EXHIBIT 4.1
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MEADOWBROOK INSURANCE GROUP, INC.
AND
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
____________________
WARRANT AGREEMENT
DATED AS OF _____________, ____
____________________
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WARRANT AGREEMENT
This Agreement is made as of _________., 2002 between MEADOWBROOK
INSURANCE GROUP, INC., a Michigan corporation (the "Company"), and FRIEDMAN,
BILLINGS, XXXXXX & CO., INC., ("FBR").
RECITALS
A. The Company proposes to sell, pursuant to an Underwriting Agreement
dated _______, 2002 between the Company and FBR (the "Underwriting Agreement"),
up to 18,500,000 shares (the "Initial Shares") of Common Stock, stated value
$.01 per share, of the Company (the "Common Stock"), to certain underwriters,
for which FBR is acting as lead representative (the "Underwriters") and up to
2,775,000 shares (the "Option Shares") of Common Stock, to cover
over-allotments, if any.
B. The Company deems it advisable, in consideration for the services
rendered to the Company by FBR as lead underwriter in connection with the
offering of the Common Stock, to issue to FBR warrants (the "Warrants")
entitling the holders thereof to purchase an aggregate of 300,000 shares of
Common Stock. The shares of Common Stock issued upon exercise of the Warrants
are referred to as the "Warrant Shares".
C. The Company desires to enter into this Agreement to set forth the
terms and conditions of the Warrants and the rights of the holders thereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I.
ISSUANCE, EXECUTION, EXPIRATION AND TRANSFER OF WARRANT
CERTIFICATES
SECTION 1.01. Form of Warrant Certificates. The Warrants shall be
evidenced by certificates in temporary or definitive fully registered form (the
"Warrant Certificates") substantially in the form of Exhibit A and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with any law or with
any rule or regulation made pursuant thereto or with any rule or regulation of
any securities exchange, or to conform to usage, or as consistently herewith may
be determined by the officers executing such Warrant Certificates as evidenced
by their execution of the Warrant Certificates. Each Warrant Certificate shall
evidence the right, subject to the provisions of this Agreement and of the
Warrant Certificate, to purchase the number of shares of Common Stock stated
therein, adjusted as provided for in Article III hereof, upon payment of the
Exercise Price (as defined in Section 2.01).
SECTION 1.02. Execution of Warrant Certificates. Each Warrant
Certificate, whenever issued, shall be dated as of the date of signature thereof
by the Company either upon initial issuance or upon exchange, substitution or
transfer, shall be signed manually by, or bear the facsimile signature of, the
Chairman of the Board or the President or a Treasurer or a Vice President of the
Company, shall have the Company's seal (if required) or a facsimile thereof
affixed or imprinted thereon and shall be attested by the manual or facsimile
signature of the Secretary or an Assistant Secretary of the Company. In case any
officer of the Company whose manual or facsimile signature has been placed upon
any Warrant Certificate shall have ceased to be such before such Warrant
Certificate is issued, it may be issued with the same effect as if such officer
had not ceased to be such at the date of issuance. Any Warrant Certificate may
be signed on behalf of the Company by any person who, at the actual date of the
execution of such Warrant Certificate, shall be a proper officer of the Company
to sign such Warrant Certificate, although at the date of the execution of this
Agreement any such person was not such an officer.
SECTION 1.03. Issuance, Delivery and Registration of Warrant
Certificates. The Company shall issue and deliver, at the closing of the sale of
the Initial Shares to the Underwriters as provided in the Underwriting
Agreement, to FBR or its designees, a Warrant Certificate representing the
Warrants, in substantially the form of Exhibit A. Additionally, the Company
shall sign and deliver Warrant Certificates upon exchange, transfer or
substitution for one or more previously signed Warrant Certificates as
hereinafter provided. The Company shall maintain books for the registration of
transfer and registration of Warrant Certificates (the "Warrant Register").
SECTION 1.04. Transfer and Exchange of Warrant Certificates. The
Company, from time to time, shall register the transfer of any outstanding
Warrant Certificates in the Warrant Register upon surrender at the principal
office of the Company of Warrant Certificates accompanied by a written
instrument or instruments of transfer, in form satisfactory to the Company, duly
executed by the Warrantholder or the Warrantholder's attorney duly authorized in
writing, and evidence, satisfactory to the Company, of compliance with the
provisions of Section 5.04. Upon any such registration of transfer, a new
Warrant Certificate shall be signed by the Company and issued to the transferee
and the surrendered Warrant Certificate shall be canceled by the Company.
Warrant Certificates may be exchanged at the option of the holder thereof, upon
surrender, properly endorsed, at the principal office of the Company, with
written instructions, for other Warrant Certificates signed by the Company
entitling the registered holder thereof, subject to the provisions thereof and
of this Agreement, to purchase in the aggregate a like number of shares of
Common Stock as the Warrant Certificate so surrendered. The Company may require
the payment of a sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any such exchange or transfer.
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ARTICLE II
SHARES OF COMMON STOCK ISSUABLE, EXERCISE PRICE, EXPIRATION
DATE AND EXERCISE OF WARRANTS
SECTION 2.01. Warrant Shares Issuable; Exercise Price; Expiration Date.
Each Warrant Certificate shall entitle the registered holder thereof, subject to
the provisions thereof and of this Agreement, to purchase from the Company at
any time from the first anniversary of the effective date (the "Effective Date")
of the registration statement (No. 333-86548) filed by the Company on Form S-2
under the Securities Act of 1933, as amended (the "Securities Act") to the close
of business on the third anniversary of such date (or, if such date is not a
Business Day (as defined below), the first following Business Day) the number of
shares of Common Stock stated therein, adjusted as provided in Article III, upon
payment of $______ per share (which price is equal to the public offering
price), adjusted as provided in Article III. Such price, as in effect from time
to time as provided in Article III, is referred to as the "Exercise Price". Each
share of Common Stock issuable upon exercise of a Warrant is referred to as a
"Warrant Share". Each Warrant not exercised during the period set forth above
shall become void, and all rights thereunder and all rights in respect thereof
under this Agreement shall cease, at the end of such period. For purposes of
this Agreement, the term "Business Day" means any day of the week other than a
Saturday, Sunday or a day which in The City of New York or in the city in which
the principal office of the Company is located shall be a legal holiday or a day
on which banking institutions are authorized or required by law to close.
SECTION 2.02. Exercise of Warrants. (a) Warrants may be exercised by
surrendering the Warrant Certificate evidencing such Warrants at the principal
office of the Company, with the Election to Exercise form set forth on the
reverse of the Warrant Certificate duly completed and signed, and by paying in
full to the Company (i) in cash, or (ii) by certified or official bank check, or
(iii) by any combination of the foregoing, the Exercise Price for each Warrant
Share as to which Warrants are then being exercised and any applicable taxes,
other than taxes that the Company is required to pay hereunder. A Warrantholder
may exercise such holder's Warrant for the full number of Warrant Shares
issuable upon exercise thereof or any lesser number of whole Warrant Shares.
(b) As soon as practicable after the exercise of any Warrants and
payment by the Warrantholder of the full Exercise Price for the Warrant Shares
as to which such Warrants are then being exercised, the Company shall
requisition from the transfer agent of the shares of Common Stock and deliver to
or upon the order of such Warrantholder a certificate or certificates for the
number of full Warrant Shares to which such Warrantholder is entitled,
registered in the name of such Warrantholder or as such Warrantholder shall
direct. Fractional Warrant Shares that otherwise would be issuable in respect of
such exercise shall be paid in cash as provided in Section 2.03, and the number
of Warrant Shares issuable to such Warrantholder shall be rounded down to the
next nearest whole number. If such Warrant Certificate shall not have been
exercised in full, the Company will issue to such Warrantholder a new Warrant
Certificate exercisable for the number of shares of Common
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Stock as to which such Warrant shall not have been exercised. The Company will
cancel all Warrants so surrendered.
(c) Each person in whose name any such certificate for Warrant Shares
is issued shall for all purposes be deemed to have become the holder of record
of such Warrant Shares on the date on which the Warrant Certificate was
surrendered to the Company and payment of the Exercise Price and any applicable
taxes was made to the Company, irrespective of the date of delivery of such
certificate for Warrant Shares.
(d) All Warrant Shares will be duly authorized, validly issued, fully
paid and nonassessable. The Company will pay all documentary stamp taxes
attributable to the initial issuance of Warrant Shares. The Company will not be
required, however, to pay any tax imposed in connection with any transfer
involved in the issue of the Warrant Shares in a name other than that of the
Warrantholder. In such case, the Company will not be required to issue any
certificate for Warrant Shares until the person or persons requesting the same
shall have paid to the Company the amount of any such tax or shall have
established to the Company's satisfaction that the tax has been paid or that no
tax is due.
SECTION 2.03. No Fractional Shares to Be Issued. If more than one
Warrant Certificate shall be surrendered for exercise at one time by the same
holder, the number of full Warrant Shares which shall be issuable upon exercise
thereof shall be computed on the basis of the aggregate number of Warrants so
surrendered. The Warrantholders, by their acceptance of the Warrant
Certificates, expressly waive their right to receive any fraction of a Warrant
Share or a share certificate representing a fraction of a Warrant Share. In lieu
thereof, the Company will purchase such fractional interest for an amount in
cash equal to the current market value of such fractional interest, as
reasonably determined by the Board of Directors of the Company.
SECTION 2.04. Cancellation of Warrants. The Company shall cancel any
Warrant Certificate delivered to it for exercise, in whole or in part, or
delivered to it for transfer, exchange or substitution, and no Warrant
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall destroy canceled
Warrant Certificates. If the Company shall acquire any of the Warrants, such
acquisition shall not operate as a redemption or termination of the right
represented by such Warrants unless and until the Warrant Certificates
evidencing such Warrants are surrendered to the Company for cancellation.
ARTICLE III
ADJUSTMENT OF EXERCISE PRICE; MERGER, ACQUISITION, ETC.;
RESERVATION OF SHARES OF COMMON STOCK; PAYMENT OF TAXES
SECTION 3.01. Adjustment of Exercise Price and Number of Warrant
Shares. The Exercise Price shall be subject to adjustment from time to time as
provided in this Article III. After each adjustment of the Exercise Price, each
Warrantholder shall at any time thereafter
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be entitled to purchase, at the Exercise Price resulting from such adjustment,
the number of Warrant Shares obtained by multiplying the Exercise Price in
effect immediately prior to such adjustment by the number of Warrant Shares
purchasable pursuant to the provisions of such Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
SECTION 3.02. Stock Dividends. If the Company shall declare a dividend
or any other distribution upon any capital stock which is payable in shares of
Common Stock or securities convertible into shares of Common Stock, the Exercise
Price shall be reduced to the quotient obtained by dividing (i) the number of
shares of Common Stock outstanding immediately prior to such declaration
multiplied by the then effective Exercise Price by (ii) the total number of
shares of Common Stock outstanding immediately after such declaration. All
shares of Common Stock and all convertible securities issuable in payment of any
dividend or other distribution upon the capital stock of the Company shall be
deemed to have been issued or sold without consideration.
SECTION 3.03. Stock Splits and Reverse Stock Splits. If the Company
shall subdivide its outstanding shares of Common Stock into a greater number of
shares, the Exercise Price shall be proportionately reduced and the number of
Warrant Shares issuable upon exercise of each Warrant shall be proportionately
increased. If the Company shall combine the outstanding shares of Common Stock
into a smaller number of shares, the Exercise Price shall be proportionately
increased and the number of Warrant Shares issuable upon exercise of each
Warrant shall be proportionately decreased.
SECTION 3.04. Reorganizations and Asset Sales. If any capital
reorganization or reclassification of the Company, or any consolidation or
merger of the Company with another corporation, or the sale of all or
substantially all of the assets of the Company shall be effected in such a way
that the holders of the shares of Common Stock shall be entitled to receive
securities, assets or other property with respect to or in exchange for shares
of Common Stock, adequate provision shall be made, prior to and as a condition
of such reorganization, reclassification, consolidation, merger or sale, whereby
each Warrantholder shall have the right to receive, upon the terms and
conditions specified herein and in addition to or in lieu of (as applicable) the
Warrant Shares otherwise receivable upon the exercise of such Warrants, such
securities or assets or other property as would have been issued or payable with
respect to or in exchange for the number of Warrant Shares otherwise receivable
after the happening of such reorganization, reclassification, consolidation,
merger or sale had such Warrantholder exercised such Warrant immediately prior
to such action. In any such case appropriate provision shall be made with
respect to the rights and interests of such Warrantholder so that the provisions
of this Agreement shall be applicable with respect to any securities, assets or
other property thereafter deliverable upon exercise of the Warrants. The Company
shall not effect any such consolidation, merger or sale unless prior to or
simultaneously with the consummation thereof the survivor or successor
corporation resulting from such consolidation or merger or the purchaser of such
assets shall assume by written instrument delivered to each holder of Warrants
the obligation to deliver to such holder such securities, or assets or other
property as such holder may be entitled to receive, subject to payment of the
Exercise Price.
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SECTION 3.05. Covenant to Reserve Shares for Issuance on Exercise. (a)
The Company will cause an appropriate number of shares of Common Stock to be
duly and validly authorized and reserved and will keep available out of its
authorized shares of Common Stock, solely for the purpose of issue upon exercise
of Warrants as herein provided, the full number of shares of Common Stock, if
any, then issuable if all outstanding Warrants then exercisable were to be
exercised. The Company covenants that all shares of Common Stock that shall be
so issuable shall be duly and validly issued and, upon payment of the Exercise
Price, fully paid and non-assessable. If at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient for such purpose,
the Company will take such action as, in the opinion of its counsel, may be
necessary to increase its authorized but unissued Common Stock to such number of
shares as shall be sufficient for such purpose. Prior to the issuance of any
Warrant Shares, the Company shall secure the listing of such Warrant Shares upon
any securities exchange upon which shares of Common Stock are then listed, if
any.
(b) The Company hereby authorizes and directs its current and future
transfer agents for the shares of Common Stock at all times to reserve such
number of authorized shares as shall be requisite for such purpose. The Company
will supply such transfer agents with duly executed stock certificates for such
purposes. Promptly after the date of expiration of the Warrants, no shares shall
be reserved in respect of such Warrants.
SECTION 3.06. Statements on Warrants. The form of Warrant Certificate
need not be changed because of any adjustment made pursuant to this Article III,
and Warrant Certificates issued after such adjustment may state the same
Exercise Price and the same number of shares of Common Stock as are stated in
the Warrant Certificates initially issued pursuant to this Agreement. The
Company, however, may at any time in its sole discretion (which shall be
conclusive) make any change in the form of Warrant Certificate that it may deem
appropriate and that does not affect the substance thereof; and any Warrant
Certificates thereafter issued or countersigned, whether in exchange or
substitution for an outstanding Warrant Certificate or otherwise, may be in the
form as so changed.
SECTION 3.07. Notice of Change in Securities Issuable, etc. Whenever
the securities issuable or deliverable in exchange for Warrants are changed
pursuant to this Article III, the Company promptly shall mail to each
Warrantholder a notice, executed by its chief financial officer, setting forth
in reasonable detail the facts requiring the change and specifying the effective
date of such change and the number or amount of, and describing the shares or
other securities issuable or deliverable in exchange for, each Warrant as so
changed. Failure to publish such notice, or any defect in such notice, shall not
affect the legality or validity of any such change.
SECTION 3.08 References to Common Stock. Unless the context otherwise
indicates, all references to Common Stock in this Agreement and in the Warrant
Certificates, in the event of a change under this Article III, shall be deemed
to refer also to any other securities issuable or deliverable in exchange for
Warrants pursuant to such change.
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ARTICLE IV
OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF WARRANTS
SECTION 4.01. No Rights as Shareholders. Nothing contained in this
Agreement or in any Warrant Certificate shall be construed as conferring on any
Warrantholder any rights whatsoever as a shareholder of the Company, including
the right to vote at, or to receive notice of, any meeting of shareholders of
the Company; nor shall the consent of any such holder be required with respect
to any action or proceeding of the Company; nor shall any such holder, by reason
of the ownership or possession of a Warrant or the Warrant Certificate
representing the same, either at, before or after exercising such Warrant, have
any right to receive any cash dividends, stock dividends, allotments or rights,
or other distributions (except as provided herein), paid, allotted or
distributed or distributable to the shareholders of the Company prior to the
date of the exercise of such Warrant, nor shall such holder have any right not
expressly conferred by such holder's Warrant or Warrant Certificate.
SECTION 4.02. Mutilated or Missing Warrant Certificates. If any Warrant
Certificate is lost, stolen, mutilated or destroyed, the Company in its
discretion may issue, in exchange and substitution for and upon cancellation of
the mutilated Warrant Certificate, or in lieu of and substitution for the
Warrant Certificate lost, stolen or destroyed, upon receipt of a proper
affidavit or other evidence satisfactory to the Company (and surrender of any
mutilated Warrant Certificate) and bond of indemnity in form and amount and with
corporate surety satisfactory to the Company in each instance protecting the
Company, a new Warrant Certificate of like tenor and exercisable for an
equivalent number of shares of Common Stock as the Warrant Certificate so lost,
stolen, mutilated or destroyed. Any such new Warrant Certificate shall
constitute an original contractual obligation of the Company, whether or not the
allegedly lost, stolen, mutilated or destroyed Warrant Certificate at any time
shall be enforceable by anyone. An applicant for such a substitute Warrant
Certificate also shall comply with such other reasonable regulations and pay
such other reasonable charges as the Company may prescribe. All Warrant
Certificates shall be held and owned upon the express condition that the
foregoing provisions are exclusive with respect to the replacement of lost,
stolen, mutilated or destroyed Warrant Certificates, and shall preclude any and
all other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement of negotiable
instruments or other securities without their surrender.
SECTION 4.03. Liquidation, Merger, etc.; Notice to Warrantholders. If:
(a) the Company shall authorize the issuance to all holders of Common
Stock of rights or warrants to subscribe for or purchase capital stock of the
Company or of any other subscription rights or warrants; or
(b) the Company shall authorize the distribution to all holders of
Common Stock of evidences of its indebtedness or assets (other than cash
dividends or cash distributions
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payable out of current earnings, retained earnings or earned surplus or
dividends payable in Common Stock); or
(c) there shall be proposed any consolidation or merger to which the
Company is to be a party and for which approval of the holders of Common Stock
is required, or the conveyance or transfer of the properties and assets of the
Company substantially as an entirety, or such other merger or transaction
described in Section 3.04 hereof; or
(d) there shall be proposed a reorganization, reclassification,
voluntary or involuntary dissolution, liquidation or winding up of the Company;
then the Company shall cause to be given to each Warrantholder, by first-class
mail, postage prepaid, a written notice stating (i) the date as of which the
holders of record of shares of Common Stock to be entitled to receive any such
rights, warrants or distribution are to be determined or (ii) the date on which
any consolidation, merger, conveyance, transfer, reorganization,
reclassification, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of record of
shares of Common Stock shall be entitled to exchange the shares for securities
or other property, if any, deliverable upon the consolidation, merger,
conveyance, transfer, reorganization, reclassification, dissolution, liquidation
or winding up. Such notice shall be filed and mailed in the case of a notice
pursuant to (i) above at least ten calendar days before the record date
specified and in the case of a notice pursuant to clause (ii) above at least 20
calendar days before the earlier of the dates specified. From the time notice is
required to be given pursuant to this Section 4.03, the holders of Warrants
shall be entitled to exercise such Warrants regardless of the provisions of
Section 2.01.
ARTICLE V
MISCELLANEOUS
SECTION 5.01. Registration of Warrant Shares.
(a) The Company shall use its best efforts to keep effective the
registration statement on Form S-2 (No. 333-86548) on which the Warrant Shares
are currently registered until the earlier of the exercise of all the Warrants
or the third anniversary of the effective date of such registration statement.
If, at any time prior to the close of business on the third anniversary of the
Effective Date, there is no registration statement in effect for the Warrant
Shares, the Company, upon the written request of holders of Warrants and of
Warrant Shares representing an aggregate of 50% or more of the Warrant Shares,
will file with the Securities and Exchange Commission under the Securities Act,
such registration statements and amendments thereto and such other filings as
may be required to permit the public offering and sale of such Warrant Shares in
compliance with the Securities Act. The Company shall be required to register
Warrant Shares no more than once pursuant to this Section 5.01(a).
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(b) The Company will permit, subject to the last sentence of this
Section 5.01(b), any Warrant Shares to be included, at the request of the
holders of such Warrant Shares, in any registration of securities of the Company
(other than shares of Common Stock for an employees' option or stock purchase
plan or shares registered on Form S-4 in connection with an arms-length merger
transaction) under a registration statement filed by the Company under the
Securities Act at any time prior to the close of business on the third
anniversary of the Effective Date. The Company shall provide written notice to
the record holders of all Warrants and Warrant Shares at least 30 days prior to
the filing of any such registration statement sent by registered mail to the
address of record of each such holder. If the offering pursuant to any
registration statement described in this Section 5.01(b) is made through
underwriters and the managing underwriter of such offering shall advise the
Company in writing that, in its opinion, the distribution of the number of
Warrant Shares requested to be included in the registration concurrently with
the securities being registered by the Company would materially and adversely
affect the distribution of such securities by the Company, then all selling
security holders (but not the Company) shall reduce the amount of securities
each intended to distribute through such offering on a pro rata basis.
(c) Each such holder shall pay the underwriting discount attributable
to such holder's Warrant Shares, any transfer tax payable with respect thereto
and the fees and expenses of such holder's counsel. All other expenses of
registration under Section 5.01(a), or Section 5.01(b) shall be borne by the
Company.
(d) The Company will agree to indemnify the holders of Warrant Shares
that are included in a registration statement or amendments to existing
registration statements pursuant to this Section 5.01 substantially to the same
extent as the Company has agreed to indemnify the Underwriters in the
Underwriting Agreement and such holders will agree to indemnify the Company and
any underwriter with respect to information furnished by them in writing to the
Company for inclusion therein substantially to the same extent as the
Underwriters have indemnified the Company in the Underwriting Agreement.
(e) If the offering pursuant to any registration statement provided for
herein is made through underwriters, the Company will enter into an underwriting
agreement in customary form and indemnify, in customary form, such underwriters
and each person who controls any such underwriter within the meaning of the
Securities Act. Such underwriting agreement shall contain provisions for the
indemnification of the Company in customary form, provided that the aggregate
amount that may be recovered from any such underwriter pursuant to such
provisions shall be limited to the total price at which the Warrant Shares
purchased by any such underwriter under such underwriting agreement were offered
to the public.
SECTION 5.02. Enforcement of Warrant Rights. All rights of action are
vested in the respective Warrantholders. Any holder of any Warrant, in his own
behalf and for his own benefit, may enforce, and may institute and maintain any
suit, action or proceeding against the Company suitable to enforce, or otherwise
in respect of, his right to exercise his Warrant for the purchase of the number
of Warrant Shares issuable or deliverable in exchange therefor, in the manner
provided in the Warrant and in this Agreement.
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SECTION 5.03. Negotiability and Ownership. The Warrants issued
hereunder shall not, for a period of one year following the Effective Date, be
sold, transferred, assigned or hypothecated by the holders thereof except (a) to
persons who are officers or partners of FBR and members of the selling group
and/or their officers and partners or (b) in the case of an individual, pursuant
to such individual's last will and testament or the laws of descent and
distribution and, in any case, only in compliance with the Securities Act. For
the period commencing one year after the Effective Date until the expiration of
the Warrants, the Warrants issued hereunder shall not be sold, transferred,
assigned or hypothecated by the holders thereof except (a) to FBR, and any of
its affiliates, or any officers, directors, employees or representatives of the
foregoing or (b) in the case of an individual, pursuant to such individual's
last will and testament or the laws of descent and distribution and, in any
case, only in compliance with the Securities Act. For the purposes of this
Section 5.03, the terms "officers," "directors," "employees" and
"representatives" shall refer to those persons who are officers, directors,
employees or representatives, as the case may be, of FBR or any of its
affiliates, as the case maybe, or who become officers, directors or employees of
FBR or any of its affiliates at any time before the expiration of the Warrants
regardless of whether such persons are officers, directors, employees or
representatives of FBR or any of its affiliates at the time they sell, transfer,
assign or hypothecate a Warrant. Any attempt to sell, transfer, assign or
hypothecate in contravention of this Section shall be null and void.
SECTION 5.04. Warrant Legend. (a) Each Warrant shall contain a legend
in substantially the following form:
"THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT ARE SUBJECT TO THE CONDITIONS SPECIFIED IN THE WARRANT AGREEMENT,
DATED _____________, 2002, BETWEEN MEADOWBROOK INSURANCE GROUP, INC. AND
FRIEDMAN, BILLINGS, XXXXXX & CO., INC. ANY ATTEMPT TO TRANSFER THIS WARRANT OR
ANY SHARE OF COMMON STOCK ISSUED UPON EXERCISE OF THIS WARRANT TO ANY
UNAUTHORIZED TRANSFEREE, SHALL BE NULL AND VOID. NO TRANSFER IN VIOLATION OF
SAID AGREEMENT SHALL BE EFFECTIVE. THIS WARRANT MAY NOT BE SOLD OR TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE AND CURRENT REGISTRATION STATEMENT OR
POSTEFFECTIVE AMENDMENT THERETO FOR SUCH SHARES UNDER THE SECURITIES ACT OF 1933
(THE "ACT") OR AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT. THE SHARES OF COMMON
STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD OR TRANSFERRED
WITHOUT AN EFFECTIVE AND CURRENT REGISTRATION STATEMENT OR POSTEFFECTIVE
AMENDMENT THERETO FOR SUCH SHARES UNDER THE ACT OR AN OPINION OF COUNSEL IN FORM
AND SUBSTANCE SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER
THIS ACT."
(b) Each certificate representing Warrant Shares, unless registered
pursuant to Section 5.01, shall contain a legend substantially in the following
form:
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"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD OR TRANSFERRED
WITHOUT AN EFFECTIVE AND CURRENT REGISTRATION STATEMENT OR POSTEFFECTIVE
AMENDMENT THERETO FOR SUCH SHARES UNDER THE SECURITIES ACT OF 1933 OR AN OPINION
OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER THAT REGISTRATION IS
NOT REQUIRED UNDER THAT ACT. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE CONDITIONS SPECIFIED IN THE AGREEMENT, DATED _____________, 2002,
BETWEEN MEADOWBROOK INSURANCE GROUP, INC. AND FRIEDMAN, BILLINGS, XXXXXX & CO.,
INC. ANY ATTEMPT TO TRANSFER THE SHARES REPRESENTED BY THIS CERTIFICATE TO ANY
UNAUTHORIZED TRANSFEREE, SHALL BE NULL AND VOID. NO TRANSFER IN VIOLATION OF
SAID AGREEMENT SHALL BE EFFECTIVE."
SECTION 5.05. Supplements and Amendments. (a) Notwithstanding the
provisions of Section 5.05(b), FBR, without the consent or concurrence of the
registered holders of the Warrants, may enter into one or more supplemental
agreements or amendments with the Company for the purpose of evidencing the
rights of Warrantholders upon consolidation, merger, sale, transfer or
reclassification pursuant to Section 3.04, making any changes or corrections in
this Agreement that are required to cure any ambiguity, to correct or supplement
any provision contained herein that may be defective or inconsistent with any
other provision herein or any clerical omission or mistake or manifest error
herein contained, or making such other provisions in regard to matters or
questions arising under this Agreement as shall not adversely affect the
interests of the holders of the Warrants or be inconsistent with this Agreement
or any supplemental agreement or amendment.
(b) With the consent of the registered holders of at least a majority
in number of the Warrants at the time outstanding, the Company and FBR at any
time and from time to time by supplemental agreement or amendment may add any
provisions to or change in any manner or eliminate any of the provisions of this
Agreement or of any supplemental agreement or modify in any manner the rights
and obligations of the Warrantholders and of the Company; provided, however,
that no such supplemental agreement or amendment, without the consent of the
registered holder of each outstanding Warrant affected thereby, shall:
(1) alter the provisions of this Agreement so as to affect adversely
the terms upon which the Warrants are exercisable or may be redeemed; or
(2) reduce the number of Warrants outstanding the consent of whose
holders is required for any such supplemental agreement or amendment.
SECTION 5.06. Covenant as to No Investment Company Status. The Company
shall use its best efforts, until the third anniversary of the Effective Date,
to maintain its status that it is not an "investment company" or an entity
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940.
11
SECTION 5.07. Successors and Assigns. All the covenants and provisions
of this Agreement by or for the benefit of the Company or FBR shall bind and
inure to the benefit of their respective successors and assigns hereunder.
SECTION 5.08. Notices. Any notice or demand authorized by this
Agreement to be given or made by the holder of any Warrant to or on the Company
shall be sufficiently given or made if sent by mail first-class, postage
prepaid, addressed (until another address is filed in writing by the Company
with FBR) as follows:
Meadowbrook Insurance Group, Inc.
00000 Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxxxxx, General Counsel
Any notice or demand authorized by this Agreement to be given or made
by the holder of any Warrant or by the Company to or on FBR shall be
sufficiently given or made if sent by mail first-class, postage prepaid,
addressed (until another address is filed in writing by FBR with the Company),
as follows:
Friedman, Billings, Xxxxxx & Co., Inc.
0000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxxxx
Any notice or demand authorized by this Agreement to be given or made
to the holder of any Warrants shall be sufficiently given or made if sent by
first-class mail, postage prepaid to the last address of such holder as it shall
appear on the Warrant Register.
SECTION 5.09. Applicable Law. The validity, interpretation and
performance of this Agreement and of the Warrant Certificate shall be governed
by the law of the State of New York without giving effect to the principles of
conflicts of laws thereof.
SECTION 5.10. Benefits of this Agreement. Nothing in this Agreement
expressed and nothing that may be implied from any of the provisions hereof is
intended, or shall be construed, to confer upon, or give to, any person or
corporation other than the parties hereto and the holders of the Warrants any
right, remedy or claim under or by reason of this Agreement or of any covenant,
condition, stipulation, promise or agreement hereof, and all covenants,
conditions, stipulations, promises and agreements in this Agreement contained
shall be for the sole and exclusive benefit of the parties hereto and their
successors and of the holders of the Warrants.
SECTION 5.11. Registered Warrantholders. Prior to due presentment for
registration of transfer, the Company may deem and treat the person in whose
name any Warrants are registered in the Warrant Register as the absolute owner
thereof for all purposes whatever (notwithstanding any notation of ownership or
other writing thereon made by
12
anyone other than the Company) and the Company shall not be affected by any
notice to the contrary or be bound to recognize any equitable or other claim to
or interest in any Warrants on the part of any other person and shall not be
liable for any registration of transfer of Warrants that are registered or to be
registered in the name of a fiduciary or the nominee of a fiduciary unless made
with actual knowledge that a fiduciary or nominee is committing a breach of
trust in requesting such registration of transfer or with such knowledge of such
facts that its participation therein amounts to bad faith. The terms
"Warrantholder" and "holder of any "Warrants" and all other similar terms used
herein shall mean such person in whose name Warrants are registered in the
Warrant Register.
SECTION 5.12. Inspection of Agreement. A copy of this Agreement shall
be available at all reasonable times for inspection by any Warrantholder at the
principal office of the Company. The Company may require any such Warrantholder
to submit his Warrant Certificate for inspection by it before allowing such
Warrantholder to inspect a copy of this Agreement.
SECTION 5.13. Headings. The Article and Section headings herein are for
convenience only and are not a part of this Agreement and shall not affect the
interpretation thereof.
SECTION 5.14. Counterparts. The Agreement may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto under their respective seals as of the day and year first above
written.
MEADOWBROOK INSURANCE GROUP, INC.
By:___________________________________
Name:
Title: President
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
By:___________________________________
Name:
Title:
13
EXHIBIT A
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
No. __________ _______ Warrants
WARRANTS
TO PURCHASE SHARES OF COMMON STOCK OF
MEADOWBROOK INSURANCE GROUP, INC.
Meadowbrook Insurance Group, Inc., a Michigan corporation (the
"Company"), for value received, hereby certifies that
______________________________________
or registered assigns, is the owner of the number of Warrants, set
forth above, each of which represents the right, subject to the terms and
conditions hereof and of the Warrant Agreement hereafter referred to (the
"Warrant Agreement"), to purchase from the Company at any time, or from time to
time, from the first anniversary of the date of original issuance of the
Warrants to the close of business on the third anniversary of such date (or, if
such date is not a Business Day (as defined below), the first following Business
Day) (the "Exercise Period"), the number of shares of Common Stock, par value
$.01 per share, of the Company (the "Common Stock") described in the Warrant
Agreement (each share of Common Stock issuable upon exercise of a Warrant is
referred to as a "Warrant Share"). Subject to the terms and conditions of the
Warrant Agreement, the exercise price per Warrant represented by this Warrant
Certificate shall be $[________] per share, adjusted as provided in Article III
of the Warrant Agreement, payable in full as to each Warrant exercised at the
time of purchase. The term "Underwriting Agreement" as used herein refers to the
Underwriting Agreement dated _____________, 2002 between the Company and
Friedman, Billings, Xxxxxx & Co., Inc. The term "Exercise Price" as used herein
refers to the foregoing price per share in effect at any time.
This Warrant may be exercised in whole or in part at any time or from
time to time during the Exercise Period. The portion of any Warrant not
exercised during the Exercise Period shall become void, and all rights hereunder
and all rights in respect hereof and under the Warrant Agreement shall cease at
the end of the Exercise Period.
Each such purchase of Warrant Shares shall be made, and shall be deemed
effective for the purpose of determining the date of exercise, only upon
surrender hereof to the Company at the principal office of the Company, with the
form of Election to Exercise on the reverse hereof duly filled in and signed,
and upon payment in full to the Company of the Exercise Price (i) in cash or
(ii) by certified or official bank check or (iii) by any combination of the
foregoing, all as provided in the Warrant Agreement and upon compliance with and
subject to the conditions set forth herein and in the Warrant Agreement.
This Warrant Certificate is issued under and in accordance with the
Warrant Agreement dated as of _______ (the "Warrant Agreement"), between the
Company and Friedman, Billings, Xxxxxx & Co., Inc. and is subject to the terms
and provisions of the
A-1
Warrant Agreement, which terms and provisions are hereby incorporated by
reference herein and made a part hereof. Copies of the Warrant Agreement and of
the Underwriting Agreement are available for inspection by the registered holder
at the principal office of the Company.
The Company shall not be required upon the exercise of the Warrants
represented hereby to issue fractions of Warrant Shares or to distribute share
certificates that evidence fractional Warrant Shares. Every holder of this
Warrant Certificate expressly waives its right to receive any fraction of a
Warrant Share or a share certificate representing a fraction of a Warrant Share.
Fractional Warrant Shares that otherwise would be issuable in respect of such
exercise shall be paid in cash as provided in the Warrant Agreement, and the
number of Warrant Shares issuable to such Warrantholder shall be rounded down to
the next nearest whole number. If such Warrant Certificate shall not have been
exercised in full, the Company will issue to such Warrantholder a new Warrant
Certificate exercisable for the number of shares of Common Stock as to which
such Warrant shall not have been exercised.
This Warrant Certificate may be exchanged either separately or in
combination with other Warrant Certificates at the principal office of the
Company for new Warrant Certificates representing the same aggregate number of
Warrants as were evidenced by the Warrant Certificate or Warrant Certificates
exchanged, upon surrender of this Warrant Certificate and upon compliance with
and subject to the conditions set forth herein and in the Warrant Agreement.
This Warrant Certificate is transferable (subject to restrictions set
forth in the Warrant Agreement) at the principal office of the Company by the
registered holder hereof in person or by his attorney duly authorized in
writing, upon (i) surrender of this Warrant Certificate and (ii) upon compliance
with and subject to the conditions set forth herein and in the Warrant
Agreement. Upon any such transfer, a new Warrant Certificate or new Warrant
Certificates of different denominations, representing in the aggregate a like
number of Warrants, will be issued to the transferee. Every holder of Warrants,
by accepting this Warrant Certificate, consents and agrees with the Company and
with every subsequent holder of this Warrant Certificate that until due
presentation for the registration of transfer of this Warrant Certificate on the
Warrant Register maintained by the Company, the Company may deem and treat the
person in whose name this Warrant Certificate is registered as the absolute and
lawful owner for all purposes whatsoever and the Company shall not be affected
by any notice to the contrary.
Nothing contained in the Warrant Agreement or in this Warrant
Certificate shall be construed as conferring on the holder of any Warrants or
his transferee any rights whatsoever as a shareholder of the Company.
The Warrant Agreement and each Warrant Certificate, including this
Warrant Certificate, shall be deemed a contract made under the laws of the State
of New York and for all purposes shall be construed in accordance with the laws
of the State of New York without giving effect to the principles of conflicts of
law thereof.
A-2
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated:
MEADOWBROOK INSURANCE GROUP,
INC.
(CORPORATE SEAL) By: ___________________________
ATTEST:
________________________________
"THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT ARE SUBJECT TO THE CONDITIONS SPECIFIED IN THE WARRANT AGREEMENT,
DATED _____________, 2002, BETWEEN MEADOWBROOK INSURANCE GROUP, INC. AND
FRIEDMAN, BILLINGS, XXXXXX & CO., INC. ANY ATTEMPT TO TRANSFER THIS WARRANT OR
ANY SHARE OF COMMON STOCK ISSUED UPON EXERCISE OF THIS WARRANT TO ANY
UNAUTHORIZED TRANSFEREE, SHALL BE NULL AND VOID. NO TRANSFER IN VIOLATION OF
SAID AGREEMENT SHALL BE EFFECTIVE. THIS WARRANT MAY NOT BE SOLD OR TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE AND CURRENT REGISTRATION STATEMENT OR
POSTEFFECTIVE AMENDMENT THERETO FOR SUCH SHARES UNDER THE SECURITIES ACT OF 1933
(THE "ACT") OR AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT. THE SHARES OF COMMON
STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD OR TRANSFERRED
WITHOUT AN EFFECTIVE AND CURRENT REGISTRATION STATEMENT OR POSTEFFECTIVE
AMENDMENT THERETO FOR SUCH SHARES UNDER THE ACT OR AN OPINION OF COUNSEL IN FORM
AND SUBSTANCE SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER
THIS ACT."
A-3
ELECTION TO EXERCISE
(To be executed upon exercise of Warrant)
TO .:
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant Certificate for, and to purchase
thereunder, ___________ shares of Common Stock, as provided for therein, and
tenders herewith payment of the purchase price in full in the form of cash or a
certified or official bank check (or combination thereof) in the amount of
$__________________.
Please issue a certificate or certificates for such shares of Common
Stock in the name of:
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF
ASSIGNEE: Name ___________________________
_____________________________ Address ________________________
Signature ______________________
________________________________
Note: The above signature should
correspond exactly with the name on
the face of this Warrant Certificate
or with the name of assignee
appearing in the assignment form
below.
Dated: ____________________,_______
ASSIGNMENT
(To be executed only upon assignment of Warrant Certificate)
For value received, __________________________ hereby sells, assigns
and transfer unto ___________________________ the within Warrant Certificate,
together with all right, title and interest therein, and does hereby irrevocably
constitute and appoint _______________________ attorney, to transfer said
Warrant Certificate on the books of the within-named Company, with full power of
substitution in the premises.
Dated: ___________________, _______
____________________________________________
NOTE: The above signature should correspond
exactly with the name on the face of
this Warrant Certificate
