Signature
____________________________________________
Printed Name of Person Signing
____________________________________________
Capacity of Person Signing if Signing as
Custodian, Trustee, or on Behalf of an Entity
C-2
