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2,500,000 Shares
FINANCIAL PACIFIC INSURANCE GROUP, INC.
Common Stock
Par Value $.001
UNDERWRITING AGREEMENT
June __, 1998
EVEREN Securities, Inc.
Xxxxxx & Xxxxxx Incorporated
As Representatives of the Several Underwriters
EVEREN Securities, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Xxxxxx & Xxxxxx, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Financial Pacific Insurance Group, Inc., a Delaware corporation (the
"Company"), and Xxxxxxx, Xxxxx & Xxxxx, Firemark Advisors, Inc., St. Xxxx Fire &
Marine Insurance Company, Celerity Partners, L.P., Xxxxxx X. Xxxxxxx and Xxxxx
Xxxxxx (collectively, the "Selling Stockholders") confirm their agreements with
each other and the several underwriters listed in Schedule I hereto (the
"Underwriters"), for whom EVEREN Securities, Inc. (the "Managing
Representative") and Xxxxxx & Xxxxxx, Inc. (the "Representative" and, together
with the Managing Representative, collectively and severally, the
"Representatives") have been duly authorized to act as representatives, as
follows:
1. The Shares. Subject to the terms and conditions set forth in this
agreement (the "Agreement"), the Company proposes to issue and sell 2,000,000
shares of its authorized but unissued Common Stock, $.001 par value (the "Common
Stock"), to the several Underwriters and the Selling Stockholders propose to
sell an aggregate of 500,000 shares of the Company's authorized and outstanding
Common Stock to the several Underwriters, with each of the Selling Stockholders
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to sell the number of shares listed beside such Selling Stockholder's name on
Schedule II hereto. The 2,000,000 shares of Common Stock of the Company to be
sold by the Company are hereinafter called the "Company Shares" and the 500,000
shares of Common Stock to be sold by the Selling Stockholders are hereinafter
called the "Selling Stockholder Shares." The Company Shares and the Selling
Stockholder Shares are hereinafter collectively referred to as the "Firm
Shares." The Company also proposes to grant to the Underwriters an option to
purchase up to 375,000 additional shares of Common Stock (the "Option Shares")
if requested by the Underwriters as provided in Section 3 hereof. The Firm
Shares and the Option Shares are herein collectively called the "Shares."
The Company and the Selling Stockholders hereby confirm their
respective agreements with the Underwriters as follows:
2. Registration Statement and Prospectus. The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Act"), a registration statement on Form S-1 (File No. 333-50511) including a
prospectus, relating to the Shares, which may have been amended; each such
amendment was so prepared and filed. The registration statement, as amended at
the time when it became or becomes effective, including all financial schedules
and exhibits thereto and all of the information (if any) deemed to be part of
the registration statement at the time of its effectiveness pursuant to Rule
430A under the Act ("Rule 430A"), is hereinafter referred to as the
"Registration Statement"; any registration statement filed pursuant to Rule
462(b) under the Act is herein called the "462(b) Registration Statement," and
after such filing the term "Registration Statement" shall include the Rule
462(b) Registration Statement; the prospectus in the form first provided to the
Underwriters by the Company in connection with the offering and sale of the
Shares (whether or not required to be filed pursuant to Rule 424(b) under the
Act ("Rule 424(b)")) is hereinafter referred to as the "Prospectus," except that
if any revised prospectus shall be provided to the Underwriters by the Company
for use in connection with the offering of the Shares that differs from the
Prospectus (whether or not any such revised prospectus is required to be filed
by the Company pursuant to Rule 424(b) under the Act), the term "Prospectus"
shall refer to the revised prospectus from and after the time it is first
provided to the Underwriters for such use; and each preliminary prospectus
included in the Registration Statement prior to the time it became or becomes
effective is herein referred to as a "Preliminary Prospectus."
3. Agreements to Sell and Purchase. On the basis of the representations
and warranties contained in this Agreement, and subject to the terms and
conditions hereof, (i) the Company and the Selling Stockholders agree, severally
and not jointly, to sell to the Underwriters, at a price of $ per Share (the
"Purchase Price"), the Company Shares and the Selling Stockholder Shares,
respectively; and (ii) each Underwriter agrees, severally and not jointly, to
purchase from the Company and the Selling Stockholders, at the Purchase Price,
the aggregate number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto.
On the basis of the representations and warranties contained in this
Agreement, and subject to the terms and conditions hereof, (i) the Company
agrees to sell to the Underwriters, at the Purchase Price, up to 375,000 Option
Shares; and (ii) the Underwriters shall have the right to
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purchase, severally and not jointly, from time to time, up to an aggregate of
375,000 Option Shares at the Purchase Price. Option Shares may be purchased as
provided in Section 4 hereof solely for the purpose of covering over-allotments
made in connection with the offering of the Firm Shares. If any Option Shares
are to be purchased, each Underwriter, severally and not jointly, agrees to
purchase the number of Option Shares (subject to such adjustments to eliminate
fractional shares as the Representatives may determine) that bears the same
proportion to the total number of Option Shares to be purchased as the number of
Firm Shares set forth opposite the name of such Underwriter in Schedule I bears
to the total number of Firm Shares.
For a period of 180 days from the date this Agreement becomes
effective, the Company will not, without the prior written consent of EVEREN
Securities, Inc. on behalf of the Underwriters (1) offer, pledge, sell, contract
to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock,
or (2) enter into any swap or other agreement that transfers, in whole or in
part, any of the economic consequences of ownership of the Common Stock, whether
any such transaction described in clause (1) or (2) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise;
provided, however, that this clause shall not apply to (i) the transactions
expressly contemplated hereby, (ii) the issuance of the Warrants pursuant to the
Warrant Agreement dated June __, 1998 between the Company and the purchasers
party thereto, (iii) the granting of options for shares of Common Stock
involving the Shares and (iv) the sales of shares of Common Stock to the
Company's employees pursuant to the exercise of options under those employee
benefit plans described in the Prospectus and provided further, however, that
the Company may issue shares of Common Stock ("Acquisition Shares") during such
period in connection with acquisitions of business so long as the purchaser of
such Acquisition Shares agrees to be bound by a lock-up letter in form and
substance satisfactory to you pursuant to which such purchaser agrees with the
Company not to sell, offer to sell, solicit an offer to buy, contract to sell,
grant any option to purchase, or otherwise transfer or dispose of, any such
Acquisition Shares at any time before the expiration of such 180 day period and
the certificates evidencing such Acquisition Shares bear a legend to such
effect.
For a period of 180 days from the date this Agreement becomes
effective, the Company will not, without the prior written consent of the
Representatives on behalf of the Underwriters, file a registration statement
relating to shares of capital stock (including the Common Stock) or securities
convertible into or exercisable or exchangeable for, capital stock or warrants,
options or rights to purchase or acquire, capital stock, with the exception of
the filing of Registration Statements on Form S-8 with respect to the Company's
employee benefit plans described in the Prospectus and provided further,
however, that the Company may issue shares of Common Stock ("Acquisition
Shares") during such period in connection with acquisitions of business so long
as the purchaser of such Acquisition Shares agrees to be bound by a lock-up
letter in form and substance satisfactory to you pursuant to which such
purchaser agrees with the Company not to sell, offer to sell, solicit an offer
to buy, contract to sell, grant any option to purchase, or otherwise transfer or
dispose of, any such Acquisition Shares at any time before the expiration of
such 180 day period and the certificates evidencing such Acquisition Shares bear
a legend to such effect.
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4. Agreements of the Company as to Delivery and Payment. The Company
agrees with each Underwriter that:
(a) Delivery to the Underwriters of and payment for the Firm
Shares shall be made at 9:00 A.M., Los Angeles time, on the third full
business day (such time and date being referred to as the "Closing
Date") following the date of the initial public offering of the Firm
Shares as advised to you by the Company, at such place as you shall
designate. Payment for the Firm Shares shall be made to the Company or
its order upon delivery of the Company Shares, and shall be made to the
Custodian for the account of the Selling Stockholders upon delivery of
the Selling Stockholder Shares, in each case in Federal or other funds
immediately available in Los Angeles.
(b) Delivery to the Underwriters of and payment for any Option
Shares to be purchased by the Underwriters shall be made at such place
as the Representatives shall designate, at 9:00 A.M., Los Angeles time,
on such date or dates (individually, an "Option Closing Date" and
collectively, the "Option Closing Dates"), which may be the same as the
Closing Date but shall in no event be earlier than the Closing Date, as
shall be specified in a written notice from the Representatives to the
Company of the Underwriters' determination to purchase a number,
specified in said notice, of Option Shares. Any such notice may be
given at any time within 45 days after the date of this Agreement.
Payment for any Option Shares shall be made to the Company or its order
upon delivery of the Option Shares, in Federal or other funds
immediately available in Los Angeles.
(c) Certificates for the Shares shall be registered in such
names and issued in such denominations as you shall request in writing
not later than two business days prior to the Closing Date or the
applicable Option Closing Date, as the case may be, and shall be made
available for inspection not later than 9:00 A.M., Los Angeles time, on
the business day next preceding the Closing Date or the applicable
Option Closing Date, as the case may be, with any transfer taxes
payable upon initial issuance or the transfer thereof duly paid by the
Company for the respective accounts of the Underwriters against payment
of the Purchase Price therefor.
5. Further Agreements of the Company. The Company also agrees with each
Underwriter that:
(a) it will, if the Registration Statement has not heretofore
become effective under the Act, file an amendment to the Registration
Statement or, if necessary pursuant to Rule 430A under the Act, a
post-effective amendment to the Registration Statement, as soon as
practicable after the execution and delivery of this Agreement, and
will use its best efforts to cause the Registration Statement or such
post-effective amendment to become effective at the earliest possible
time; and the Company will comply fully and in a timely manner with the
applicable provisions of Rule 424(b) and Rule 430A under the Act;
(b) it will advise you promptly and, if requested by you,
confirm such advice in writing, (i) when the Registration Statement has
become effective, if and when the Prospectus is sent for filing
pursuant to Rule 424 under the Act and when any post-effective
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amendment to the Registration Statement becomes effective, (ii) of the
receipt of any comments from the Commission that relate to the
Registration Statement or requests by the Commission for amendments to
the Registration Statement or amendments or supplements to the
Prospectus or for additional information, (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement, or of the suspension of qualification of the
Shares for offering or sale in any jurisdiction, or the initiation or,
to the best knowledge of the Company, threat of any proceedings for
such purpose by the Commission or any state securities commission or
other regulatory authority, and (iv) of the happening of any event or
information becoming known during the period referred to in paragraph
(e) below that makes any statement of a material fact made in the
Registration Statement untrue or that requires the making of any
additions to or changes in the Registration Statement (as amended or
supplemented from time to time) in order to make the statements therein
not misleading or that makes any statement of a material fact made in
the Prospectus (as amended or supplemented from time to time) untrue or
that requires the making of any additions to or changes in the
Prospectus (as amended or supplemented from time to time) in order to
make the statements therein not misleading except statements in or
omissions from the Registration Statement and the Prospectus made or
omitted in reliance upon, and in conformity with, information relating
to the Underwriters furnished in writing to the Company by or on behalf
of the Underwriters with your consent expressly for use therein; if at
any time the Commission shall issue or institute proceedings (or
threaten to institute any such proceedings) to issue any stop order
suspending the effectiveness of the Registration Statement, or any
state securities commission or other regulatory authority shall issue
or institute proceedings (or threaten to institute proceedings) to
issue an order suspending the qualification or exemption of the Shares
under any state securities or Blue Sky laws, the Company shall use its
best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
(c) it will furnish to the Representatives without charge one
signed copy of the Registration Statement as first filed with the
Commission and of each amendment to it, including all exhibits filed
therewith, and, from time to time, will furnish to you and each
Underwriter designated by you a reasonable number of conformed copies
of the Registration Statement as so filed and of each amendment to it,
without exhibits;
(d) it will not file any amendment or supplement to the
Registration Statement, whether before or after the time when it
becomes effective, make any filing under Rule 462(b) of the Act or make
any amendment or supplement to the Prospectus of which you shall not
previously have been advised and provided a copy a reasonable period of
time prior to the filing thereof or to which you or your counsel shall
reasonably object; and it will prepare and file with the Commission,
promptly upon your reasonable request, any amendment to the
Registration Statement or supplement to the Prospectus that may be
necessary or advisable in connection with the distribution of the
Shares by you in your or your counsel's opinion, and will use its
reasonable commercial efforts to cause the same to become effective as
promptly as possible;
(e) promptly after the Registration Statement becomes
effective, and from time
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to time thereafter for such period as a prospectus is required by the
Act to be delivered in connection with the sales by an underwriter or a
dealer (in the opinion of your counsel), it will furnish to each
Underwriter and dealer without charge as many copies of the Prospectus
(and any amendment or supplement of the Prospectus) as such Underwriter
or dealer may reasonably request for the purposes contemplated by the
Act; the Company consents to the use of the Prospectus and any
amendment or supplement thereto by any Underwriter or any dealer, both
in connection with the offering or sale of the Shares and for such
period of time thereafter as the Prospectus is required by the Act to
be delivered in connection therewith;
(f) if during the period specified in paragraph (e) any event
shall occur or information become known as a result of which in the
opinion of your counsel or in the judgment of the Company it becomes
necessary to amend or supplement the Prospectus in order to make the
statements therein, in light of the circumstances existing as of the
date the Prospectus is delivered to a purchaser, not misleading, or it
is necessary to amend or supplement the Prospectus to comply with any
law, forthwith to prepare and, subject to paragraph 5(d) above, it will
file with the Commission at the sole expense of the Company an
appropriate amendment or supplement to the Prospectus so that the
statements of any material facts in the Prospectus, as so amended and
supplemented, will not in light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with
law, and it will furnish to the Underwriters and to such dealers as the
Underwriters shall specify, at the sole expense of the Company, such
number of copies thereof as such Underwriters or dealers may reasonably
request;
(g) prior to any public offering of the Shares, it will
cooperate with you and counsel for the Underwriters in connection with
the registration or qualification of the Shares for offer and sale by
the several Underwriters and by dealers under the state securities or
Blue Sky laws of such jurisdictions as you may reasonably request
(provided, that the Company shall not be obligated to qualify as a
foreign corporation in any jurisdiction in which it is not so qualified
or to take any action which would subject it to general consent to
service of process in any jurisdiction in which it is not now so
subject); the Company will continue such qualification in effect so
long as required by law for the distribution of the Shares and will
file such consents to service of process or other documents as may be
necessary in order to effect such registration or qualification
(provided, that the Company shall not be obligated to take any action
that would subject it to general consent to service of process in any
jurisdiction in which it is not now so subject);
(h) it will not, prior to the exercise in full or termination
or expiration of the option to purchase the Option Shares, incur any
liability or obligation, direct or contingent, or enter into any
material transaction, other than in the ordinary course of business,
except as contemplated by the Prospectus;
(i) it will not acquire any capital stock of the Company prior
to the exercise in full or termination or expiration of the option to
purchase the Option Shares nor will the Company declare or pay any
dividend or make any other distribution upon the Common Stock payable
to Stockholders of record on a date prior to the exercise in full or
termination
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or expiration of the option to purchase the Option Shares, except in
either case as contemplated by the Prospectus;
(j) it will make generally available to its security holders
as soon as reasonably practicable a consolidated earnings statement
covering a period of at least 12 months beginning after the "effective
date" (as defined in Rule 158 under the Act) of the Registration
Statement (but in any event not later than the forty-fifth (45th) day
following the end of the fiscal quarter first occurring after the first
anniversary of the effective date of the Registration Statement) that
will satisfy the provisions of Section 11(a) of the Act and Rule 158
thereunder and to advise you in writing when such statement has been
made so available;
(k) during the period of five years after the date of this
Agreement, it will furnish to you a copy (i) as soon as practicable
after the filing thereof, of each report filed by the Company with the
Commission, any securities exchange or the National Association of
Securities Dealers, Inc. ("NASD"); (ii) as soon as practicable after
the release thereof, of each material press release in respect of the
Company; (iii) as soon as available, of each report of the Company
mailed to Stockholders; and (iv) as soon as available, such other
publicly available information concerning the Company as you may
reasonably request;
(l) subject to Section 5(m), whether or not the transactions
contemplated hereby are consummated or this Agreement becomes effective
as to all of its provisions or is terminated, it will pay all costs,
fees, expenses and taxes incident to the performance by the Company of
its obligations hereunder, including (i) the preparation, printing,
filing and distribution under the Act of the Registration Statement
(including financial statements and exhibits), each Preliminary
Prospectus and all amendments and supplements to any of them prior to
or during the period specified in paragraph (e) above of this Section
5, (ii) the word processing, reproduction and distribution of this
Agreement, the Blue Sky Survey and any other agreements, memoranda,
correspondence and other documents prepared and delivered by the
Underwriters or their counsel in connection with the offering of the
Shares (including in each case any disbursements of counsel for the
Underwriters relating to such preparation and delivery), (iii) the
registration or qualification of the Shares for offer and sale under
the securities or Blue Sky laws of the several states, including in
each case the fees and disbursements of counsel for the Underwriters,
relating to such registration or qualification and memoranda relating
thereto, provided that the Company shall not be required to pay more
than $25,000 for legal fees of the counsel for the Underwriters
relating to Blue Sky matters, (iv) the listing of the Shares on The
Nasdaq National Market System ("NMS"); (v) furnishing such copies of
the Registration Statement, each Preliminary Prospectus, the Prospectus
and all amendments and supplements thereto as may be requested for use
in connection with the offering or sale of the Shares by the
Underwriters or by dealers to whom the Shares may be sold, (vi)
obtaining the opinions to be provided pursuant to Section 8 of this
Agreement and (vii) the performance by the Company of all of its other
obligations under this Agreement;
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(m) in addition to the expenses set forth in Section 5(l), the
Company shall, as applicable: (A) on the Closing Date, and on each of
the Option Closing Dates, pay to EVEREN Securities, Inc., individually
and not in its capacity as Managing Representative, a non-accountable
expense allowance equal to one percent (1%) of the initial public
offering price of the Shares and Option Shares sold pursuant to this
Agreement, or (B) (i) if the sale of the Shares provided for herein is
not consummated because the Underwriters exercise their right to
terminate this Agreement pursuant to Section 9 hereof and any of the
following have occurred during the term of this Agreement: (1) there
has been any material adverse change in the condition (financial or
otherwise), earnings, affairs, business or prospects of the Company;
(2) the discovery of any defect in the authorization, validity of
issuance or fully paid status of any of the Company's outstanding
securities; (3) the discovery that any of the Company's business plans,
prospects, condition (financial or otherwise) or projections are
materially different from information with respect thereto previously
provided to you; (4) the failure or inability to qualify or register
the offer and sale of the Common Stock on the NASDAQ-NMS or other
appropriate exchange; or (5) the Company or the Selling Stockholders
shall refuse or be unable to comply with any provision hereof (except
as the result of any breach of this Agreement by the Underwriters), the
Company will promptly reimburse the Underwriters upon demand for all
reasonable out-of-pocket expenses (including the fees and disbursements
of counsel for the Underwriters) that shall have been incurred by the
Underwriters in connection with the proposed purchase and sale of
Shares, or (ii) notwithstanding any provision of this Agreement to the
contrary, if the sale of the Shares provided for herein is not
consummated or this Agreement is terminated for any reason other than
the reasons set forth set in clause (B) (i) of this Section 5(m), the
Company shall not pay any out-of-pocket expenses (including the fees
and disbursements of counsel for the Underwriters) that shall have been
incurred by the Underwriters in connection with the proposed purchase
and sale of Shares. For purposes of this Section 5(m), the reimbursable
amount for fees and disbursements of counsel for the Underwriters will
be limited to $100,000.00.
(n) it intends to use the net proceeds received by it from the
sale of the Shares being sold by it in the manner specified under the
caption "Use of Proceeds" in the Prospectus, and it will file such
reports with the Commission with respect to the application of the
proceeds therefrom as may be required in accordance with Rule 463 under
the Act;
(o) if, at the time of effectiveness of the Registration
Statement, any information shall have been omitted therefrom in
reliance upon Rule 430A, then immediately following the execution and
delivery of this Agreement, it will prepare, and file or transmit for
filing with the Commission in accordance with such Rule 430A and Rule
424(b), copies of an amended prospectus, or, if required by such Rule
430A, a post-effective amendment to the Registration Statement
(including an amended prospectus), containing all information so
omitted;
(p) it will cause the Shares to be listed, subject to notice
of issuance or sale, on the NMS; it will comply with all registration,
filing and reporting requirements of the Securities Exchange Act of
1934, as amended, (the "Exchange Act") and the NMS
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applicable to the Company;
(q) the Company shall obtain and deliver to you prior to the
Closing Date an agreement from each current officer and director of the
Company, and each beneficial owner of Common Stock (other than Xxxx
Xxx) prior to the date hereof a written agreement (the "Lock-up
Agreements") that for a period of 180 days from the date this Agreement
becomes effective, he or she will not, without the prior written
consent of the Managing Representative on behalf of the Underwriters
(1) offer, pledge, sell, contract to sell, sell any option or contract
to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, or
(2) enter into any swap or other agreement that transfers, in whole or
in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise; provided, however, that this clause
shall not apply to the transactions expressly contemplated hereby
involving the Shares or the warrants to be provided under the Warrant
Agreement (the "Warrants") or to transfers of Common Stock to
partnerships, limited liability companies, trusts or similar entities
organized for the exclusive benefit of family members of the transferor
for financial and estate planning purposes so long as any transferee
that receives Common Stock as a result of such transfer shall agree
upon such transfer to be bound by the terms of this paragraph and shall
be capable of being so bound; and
(r) it will use its reasonable commercial efforts to do and
perform all things required to be done and performed under this
Agreement by it prior to or after the Closing Date or any Option
Closing Date, as the case may be, and to satisfy all conditions
precedent to the delivery of the Shares.
6. Representations and Warranties.
(a) the Company represents and warrants to each Underwriter as
of the date hereof, the Closing Date and each Option Closing Date that:
(i) the Company has not received from the Commission
any order preventing or suspending the use of any Preliminary
Prospectus relating to the proposed offering of the Shares nor
instituted or threatened any proceedings for that purpose. The
Registration Statement, on the date it became or becomes
effective, any 462(b) Registration Statement, on the date it
became or becomes effective, each Preliminary Prospectus, on
the date of the filing thereof with the Commission, and the
Prospectus and any amendment or supplement thereto, on the
date of filing thereof with the Commission (or if not filed,
on the date provided by the Company to the Underwriters in
connection with the offering and sale of the Shares) and at
the Closing Date and each Option Closing Date conformed or
will conform in all material respects with the requirements of
the Act and the rules and regulations promulgated thereunder
("Rules and Regulations"); the Registration Statement, on
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the date it became or becomes effective, and any 462(b)
Registration Statement, on the date it became or becomes
effective, did not or will not contain an untrue statement of
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; each Preliminary Prospectus, on the date of the
filing thereof with the Commission, and the Prospectus and any
amendment or supplement thereto, on the date of filing thereof
with the Commission (or if not filed, on the date provided by
the Company to the Underwriters in connection with the
offering and sale of the Shares) and at the Closing Date and
each Option Closing Date did not and will not include an
untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading; the foregoing shall not apply
to statements in or omissions from the Registration Statement
and the Prospectus made or omitted in reliance upon, and in
conformity with, information relating to the Underwriters
furnished in writing to the Company by or on behalf of the
Underwriters with your consent expressly for use therein; the
Company and the Selling Stockholders hereby acknowledge for
all purposes under this Agreement that (A) the statements set
forth under the caption "Underwriting" in the Prospectus and
(B) the stabilization legend on the inside cover of the
Prospectus constitute the only written information furnished
to the Company by or on behalf of the Underwriters for use in
the preparation of the Registration Statement or the
Prospectus or any amendment or supplement thereto;
(ii) the Company has been duly incorporated and is a
validly existing corporation in good standing under the laws
of Delaware, with full corporate power and authority to own or
lease its properties and assets and to conduct its business as
described in the Registration Statement and the Prospectus, is
duly registered as an insurance holding company under the laws
of California, and is duly qualified to do business in each
jurisdiction in which it owns or leases real property or in
which the conduct of its business or the ownership or leasing
of property requires such qualification, except where the
failure to be so qualified, either individually or in the
aggregate, would not have a material adverse effect on the
condition (financial or otherwise), business, assets,
prospects, net worth or results of operations of the Company
taken as a whole (a "Material Adverse Effect");
(iii) the Company has no subsidiaries other than
Financial Pacific Insurance Agency ("FPIA"), Financial Pacific
Insurance Company ("FPIC")and Financial Pacific Technology,
Inc., each a corporation organized and operating under the
laws of California; all issued and outstanding shares of
capital stock or other equity interest of each subsidiary of
the Company have been duly authorized and validly issued and
are fully paid and nonassessable, and were not issued in
violation of or subject to any preemptive right, or other
rights to subscribe for or purchase shares or other equity
interest and are owned by the Company free and clear of any
pledge, lien, security interest, encumbrance, claim or
equitable interest.
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(iv) the capitalization of the Company is, and upon
consummation of the transactions contemplated hereby and by
the Prospectus will be, as set forth in the Registration
Statement and the Prospectus under the caption
"Capitalization"; all of the outstanding shares of capital
stock of the Company (including the shares to be sold by the
Selling Stockholders hereunder) have been duly authorized and
are validly issued, are fully paid and non-assessable and
conform to the description thereof in the Registration
Statement and the Prospectus and were not issued in violation
of any preemptive rights or other rights to subscribe for or
purchase securities; and, except as set forth in the
Registration Statement and the Prospectus with respect to
4,400 shares of Series A Preferred Stock and the warrants to
purchase an aggregate of 747,216 shares of the Common Stock
described under the Caption "Description of Capital Stock" and
the options to purchase 82,819 shares of the Common Stock
under the Company's 1993 Stock Incentive Plan, and except for
the Warrants, no options, warrants or other rights to purchase
from the Company, agreements or other obligations of the
Company to issue or other rights to convert any obligation
into, or exchange any securities for, shares of capital stock
of or ownership interests in the Company are outstanding; the
description of the Company's 1993 Stock Incentive Plan and the
options or other rights granted and exercised thereunder, as
set forth in the Registration Statement and the Prospectus,
accurately and fairly presents the information required to be
shown under the Act with respect to such options and rights;
(v) subsequent to the respective dates as of which
information is given in the Registration Statement and
Prospectus, and except as described therein, (A) the Company
has not incurred any material liabilities or obligations,
direct or contingent, or entered into any material
transactions not in the ordinary course of business, (B) the
Company has not purchased any of its outstanding capital stock
or declared, paid or otherwise made any dividend or
distribution of any kind on its capital stock or otherwise and
(C) there has not been any material adverse change in the
Company's condition (financial or otherwise), business,
affairs, prospects or results of operations or any material
change in the Company's capital stock, short-term debt or
long-term debt;
(vi) the Company Shares have been duly and validly
authorized and, when issued, delivered and paid for pursuant
to this Agreement, will be validly issued, fully paid and
nonassessable, and will conform to the description thereof
contained in the Prospectus;
(vii) this Agreement has been duly authorized,
executed and delivered by the Company and is a legal, valid
and binding agreement of the Company enforceable in accordance
with its terms, except as enforceability of the same may be
limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally
and by general equity principles;
(viii) the Company is not in violation of its
Restated Certificate
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of Incorporation or By-laws; the Company is not in violation
of or in breach of or in default in (nor has any event
occurred that with notice or lapse of time, or both, would be
a breach of or a default in) the performance of any
obligation, agreement or condition contained in any agreement,
lease, contract, permit, license, franchise agreement,
mortgage, loan agreement, debenture, note, deed of trust,
bond, indenture or other evidence of indebtedness or any other
instrument or obligation (collectively, "Obligations or
Instruments") to which the Company is a party or by which the
Company or any of its properties or assets is bound or
affected (except for such breach or default as would not have
a Material Adverse Effect); the Company is not in violation of
any statute, judgment, decree, order, rule or regulation
(collectively, "Laws") applicable to the Company or any of its
properties or assets that, alone, or together with other
violations of Laws would result in a Material Adverse Effect;
and to the best knowledge of the Company, no other party under
any contract or other agreement to which the Company is a
party is in material default thereunder except for such
defaults as would not individually or in the aggregate result
in a Material Adverse Effect;
(ix) the execution, delivery and performance of this
Agreement, the delivery of the Shares by the Company and the
Selling Stockholders pursuant to this Agreement, and the
consummation of the transactions contemplated hereby and
thereby will not, alone or upon notice or the passage of time
or both, (A) require any consent, approval, authorization or
other order of any court, regulatory body, administrative
agency or other governmental body or third party, except such
consents or approvals as have been obtained or waived or which
would not result in a Material Adverse Effect (and except in
the case of the Shares such as may be required under the Act
and the securities or Blue Sky laws of the various states or
by the NASD), and except those relating to the acquisition of
10% or more of the aggregate number of shares of the Common
Stock to be outstanding upon the consummation of the
transactions contemplated by this Agreement by any person or
affiliated persons (other than the purchase and sale of the
Shares by the Underwriters pursuant to this Agreement), (B)
except as described in the Prospectus, result in the creation
or imposition of any lien, charge or encumbrance upon any of
the properties or assets of the Company pursuant to the terms
and provisions of any Obligation or Instrument, (C) conflict
with or constitute a breach or default under any Obligation or
Instrument to which the Company is a party or by which the
Company or any of its properties or assets is bound, (except
for such creation, conflict, breach or default as would not
have a Material Adverse Effect or would not interfere with the
consummation of the transactions contemplated by this
Agreement), or (D) assuming compliance with the Act and all
applicable state securities or Blue Sky laws, violate or
conflict with any Laws applicable to the Company or its
subsidiary or any of their respective properties or assets
taken as a whole (except for such violation or conflict as
could not have a Material Adverse Effect or would not
interfere with the consummation of the transactions
contemplated by this Agreement); no action, suit or proceeding
before any court or arbitrator or any governmental body,
agency or official (domestic or foreign) is pending against
or, to the knowledge of the
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Company, threatened against the Company, that, if adversely
determined, could reasonably be expected to in any manner
invalidate this Agreement or the Warrant Agreement;
(x) except as set forth in the Prospectus, there is
no action, suit, proceeding, inquiry or investigation,
governmental or otherwise before any court, arbitrator or
governmental agency or body (collectively, "Proceedings")
pending to which the Company or its subsidiary is a party or
to which any of their respective properties or assets are
subject, that, if determined adversely to the Company or its
subsidiary, as the case may be, would result in a Material
Adverse Effect, or that would materially and adversely affect
the properties or assets thereof, or that seeks to restrain,
enjoin, prevent the consummation of or otherwise challenge the
issuance or sale of any of the Shares to be sold hereunder or
the consummation of the transactions contemplated hereunder,
or under the Warrant Agreement and, to the best knowledge of
the Company, no such Proceedings are threatened or
contemplated; and (except for such contracts, documents or
agreements for which confidential treatment has been granted
by the Commission in accordance with Rule 406 of the Rules and
Regulations) there is no contract, document, agreement or
transaction to which the Company or its subsidiary is a party,
or that involved or involves the Company, its subsidiary or
any of their properties or assets that are required to be
described in or filed as exhibits to the Registration
Statement or the Prospectus by the Act or the Rules and
Regulations that have not been so described or filed; no
action has been taken with respect to the Company, and, to the
best knowledge of the Company, no statute, Rule or regulation
or order has been enacted, adopted or issued by any
governmental agency that suspends the effectiveness of the
Registration Statement, prevents or suspends the use of any
Preliminary Prospectus or the Prospectus, or suspends the sale
of the Shares in any jurisdiction referred to in Section 5(g)
hereof; no injunction, restraining order or order of any
nature by a federal or state court of competent jurisdiction
or any insurance regulatory agency has been issued with
respect to the Company that might prevent the issuance of the
Shares, suspend the effectiveness of the Registration
Statement, prevent or suspend the use of any Preliminary
Prospectus or the Prospectus or suspend the sale of the Shares
in any jurisdiction referred to in Section 5(g) hereof; and
every request of the Commission, or any securities authority
or agency of any jurisdiction, for additional information (to
be included in the Registration Statement or the Prospectus or
otherwise) has been complied with in all material respects;
(xi) the Company and each of its subsidiaries is duly
licensed or authorized as an insurer or insurance agency or
third-party administrator in each jurisdiction where it is
required to be so licensed or authorized to conduct its
business as described in the Prospectus, or is subject to no
material liability or disability by reason of the failure to
be so licensed or authorized in any such jurisdiction; the
Company has made all required filings under applicable
insurance holding company statutes; each subsidiary of the
Company is in compliance with the requirements of the
insurance laws and regulations of California and the insurance
laws and
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regulations of other jurisdictions which are applicable to
such subsidiary, and has filed all notices, reports, documents
or other information required to be filed thereunder, except
where the failure to so comply or file would not have a
Material Adverse Effect; the Company and each of its
subsidiaries have all other necessary authorizations,
approvals, orders, consents, certificates, permits,
registrations or qualifications of and from all insurance
regulatory authorities to conduct its businesses as described
in the Prospectus, or are subject to no material liability or
disability by reason of the failure to have such
authorizations, approvals, orders, consents, licenses,
certificates, permits, registrations or qualifications; and
none of the Company or any of its subsidiaries has received
any notification from any insurance regulatory authority to
the effect that any additional authorization, approval, order,
consent, license, certificate, permit, registration or
qualification from such insurance regulatory authority is
needed to be obtained by any of the Company or its
subsidiaries in any case where it could be reasonably expected
that (x) the Company or its subsidiaries would in fact be
required either to obtain any such additional authorization,
approval, order, consent, license, certificate, permit,
registration or qualification, or cease or otherwise limit
writing certain business and (y) the failure to obtain such
authorization, approval, order, consent, license, certificate,
permit, registration or qualification or the limiting of such
business would have a Material Adverse Effect on the business,
financial position or results of operations of the Company and
its subsidiaries;
(xii) the Company is not aware that any of its
pending applications for licenses or permits to act as an
insurer or insurance agent or third-party administrator, or
any such pending application of a subsidiary, is not being
processed in due course;
(xiii) except as disclosed in the Prospectus, to the
best knowledge of the Company, no change in any insurance
laws, rules or regulations in California has been introduced
that would reasonably be expected to be adopted and if
adopted, would reasonably be expected to have, individually or
in the aggregate with all such changes, a Material Adverse
Effect;
(xiv) in addition to the above, the Company and its
subsidiaries believe they have such permits, licenses,
franchises and authorizations of governmental or regulatory
authorities or third parties ("Permits"), including, without
limitation, under any applicable Environmental Laws, as are
necessary to own, lease and operate its properties and assets
and to conduct its businesses, except where the failure to
have any such Permit would not have a Material Adverse Effect;
the Company has fulfilled and performed all of its material
conditions or obligations with respect to such Permits, and no
event has occurred that allows, or after notice or lapse of
time, or both would allow, revocation or termination thereof
or result in any other material impairment of the rights of
the holder of any such Permit;
(xv) all reinsurance treaties and arrangements to
which the Company or any of its subsidiaries is a party are in
full force and effect and none of the Company
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or its subsidiaries is in violation of or in default in the
performance, observance or fulfillment of, any material
obligation, agreement, covenant or condition contained
therein; neither the Company nor any of its subsidiaries has
received notice from any of the other parties to such
treaties, contracts or agreements that such other party
intends not to perform such treaty, and the Company and its
subsidiaries, to their best knowledge, have no reason to
believe that any of the other parties to such treaties or
arrangements will be unable to perform any such treaties or
arrangements except to the extent adequately and properly
reserved for in the consolidated financial statements of the
Company and its subsidiaries included in the Prospectus.
(xvi) the Company has not violated any foreign,
federal, state or local law or regulation relating to the
protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), nor any foreign, Federal,
state or local law relating to discrimination in the hiring,
promotion or pay of employees nor any applicable foreign,
Federal or state wages and hours laws, nor any provisions of
the Employee Retirement Income Security Act of 1974, as
amended or the rules and regulations promulgated thereunder or
similar foreign laws, that, in each case or in the aggregate,
would have in a Material Adverse Effect; none of the property
leased by the Company is contaminated with any waste or
hazardous substances, and, to the extent that the Company
disposes in the ordinary course of its business products that
may be classified as or contain "hazardous substances," the
disposal of such products (A) is in material compliance with
all applicable laws as of the date hereof and (B) has not and
will not result in a Material Adverse Effect;
(xvii) the Company is not, and does not intend to
conduct its business in a manner in which it would become, an
"investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment
Company Act of 1940, as amended (the "Investment Company
Act");
(xviii) except as otherwise set forth in the
Prospectus, the Company has good and marketable title, free
and clear of all liens, claims, encumbrances and restrictions
(except liens for taxes not yet due and payable) to all
property and assets described in the Registration Statement as
being owned by it; all leases to which the Company is a party
are subsisting, valid and binding and no default of the
Company or, to the best knowledge of the Company any other
person has occurred or is continuing thereunder that might
result in a Material Adverse Effect; and the Company enjoys
peaceful and undisturbed possession under all such leases to
which the Company is a party as lessee with such exceptions as
do not materially interfere with the use made thereof by the
Company;
(xix) the Company believes it maintains adequate
insurance for the conduct of its business with reputable
third-party insurers in accordance with prudent practices in
its industry, and the Company has no reason to believe that it
will not be able to renew its existing coverage as and when
such coverage expires or to obtain
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similar coverage from similar insurers as may be necessary to
continue its business at a comparable cost;
(xx) to the best of the Company's knowledge, KPMG
Peat Marwick LLP, the accounting firm that has certified or
reviewed, or shall certify or review, the financial statements
and supporting schedules filed or to be filed with the
Commission as part of the Registration Statement and the
Prospectus, is an independent public accounting firm with
respect to the Company as required by the Act;
(xxi) the consolidated financial statements of the
Company, together with related notes and schedules of the
Company included in the Registration Statement and the
Prospectus, are accurate and present fairly, in all material
respects, the financial position, results of operations and
cash flows of the Company at the indicated dates and for the
indicated periods; such financial statements have been
prepared in accordance with generally accepted accounting
principles ("GAAP") consistently applied throughout the
periods involved, except where such summary and selected
financial and operating data have been prepared or include
data prepared in accordance with statutory accounting
principles and the Registration Statement specifically
indicates that this is the case, and all adjustments necessary
for a fair presentation of results for such periods have been
made, and any unaudited financial statements have been
prepared on a basis substantially consistent with that of the
audited operating financial statements included in the
Registration Statement and the Prospectus; and the summary and
selected financial and operating data included in the
Registration Statement and the Prospectus present fairly, in
all material respects, the information shown therein and have
been compiled on a basis consistent with the audited and any
unaudited financial statements, as the case may be, included
therein;
(xxii) the statutory financial statements of the
Company and its subsidiaries from which certain ratios and
other statistical data filed as part of the Registration
Statement or included or incorporated in the Prospectus have
been derived: (i) 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 California Department of Insurance,
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 (ii) present fairly the statutory financial position of
the Company and its subsidiaries as at the dates thereof, and
the statutory basis results of operations of the Company for
the periods covered thereby;
(xxiii) FPIC is currently rated A- (excellent) by
A.M. Best; the Company is not aware of any action by A.M. Best
that could lead to a downward change in the rating of FPIC,
nor is it aware of any circumstance that could be the basis
for such downward change;
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(xxiv) except for the registration rights of the
Selling Stockholders which have been exercised, all rights of
security holders of the Company to require registration of
shares of Common Stock (a "Registration Right") or any other
security of the Company because of the filing of the
Registration Statement or consummation of the transactions
contemplated by this Agreement or to receive notification of
such filing or consummation have been duly waived with respect
to the public offering contemplated hereby. There are no
preemptive rights with respect to the offering being made by
the Prospectus;
(xxv) except as disclosed in the Registration
Statement and the Prospectus, no labor dispute with the
employees of the Company exists, or to the best knowledge of
the Company, is imminent, and the Company has not received
notice of any existing or imminent labor disturbance by the
employees of any of its principal suppliers, customers,
manufacturers or contractors that could result in any Material
Adverse Effect;
(xxvi) to the best of the Company's knowledge, the
Company has filed or caused to be filed, or has properly filed
extensions for, all foreign, federal, state and local income,
value added and franchise tax returns and has paid all taxes
and assessments shown thereon as due, except for such taxes
and assessments as are disclosed or adequately reserved
against and that are being contested in good faith by
appropriate proceedings, promptly instituted and diligently
conducted;
(xxvii) the Company does not own or require any
patents in connection with the business it now operates and
the Company owns or possesses the licenses, inventions,
copyrights, know-how (including trade secrets and other
unpatented and or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks
and trade names (collectively, "Proprietary Rights") currently
employed by it in connection with the business it now operates
except where the failure to so own such Proprietary Rights
would not have a Material Adverse Effect; and the Company has
not received any notice and is not otherwise aware of any
infringement of or conflict with asserted rights of others
with respect to any Proprietary Rights that, if the subject of
any unfavorable decision, ruling or finding, in the aggregate,
would result in a Material Adverse Effect;
(xxviii) the Company is conducting and intends to
conduct its business so as to comply in all material respects
with applicable federal, state, local and foreign government
Laws, except where the failure to comply would not have a
Material Adverse Effect; and except as set forth in the
Registration Statement and the Prospectus, the Company is not
charged with or, to the best knowledge of the Company, under
investigation with respect to, any material violation of any
such Laws;
(xxix) the Company has not taken and will not take,
directly or indirectly, any action designed to or that might
reasonably be expected to cause or result, under
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the Exchange Act or otherwise, in stabilization or
manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares;
(xxx) neither the Company nor, to the best knowledge
of the Company, any employee or agent of the Company has made
any payment of funds of the Company or received or retained
any funds in violation of any law, rule or regulation
(including, without limitation, the Foreign Corrupt Practices
Act) or of a character required to be disclosed in the
Prospectus; the Company has not, at any time during the past
five years, (1) made any unlawful contributions to any
candidate for any political office, or failed fully to
disclose any contribution in violation of law, or (2) made any
unlawful payment to state, federal or foreign government
officer or officers, or other person charged with similar
public or quasi-public duty;
(xxxi) the Company maintains a system of internal
accounting controls which it believes is sufficient to provide
reasonable assurance that (i) transactions are executed in
accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's
general or specific authorization, and (iv) the recorded
accountability for inventory is compared with the existing
inventory at reasonable intervals and appropriate action is
taken with respect to any differences;
(b) In addition, the Selling Stockholders, severally and not
jointly, represent and warrant to and agree with each Underwriter and
the Company that:
(i) each such Selling Stockholder now has and on the
Closing Date will have valid marketable title to the Selling
Stockholder Shares to be sold by him or her, free and clear of
any pledge, lien, security interest, encumbrance, claim or
equitable interest other than pursuant to this Agreement; and
upon delivery of such Shares hereunder and payment of the
Purchase Price as herein contemplated, each of the
Underwriters will obtain valid marketable title to the Shares
purchased by it from such Selling Stockholder, free and clear
of any pledge, lien, security interest pertaining to such
Selling Stockholder or such Selling Stockholder's property,
encumbrance, claim or equitable interest, including any
liability for estate or inheritance taxes, or any liability to
or claims of any creditor, devisee, legatee or beneficiary of
such Selling Stockholders;
(ii) each such Selling Stockholder has duly executed
and delivered, in the form heretofore furnished to the
Representatives, an irrevocable Power of Attorney and Custody
Agreement appointing Xxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxx and
Xxxxxxx X. Xxxxxxx, or any of them, as attorney-in-fact (the
"Attorney") with Xxxxxx X. Xxxxxxx as custodian (the
"Custodian"); the Power of Attorney and Custody Agreement
constitutes a valid and binding agreement on the part of each
Selling Stockholder, enforceable in accordance with its terms,
except as the enforcement
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thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to
or affecting creditors' rights generally or by general
equitable principles; and the Attorney, acting alone, is
authorized to execute and deliver this Agreement and the
certificate referred to in Section 8(l) hereof on behalf of
such Selling Stockholder, to determine the Purchase Price to
be paid by the several Underwriters to such Selling
Stockholder as provided in Section 3 hereof, and to duly
endorse (in blank or otherwise) the certificate or
certificates representing such Shares or a stock power or
powers with respect thereto, to accept payment therefor, and
otherwise to act on behalf of such Selling Stockholder in
connection with this Agreement;
(iii) all consents, approvals, authorizations and
orders required for the execution and delivery by each Selling
Stockholder of the Power of Attorney and Custody Agreement,
the execution and delivery by or on behalf of such Selling
Stockholder of this Agreement and the sale and delivery of the
Selling Stockholder Shares to be sold by such Selling
Stockholder under this Agreement (other than, at the time of
the execution hereof (if the Registration Statement has not
yet been declared effective by the Commission), the issuance
of the order of the Commission declaring the Registration
Statement effective and such consents, approvals,
authorizations or orders as may be necessary under state or
other securities or Blue Sky laws) have been obtained and are
in full force and effect; and such Selling Stockholder has
full legal right, power and authority to enter into and
perform its obligations under this Agreement and such Power of
Attorney and Custody Agreement, and to sell, assign, transfer
and deliver the Shares to be sold by such Selling Stockholder
under this Agreement;
(iv) for a period of 180 days from the date this
Agreement becomes effective, no Selling Stockholder will,
without the prior written consent of EVEREN Securities, Inc.
on behalf of the Underwriters (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option,
right or warrant to purchase, or otherwise transfer or dispose
of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for
Common Stock (except for such transactions contemplated in the
Registration Statement), or (2) enter into any swap or other
agreement that transfers, in whole or in part, any of the
economic consequences of ownership of the Common Stock,
whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise; provided, however,
that this clause shall not apply to the transactions expressly
contemplated hereby involving the Shares or to transfers of
Common Stock to partnerships, limited liability companies,
trusts or similar entities organized for the exclusive benefit
of family members of a Selling Stockholder for financial and
estate planning purposes so long as any transferee that
receives Common Stock as a result of such transfer shall agree
upon such transfer to be bound by the terms of this paragraph
and shall be capable of being so bound;
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(v) the performance of this Agreement and the
consummation of the transactions herein contemplated will not
result in a breach or violation of any of the terms and
provisions of or constitute a default under any bond,
debenture, note or other evidence of indebtedness, or under
any lease, contract, indenture, mortgage, deed of trust, loan
agreement, joint venture or other agreement or instrument to
which any Selling Stockholder is a party or by which any
Selling Stockholder, may be bound or, to the best of each
Selling Stockholder's knowledge, result in any violation of
any law, order, rule, regulation, writ, injunction, judgment
or decree of any court, government or governmental agency or
body, domestic or foreign, having jurisdiction over such
Selling Stockholder;
(vi) no Selling Stockholder has taken or will take,
directly or indirectly, any action designed to or that might
reasonably be expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate
the sale or resale of the Shares;
(vii) other than as permitted by the Act, no Selling
Stockholder has distributed or will distribute any prospectus
or other offering material in connection with the offering and
sale of the Shares;
(viii) each such Selling Stockholder has reviewed the
Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus) and the Registration
Statement, and the information regarding such Selling
Stockholder set forth therein under the caption "Principal and
Selling Stockholders" is complete and accurate;
(ix) each Selling Stockholder will review the
Prospectus and will comply with all agreements and satisfy all
conditions to be complied with or satisfied by the Selling
Stockholders pursuant to this Agreement on or prior to the
Closing Date, and will advise the Representatives prior to the
Closing Date if any statement to be made on behalf of such
Selling Stockholder in the certificate contemplated by Section
8(l) would be inaccurate if made as of the Closing Date;
(x) no Selling Stockholder has, unless waived prior
to the date hereof, any preemptive right, co-sale right or
right of first refusal or other similar right to purchase any
of the Company Shares; such Selling Stockholder does not have,
or has waived prior to the date hereof, any registration right
or other similar right to participate in the offering made by
the Prospectus, other than such rights of participation as
have been satisfied by the participation of such Selling
Stockholder in the transactions to which this Agreement
relates in accordance with the terms of this Agreement; and
such Selling Stockholder does not own any warrants, options or
similar rights to acquire, and does not have any right or
arrangement to acquire, any capital stock, rights, warrants,
options or other securities from the Company, other than those
described in the Registration Statement and the Prospectus.
7. Indemnification.
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(a) The Company agrees to indemnify and hold harmless each of
the Underwriters and each person, if any, who controls each of the
Underwriters within the meaning of Section 15 of the Act or Section 20
of the Exchange Act (the "indemnified parties") from and against any
and all losses, claims, damages, liabilities and judgments caused by,
arising out of, related to or based upon any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), including the
information deemed to be part of the Registration Statement at the time
of effectiveness pursuant to Rule 430A, if applicable, or the
Prospectus or any Preliminary Prospectus or caused by any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that the Company shall not be liable in any such
case to the extent that such losses, claims, damages, liabilities or
judgments are caused by an untrue statement or omission made or omitted
in reliance upon written information furnished to the Company by or on
behalf of the Underwriters for use in the preparation of the
Registration Statement or the Prospectus or any amendment or supplement
thereto. In addition to its other obligations under this Section 7(a),
the Company agrees that, as an interim measure during the pendency of
any claim, action, investigation, inquiry or other proceeding arising
out of or based upon any statement or omission, or any alleged
statement or omission, described in this Section 7(a), or any
inaccuracy in the representations and warranties of the Company herein
or the failure to perform its obligations hereunder, the Company will
pay each Underwriter on a quarterly basis for all reasonable legal or
other expenses incurred in connection with investigating or defending
any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the Company's obligation to indemnify
hereunder or to pay each Underwriter for such expenses and the
possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. To the extent that any
such interim payment is so held to have been improper, the Underwriters
shall promptly return such payment to the Company. Any such interim
reimbursement payments which are not made to the Underwriters within
thirty (30) days of a request for reimbursement shall bear interest at
the prime rate (or other commercial lending rate for borrowers of the
highest credit standing) listed from time to time in The Wall Street
Journal which represents the base rate on corporate loans posted by a
substantial majority of the nation's thirty (30) largest banks (the
"Prime Rate"), from the date of such request.
(b) The Selling Stockholders agree, severally and not jointly,
to indemnify and hold harmless each of the Underwriters and each
person, if any, who controls each of the Underwriters within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act (the
"indemnified parties") from and against any and all losses, claims,
damages, liabilities and judgments caused by, arising out of, related
to or based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto), including the information deemed to be part of
the Registration Statement at the time of effectiveness pursuant to
Rule 430A, if applicable, or the Prospectus or any Preliminary
Prospectus or caused by any omission or alleged omission to state
therein
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a material fact required to be stated therein or necessary to make the
statements therein not misleading to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in
conformity with written information furnished to such Underwriter by a
Selling Stockholder, directly or through such Selling Stockholder's
representatives, specifically for use in the preparation thereof;
provided, however, that the Selling Stockholders shall not be liable in
any such case to the extent that such losses, claims, damages,
liabilities or judgments are caused by an untrue statement or omission
made or omitted in reliance upon written information furnished to the
Underwriters for use in the preparation of the Registration Statement
or the Prospectus or any amendment or supplement thereto. In addition
to any other obligations of the Selling Stockholders under this Section
7(b), the Selling Stockholders agree that, as an interim measure during
the pendency of any claim, action, investigation, inquiry or other
proceeding arising out of or based upon any statement or omission, or
any alleged statement or omission, described in this Section 7(b), or
any inaccuracy in the representations and warranties of the Selling
Stockholders herein or the failure to perform any of their obligations
hereunder, the Selling Stockholders will, severally and not jointly,
pay each Underwriter on a quarterly basis for all reasonable legal or
other expenses incurred in connection with investigating or defending
any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the Selling Stockholders' obligation to
indemnify hereunder or to pay each Underwriter for such expenses and
the possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. To the extent that any
such interim payment is so held to have been improper, the Underwriters
shall promptly return such payment to the Selling Stockholders. Any
such interim reimbursement payments which are not made to the
Underwriters within thirty (30) days of a request for reimbursement
shall bear interest at the Prime Rate from the date of such request.
(c) In case any action shall be brought against any of the
indemnified parties, based upon any Preliminary Prospectus, the
Registration Statement or the Prospectus or any amendment or supplement
thereto and with respect to which indemnity may be sought against the
Company and the Selling Stockholders, such indemnified parties shall
promptly notify the Company (and the Selling Stockholders, care of the
Company) in writing (but the failure so to notify shall not relieve the
Company or the Selling Stockholders of any liability that they may
otherwise have to such indemnified parties under this Section 7
(although the Company's and the Selling Stockholder's liability to an
indemnified party may be reduced on a monetary basis to the extent, but
only to the extent, they have been prejudiced by such failure on the
part of such indemnified party), and the Company and the Selling
Stockholders shall promptly assume the defense thereof, including the
employment of counsel satisfactory to such indemnified party and
payment of all fees and expenses. The indemnified parties shall each
have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such indemnified parties unless (i)
the employment of such counsel shall have been specifically authorized
by the Company, (ii) the Company or the Selling Stockholder, as the
case may be, shall have failed to assume promptly the defense or to
employ counsel reasonably satisfactory to such indemnified party or
(iii) the named parties to any such action (including
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any impleaded parties) include both the indemnified parties and the
Company or the Selling Stockholders, and an indemnified party shall
have been advised by counsel that there may be one or more legal
defenses available to one or more of the indemnified parties that are
different from or additional to those available to the Company or the
Selling Stockholders (in which case the Company and the Selling
Stockholders shall not have the right to assume the defense of such
action on behalf of such indemnified party, it being understood,
however, that the Company and the Selling Stockholders shall not, in
connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to
any local counsel) for the indemnified parties, which firm shall be
designated in writing by the Representatives, and that all such fees
and expenses shall be reimbursed promptly as they are incurred). The
Company and the Selling Stockholders shall not be liable for any
settlement of any such action effected without their written consent,
which consent shall not be unreasonably withheld, but if settled with
the written consent of the Company and the Selling Stockholders, the
Company and the Selling Stockholders agree to indemnify and hold
harmless the indemnified parties from and against any and all loss or
liability by reason of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which
any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional and complete release in writing of
such indemnified party from any and all liability on claims that are
the subject matter of such proceeding, which such settlement shall be
in form and substance satisfactory to the indemnified party. The
indemnification provided in this Section 7 will be in addition to any
liability which the Company and the Selling Stockholders may otherwise
have.
(d) The Underwriters agree, severally and not jointly, to
indemnify and hold harmless each Selling Stockholder, the Company, its
directors, its officers who sign the Registration Statement and any
person controlling the Company within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act (the "indemnified parties"), to
the same extent as the foregoing indemnity from the Company and the
Selling Stockholder to the Underwriters but only with reference to
information stated in or omitted from the Registration Statement, the
Prospectus or any Preliminary Prospectus in reliance upon, and in
conformity with, information relating to the Underwriters furnished in
writing to the Company by or on behalf of the Underwriters with your
consent expressly for use therein. In case any action shall be brought
against the Company, the Selling Stockholders, any of the Company's
directors, any such officers or any person controlling the Company
based on the Registration Statement, the Prospectus or any Preliminary
Prospectus and in respect of which indemnity may be sought against the
Underwriters, the Underwriters shall have the rights and duties given
to the Company and the Selling Stockholders by Section 7(c) hereof
(except that if the Company and the Selling Stockholders shall have
assumed the defense thereof, such Underwriter shall not be required to
do so, but may employ separate counsel therein and participate in the
defense thereof but the fees and expenses of such counsel shall be at
the expense of such Underwriter), and each Selling Stockholder, the
Company, its
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directors, any such officers and any person controlling the Company
shall have the rights and duties given to the "indemnified parties" by
Section 7(c) hereof. In addition to their other obligations under this
Section 7(d), the Underwriters severally and not jointly agree that, as
an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding described in Section 7(d)
hereof, they will reimburse the Company and the Selling Stockholders on
a quarterly basis for all reasonable legal or other expenses incurred
in connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of
the Underwriters' obligation to reimburse the Company and the Selling
Stockholders for such expenses and the possibility that such payments
might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement payment
is so held to have been improper, the Company and the Selling
Stockholders shall promptly return such payment to the Underwriters
together with interest, compounded daily, determined on the basis of
the Prime Rate. Any such interim reimbursement payments which are not
made to the Company or the Selling Stockholders within thirty (30) days
of a request for reimbursement shall bear interest at the Prime Rate
from the date of such request.
(e) If the indemnification provided for in this Section 7 is
for any reason unavailable to an indemnified party or insufficient to
hold such indemnified party harmless in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages, liabilities and
judgments (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Stockholders
on the one hand and the Underwriters on the other from the offering of
the Securities or (ii) if the allocation provided in 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 Stockholders on the one hand and the Underwriters on the other
in connection with the statements or omissions or alleged statements or
omissions that resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Stockholders
on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering and
sale of the Shares (before deducting expenses) received by the Company
and the Selling Stockholders on the one hand, and the total
underwriting discounts and commissions received by the Underwriters on
the other, bears to the total price to the public of the Shares, in
each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the Company, the Selling Stockholders
and the Underwriters shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material
fact or the omission or the alleged omission to state a material fact
relates to information supplied by the Company, the Selling
Stockholders or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission.
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The Company, the Selling Stockholders and the Underwriters
agree that it would not be just and equitable if contribution pursuant
to this Section 7(e) were determined by pro rata allocation (even if
the Underwriters, the Company or the Selling Stockholders were treated
as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to
in the immediately preceding paragraph. The amount paid or payable by
an indemnified party as a result of the losses, claims, damages,
liabilities or judgments referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section 7,
no Underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the Shares underwritten by
it and distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise paid or been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission, and no Selling Stockholder shall be
required to contribute, more in the aggregate than the total selling
price of his or her shares (net of all amounts reimbursed, for any
reason, by the Company or insurance policies paid for or held by the
Company). No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this Section 7(e)
to contribute are several in proportion to the respective amount of
Shares purchased hereunder by each Underwriter and not joint.
(f) It is agreed that any controversy arising out of the
operation of the interim payment arrangements set forth in Sections
7(a), 7(b) or 7(d) hereof, including the amounts of any requested
payments and method of determining such amounts, shall be settled by
arbitration conducted under the provisions of the Constitution and
Rules of the Board of Governors of the New York Stock Exchange, Inc. or
pursuant to the Code of Arbitration Procedure of the National
Association of Securities Dealers, Inc. Any such arbitration shall be
commenced by service of a written demand for arbitration or written
notice of intention to arbitrate, therein electing the arbitration
tribunal. In the event the party demanding arbitration does not make
such designation of an arbitration tribunal in such demand or notice,
then the party responding to said demand or notice is authorized to do
so. Such an arbitration shall be limited to the operation of the
interim payment provisions contained in Sections 7(a), 7(b) and 7(d)
hereof and shall not resolve the ultimate propriety or enforceability
of the obligation to indemnify or pay expenses which is created by the
provisions of such Sections 7(a), 7(b) and 7(d) hereof.
(g) The parties to this Agreement hereby acknowledge that they
are sophisticated business persons who were represented by counsel
during the negotiations regarding the provisions hereof including,
without limitation, the provisions of this Section 7, and are fully
informed regarding said provisions. They further acknowledge that the
provisions of this Section 7 fairly allocate the risks in light of the
ability of the parties to investigate the Company and its business in
order to assure that adequate disclosure is made in the Registration
Statement and Prospectus as required by the Act and the Exchange Act.
The
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parties are advised that federal or state public policy, as interpreted
by the courts in certain jurisdictions, may be contrary to certain of
the provisions of this Section 7, and the parties hereto hereby
expressly waive and relinquish any right or ability to assert such
public policy as a defense to a claim under this Section 7 and further
agree not to attempt to assert any such defense.
(h) Notwithstanding any other provision herein to the
contrary, the liability of each Selling Stockholder under this
Agreement, including under the representations, warranties and
agreements contained herein and under the indemnity and contribution
agreements contained in the provisions of this Section 7, shall be
limited to an amount equal to the initial public offering price of the
Shares sold by such Selling Stockholder to the Underwriters minus the
amount of the underwriting discount paid thereon to the Underwriters by
such Selling Stockholder.
8. Conditions to the Obligations of the Underwriters. The obligations
of the several Underwriters to purchase and pay for the Firm Shares on the
Closing Date and the Option Shares on any Option Closing Date are subject to the
fulfillment of each of the following conditions on or prior to the Closing Date
and each Option Closing Date:
(a) All the representations and warranties of the Company and
the Selling Stockholders contained in this Agreement and in any
certificate delivered hereunder shall be true and correct on the
Closing Date and each Option Closing Date with the same force and
effect as if made on and as of the Closing Date or Option Closing Date,
as applicable. The Company and the Selling Stockholders shall not have
failed at or prior to the Closing Date or Option Closing Date, as
applicable, to perform or comply in all respects with any of the
agreements herein contained and required to be performed or complied
with by the Company at or prior to the Closing Date.
(b) If the Registration Statement is not effective at the time
of the execution and delivery of this Agreement, the Registration
Statement shall have become effective (or, if a post-effective
amendment is required to be filed pursuant to Rule 430A under the Act,
such post-effective amendment shall have become effective) not later
than 8:00 A.M., Los Angeles time, on the date of this Agreement or such
later time as you may approve in writing or, if the Registration
Statement has been declared effective prior to the execution and
delivery hereof in reliance on Rule 430A, the Prospectus shall have
been filed as required hereby, if necessary; and at the Closing Date
and each applicable Option Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued, and
no proceedings for that purpose shall have been commenced or shall be
pending before or, to the best knowledge of the Underwriters, the
Company or the Selling Stockholder, threatened by the Commission; every
request for additional information on the part of the Commission shall
have been complied with to the Underwriters' reasonable satisfaction;
no stop order suspending the sale of the Shares in any jurisdiction
referred to in Section 5(g) shall have been issued, and no proceeding
for that purpose shall have been commenced or shall be pending or
threatened.
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(c) The Shares shall have been qualified for sale under the
Blue Sky laws of such states as shall have been specified by the
Representatives.
(d) The legality and sufficiency of the authorization,
issuance and sale or transfer and sale of the Shares hereunder, the
validity and form of the certificates representing the Shares, the
execution and delivery of this Agreement and all corporate proceedings
and other legal matters incident thereto, and the form of the
Registration Statement and the Prospectus (except financial statements)
shall have been approved by counsel for the Underwriters exercising
reasonable judgment, and no Underwriter shall have advised the Company
that the Registration Statement or the Prospectus, or any amendment or
supplement thereto, contains an untrue statement of material fact, or
omits to state a fact that in your opinion is material and is required
to be stated therein or is necessary to make the statements therein not
misleading.
(e) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred any material change, or any
material development involving a prospective change, in or affecting
particularly the business or properties of the Company, whether or not
arising in the ordinary course of business, that, in the judgment of
the Representatives, makes it impractical or inadvisable to proceed
with the public offering or purchase of the Shares as contemplated
hereby.
(f) You shall have received the Lock-up Agreements specified
in Section 5(q) of this Agreement.
(g) You shall have received an opinion (satisfactory to you
and your counsel) dated the Closing Date or the Option Closing Date, as
the case may be, of Xxxxxxx & XxXxxxxx, counsel for the Company and the
Selling Stockholders, to the effect set forth on Exhibit A hereto and
incorporated herein.
(h) You shall have received an opinion (satisfactory to you
and your counsel) dated the Closing Date or the Option Closing Date, as
the case may be, of LeBoeuf, Lamb, Greene, MacRae, LLP, special counsel
to the Company with respect to matters involving insurance regulation
to the effect set forth on Exhibit B hereto and incorporated herein.
(i) You shall have received on the Closing Date and on any
later date on which Option Shares are to be purchased, as the case may
be, a letter from KPMG Peat Marwick, LLP addressed to the Company and
the Underwriters, dated the Closing Date or such later date on which
Option Shares are to be purchased, as the case may be, confirming that
they are independent certified public accountants with respect to the
Company within the meaning of the Act and the applicable published
Rules and Regulations and based upon the procedures described in such
letter delivered to you concurrently with the execution of this
Agreement (herein called the "Original Letter"), but carried out to a
date not more than five (5) business days prior to the Closing Date or
such later date on which Option Shares are to be purchased, as the case
may be, (i) confirming, to the extent true, that the statements and
conclusions set forth in the Original Letter are accurate as of the
Closing Date or such later date on which Option Shares are to be
purchased, as the case may be, and (ii) setting forth
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any revisions and additions to the statements and conclusions set forth
in the Original Letter which are necessary to reflect any changes in
the facts described in the Original Letter since the date of such
letter, or to reflect the availability of more recent financial
statements, data or information. The letter shall not disclose any
change in the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company and its subsidiaries
considered as one enterprise from that set forth in the Registration
Statement or Prospectus, which, in your sole judgment, is material and
adverse and that makes it, in your sole judgment, impracticable or
inadvisable to proceed with the public offering of the Shares as
contemplated by the Prospectus. The Original Letter from KPMG Peat
Marwick, LLP shall be addressed to or for the use of the Underwriters
in form and substance satisfactory to the Underwriters and shall (i)
represent, to the extent true, that they are independent certified
public accountants with respect to the Company within the meaning of
the Act and the applicable published Rules and Regulations, (ii) set
forth their opinion with respect to their examination of the balance
sheets of the Company as of December 31, 1997, and related statements
of operations, shareholders' equity and cash flows for the years then
ended December 31, 1997, (iii) state that KPMG Peat Marwick, LLP has
performed the procedure set out in Statement on Auditing Standards No.
71 ("SAS 71") for a review of financial information at March 31, 1998,
and (iv) address other matters agreed upon by KPMG Peat Marwick, LLP
and you. In addition, you shall have received confirmation from KPMG
Peat Marwick, LLP that a letter addressed to the Company has been
delivered to the Company stating that, in performing their audit of the
Company's consolidated financial statements as of March 31, 1998, to
the extent they deemed necessary in determining their auditing
procedures, they considered the Company's system of internal accounting
controls and noted no matters that they considered to be material
weaknesses.
(j) You shall have received from the Company a certificate,
signed by Xxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx, in their capacities
as Chief Executive Officer and Chief Financial Officer of the Company,
respectively, addressed to the Underwriters and dated the Closing Date
or Option Closing Date, as applicable, to the effect that:
(i) such officer does not know of any Proceedings
instituted, threatened or contemplated against the Company of
a character required to be disclosed in the Prospectus that
are not so disclosed; such officer does not know of any
material contract required to be filed as an exhibit to the
Registration Statement which is not so filed;
(ii) such officer has carefully examined the
Registration Statement and the Prospectus and all amendments
or supplements thereto and, in such officer's opinion, such
Registration Statement or such amendment as of its effective
date and as of the Closing Date, and the Prospectus or such
supplement as of its date and as of the Closing Date, did not
contain an untrue statement of material fact or omit to state
a material fact required to be stated therein or necessary in
order to make the statements therein not misleading and, in
such officer's opinion, since the effective date of the
Registration Statement, no event has occurred or information
become known that should have been set forth in an amendment
to the Registration Statement
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or a supplement to the Prospectus which has not been so set
forth in such amendment or supplement;
(iii) the representations and warranties of the
Company set forth in Section 6(a) of this Agreement are true
and correct as of the date of this Agreement and as of the
Closing Date or the Option Closing Date, as the case may be,
and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied at or prior to such Closing Date; and
(iv) the Commission has not issued an order
preventing or suspending the use of the Prospectus or any
preliminary prospectus filed as a part of the Registration
Statement or any amendment thereto; no stop order suspending
the effectiveness of the Registration Statement has been
issued; and, to the best knowledge of the respective signers,
no proceedings for that purpose have been instituted or are
pending or contemplated under the Act.
The delivery of the certificate provided for in this subparagraph shall
be and constitute a representation and warranty of the Company as to
the facts required in the immediately foregoing clauses (iii) and (iv)
of this subparagraph to be set forth in said certificate.
(k) You shall have received a certificate, dated the Closing
Date, from each Selling Stockholder to the effect that, as of the
Closing Date, such Selling Stockholder has not been informed that:
(i) The representations and warranties made by any
Selling Stockholder herein are not true or correct in any
material respect on the Closing Date or on any later date on
which Option Shares are to be purchased, as the case may be;
or that
(ii) Any Selling Stockholder has not complied with
any obligation or satisfied any condition which is required to
be performed or satisfied on the part of such Selling
Stockholder at or prior to the Closing Date or any later date
on which Option Shares are to be purchased, as the case may
be.
(l) You and Xxxxxxxx & Xxxxxxxx LLP, counsel for the
Underwriters, shall have received on or before the Closing Date or the
Option Closing Date, as the case may be, such further documents,
opinions, certificates and schedules or instruments relating to the
business, corporate, legal and financial affairs of the Company as you
and they shall have reasonably requested from the Company.
(m) The Company shall have executed and delivered to the
Managing Representative the Warrant Agreement, together with
certificates for the Warrants in the form and under the terms specified
therein, registered in such names and amounts as the Managing
Representative shall direct.
9. Effective Date of Agreement, Termination and Defaults. This
Agreement shall become effective upon, and shall not be deemed delivered until,
the later of (i) execution of this
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Agreement and (ii) when notification of the effectiveness of the Registration
Statement has been released by the Commission.
This Agreement may be terminated at any time prior to the Closing Date
and any exercise of the option to purchase Option Shares may be canceled at any
time prior to any Option Closing Date by the Underwriters by written notice to
the Company if any of the following has occurred: (i) since the respective dates
as of which information is given in the Registration Statement and the
Prospectus, any material adverse change or development involving a prospective
material adverse change in the condition, financial or otherwise, of the Company
or the earnings, affairs, management, or business of the Company, whether or not
arising in the ordinary course of business, that would, in the Representatives'
reasonable judgment, make it impracticable to market the Shares on the terms and
in the manner contemplated in the Prospectus, (ii) any outbreak or escalation of
hostilities or other national or international calamity or crisis or change in
economic conditions or in the financial markets of the United States that, in
the Representatives' reasonable judgment, is material and adverse and would, in
the Representatives' judgment, make it impracticable to market the Shares on the
terms and in the manner contemplated in the Prospectus, (iii) the suspension or
material limitation of trading in securities on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq Stock Market or limitation on prices for
securities on either such exchange or the Nasdaq Stock Market, (iv) the
enactment, publication, decree or other promulgation of any federal or state
statute, regulation, Rule or order of any court or other governmental authority
that in the Representatives' opinion materially and adversely affects, or will
materially and adversely affect, the business or operations of the Company, (v)
the declaration of a banking moratorium by either federal or New York or
California state authorities, (vi) the taking of any action by any Federal,
state or local government or agency in respect of its monetary or fiscal affairs
that in the Representatives' reasonable opinion has a material adverse effect on
the financial markets in the United States or (vii) there shall be any change in
financial markets or in political, economic or financial conditions which, in
the reasonable opinion of the Representatives, either renders it impracticable
or inadvisable to proceed with the offering and sale of the Shares on the terms
set forth in the Prospectus or materially adversely affects the market for the
Shares.
If on the Closing Date or on any Option Closing Date, as the case may
be, any of the Underwriters shall fail or refuse to purchase the Firm Shares or
Option Shares, as the case may be, which it has agreed to purchase hereunder on
such date, and the aggregate number of Firm Shares or Option Shares, as the case
may be, that such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase does not exceed, in the aggregate, 10% of the total number
of Shares that all Underwriters are obligated to purchase on such date, each
non-defaulting Underwriter shall be obligated, in the proportion which the
number of Firm Shares set forth opposite its name in Schedule I hereto bears to
the total number of Firm Shares or Option Shares, as the case may be, which all
the non-defaulting Underwriters have agreed to purchase, or in such other
proportion as you may specify, to purchase the Firm Shares or Option Shares, as
the case may be, that such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date. If, on the Closing Date or on the
Option Closing Date, as the case may be, any of the Underwriters shall fail or
refuse to purchase the Firm Shares or Option Shares, as the case may be, in an
amount that exceeds, in the aggregate, 10% of the total number of the Shares,
and arrangements satisfactory to you and the Company for the purchase of such
Shares are not made within 48 hours after such
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default, this Agreement shall terminate without liability on the part of the
non-defaulting Underwriters, the Company or the Selling Stockholder, except as
otherwise provided in this Section 9. In any such case that does not result in
termination of this Agreement, either you or the Company may postpone the
Closing Date or the Option Closing Date, as the case may be, for not longer than
seven (7) days, in order that the required changes, if any, in the Registration
Statement and the Prospectus or any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve a defaulting
Underwriter from liability in respect of any default of any such Underwriter
under this Agreement.
The indemnity and contribution provisions and other agreements,
representations and warranties of the Company, the Selling Stockholders and the
Company's officers and directors set forth in or made pursuant to this Agreement
shall remain operative and in full force and effect, and will survive delivery
of and payment for the Shares, regardless of (i) any investigation, or statement
as to the results thereof, made by or on behalf of any of the Underwriters or by
or on behalf of the Company or the Selling Stockholders or the officers or
directors of the Company or any controlling person of the Company, (ii)
acceptance of the Shares and payment therefor hereunder or (iii) termination of
this Agreement. Notwithstanding any termination of this Agreement, the Company
shall be liable for and shall pay all expenses it has agreed to pay pursuant to
Section 5(l).
Except as otherwise provided, this Agreement has been and is made solely for
the benefit of, and shall be binding upon, the Company, the Selling
Stockholders, the Underwriters, any indemnified person referred to herein and
their respective successors and assigns, all as and to the extent provided in
this Agreement, and no other person shall acquire or have any right under or by
virtue of this Agreement. The terms "successors and assigns" shall not include a
purchaser of any of the Shares from any of the several Underwriters merely
because of such purchase.
10. Effectiveness of Registration Statement. You, the Company and the
Selling Stockholders will use your, its and their best efforts to cause the
Registration Statement to become effective, if it has not yet become effective,
and to prevent the issuance of any stop order suspending the effectiveness of
the Registration Statement and, if such stop order be issued, to obtain as soon
as possible the lifting thereof.
11. Miscellaneous. All communications hereunder will be in writing and,
if sent to the Underwriters will be mailed, delivered or telegraphed and
confirmed to you at 00 Xxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000-0000,
Attention: Syndicate Department, with a copy to EVEREN Securities, Inc., 1901
Avenue of the Stars, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxx
X. Xxxxxx, Senior Managing Director and at Xxxxxx & Xxxxxx Incorporated
_______________________; if sent to the Company will be mailed, delivered or
telegraphed and confirmed to the Company at 0000 Xxxxxxxx Xxxx, Xxxxxxx,
Xxxxxxxxxx 00000 Attention: Xxxxxx X. Xxxxxxx, President and Chief Executive
Officer with a copy to Xxxxxxx & XxXxxxxx, 000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxx X. Xxxxx; and if sent to the
Selling Stockholders will be mailed, delivered or telegraphed to them care of
the Company, with a copy to, or in any case to such other address as the person
to be notified may have requested in writing.
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The Underwriters confirm that they will acquire the Shares only for
resale to the public and do not intend to hold the Shares for investment. They
further confirm that they do not intend to exercise control over the Company or
FPIC.
Until the initial public offering of the shares to the public has been
completed (as evidenced by termination of the underwriting syndicate), the
Underwriters will not knowingly sell to a single person or an affiliated group a
number of shares which equals or exceeds 10% or more of the Company's
outstanding voting securities, unless the purchaser or purchasers provide the
Underwriters with evidence satisfactory to the Underwriters that it or they have
obtained all required approvals form the California Department of Insurance or
that such approvals are not required. Absent actual knowledge, the knowledge of
one member of the underwriting syndicate shall not be attributed to other
members of the underwriting syndicate. Until the initial public offering of the
shares to the public has been completed, no Underwriter shall exercise any
voting right associated with shares held for such Underwriter's account.
The Company shall not in any event be liable to any of the Underwriters
for loss of anticipated profits from the transactions covered by this Agreement.
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF
LAW THEREOF.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Selling Stockholder and the several Underwriters,
including you.
Very truly yours,
FINANCIAL PACIFIC INSURANCE
GROUP, INC., a Delaware
corporation
By:_______________________________
Its_______________________________
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Selling Stockholders:
XXXXXXX, XXXXX & XXXXX
By:_______________________________
Attorney-in-Fact
FIREMARK ADVISORS, INC.
By:_______________________________
Attorney-in-Fact
ST. XXXX FIRE & MARINE
INSURANCE COMPANY
By:_______________________________
Attorney-in-Fact
CELERITY PARTNERS, L.P.
By:_______________________________
Attorney-in-Fact
XXXXXX X. XXXXXXX
By:_______________________________
Attorney-in-Fact
XXXXX XXXXXX
By:_______________________________
Attorney-in-Fact
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The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
EVEREN Securities, Inc.
Acting as Managing Representative of the several Underwriters named in Schedule
I.
By: _______________________________
[Title]
Xxxxxx & Xxxxxx, Inc.
Acting as Representative of the several Underwriters named in Schedule I.
By: _________________________________
[Title]
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SCHEDULE I
Underwriter Number of Shares
----------- ----------------
EVEREN Securities, Inc......................................... $
Xxxxxx & Xxxxxx, $
Inc............................................................
$
$
$
$
$
$
$
$
TOTAL................................................. $
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