EXHIBIT 1
MERITAGE CORPORATION
1,750,000 Shares
Common Stock
($.01 Par Value)
UNDERWRITING AGREEMENT
June 20, 2002
MERITAGE CORPORATION
Common Stock
($.01 Par Value)
UNDERWRITING AGREEMENT
June 20, 2002
Deutsche Bank Securities Inc.
UBS Warburg LLC
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
JMP Securities LLC
c/o Deutsche Bank Securities Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
and
c/o UBS Warburg LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
Meritage Corporation, a Maryland corporation (the "COMPANY"), proposes
to issue and sell to the underwriters named in Schedule A annexed hereto (the
"UNDERWRITERS") an aggregate of 1,750,000 shares (the "FIRM SHARES") of Common
Stock, $.01 par value (the "COMMON STOCK") of the Company. In addition, solely
for the purpose of covering over-allotments, the Company proposes to grant to
the Underwriters the option to purchase from the Company up to an additional
262,500 shares of Common Stock (the "ADDITIONAL SHARES"). The Firm Shares and
the Additional Shares are hereinafter collectively sometimes referred to as the
"SHARES." The Shares are described in the prospectus which is referred to below.
The Company has filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively, the "ACT"), with the Securities and Exchange Commission (the
"COMMISSION") a registration statement on Form S-3 (File No. 333-87398)
including a prospectus, relating to the Shares, which incorporates by reference
documents which the Company has filed or will file in accordance with the
provi-
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sions of the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder (collectively, the "EXCHANGE ACT"). The Company has
prepared a prospectus supplement (the "PROSPECTUS SUPPLEMENT") to the prospectus
included in the registration statement referred to above setting forth the terms
of the offering, sale and plan of distribution of the Shares and additional
information concerning the Company and its business. The Company has furnished
to you, for use by the Underwriters and by dealers, copies of one or more
preliminary prospectuses, containing the prospectus included in the registration
statement, as supplemented by a preliminary Prospectus Supplement relating to
the Shares, and the documents incorporated by reference therein (each such
preliminary prospectus being referred to herein as a "PRELIMINARY PROSPECTUS").
Except where the context otherwise requires, the registration statement referred
to above, as amended when it became effective, including all documents filed as
a part thereof or incorporated by reference therein, and including any
information contained in a prospectus subsequently filed with the Commission
pursuant to Rule 424(b) under the Act and deemed to be part of the registration
statement at the time of its effectiveness and also including any registration
statement filed pursuant to Rule 462(b) under the Act, is referred to herein as
the "REGISTRATION STATEMENT", and the prospectus included in the Registration
Statement, including all documents incorporated therein by reference, as
supplemented by the final Prospectus Supplement relating to the Shares, in the
form filed by the Company with the Commission pursuant to Rule 424(b) under the
Act on or before the second business day after the date hereof (or such earlier
time as may be required under the Act), is herein called the "PROSPECTUS". Any
reference herein to the Registration Statement, the Prospectus, any Preliminary
Prospectus or any amendment or supplement thereto shall be deemed to refer to
and include the documents incorporated by reference therein, and any reference
herein to the terms "AMEND", "AMENDMENT", or "SUPPLEMENT" with respect to the
Registration Statement, the Prospectus or any Preliminary Prospectus shall be
deemed to refer to and include the filing after the execution hereof of any
document with the Commission deemed to be incorporated by reference therein. For
purposes of this Agreement, all references to the Registration Statement, the
Prospectus or any Preliminary Prospectus or to any amendment or supplement
thereto shall be deemed to include any copy thereof filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval System
("▇▇▇▇▇").
The Company and the Underwriters agree as follows:
1. Sale and Purchase. Upon the basis of the warranties and
representations and subject to the terms and conditions herein set forth, the
Company agrees to sell to the respective Underwriters and each of the
Underwriters, severally and not jointly, agrees to purchase from the Company the
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule A annexed hereto at a purchase price of $39.69 per Share. The Company
is advised by you that the Underwriters intend (i) to make a public offering of
their respective portions of the Firm Shares as soon after the execution and
delivery of this Agreement as in your judgment is advisable and (ii) initially
to offer the Firm Shares upon the terms set forth in the Prospectus. You may
from time to time increase or decrease the public offering price after the
initial public offering to such extent as you may determine.
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In addition, the Company hereby grants to the several Underwriters the
option to purchase, and upon the basis of the warranties and representations and
subject to the terms and conditions herein set forth, the Underwriters shall
have the right to purchase, severally and not jointly, from the Company, ratably
in accordance with the number of Firm Shares to be purchased by each of them
(subject to such adjustment as you shall determine to avoid fractional shares),
all or a portion of the Additional Shares as may be necessary to cover
over-allotments made in connection with the offering of the Firm Shares, at the
same purchase price per Share to be paid by the Underwriters to the Company for
the Firm Shares. This option may be exercised by you on behalf of the several
Underwriters at any time (but not more than once) on or before the thirtieth day
following the date hereof, by written notice to the Company. Such notice shall
set forth the aggregate number of Additional Shares as to which the option is
being exercised and the date and time when the Additional Shares are to be
delivered (such date and time being herein referred to as the "ADDITIONAL TIME
OF PURCHASE"); provided, however, that the Additional Time of Purchase shall not
be earlier than the Time of Purchase (as defined below) nor earlier than the
second business day (1) after the date on which the option shall have been
exercised nor later than the tenth business day after the date on which the
option shall have been exercised. The number of Additional Shares to be sold to
each Underwriter shall be the number which bears the same proportion to the
aggregate number of Additional Shares being purchased as the number of Firm
Shares set forth opposite the name of such Underwriter on Schedule A hereto
bears to the total number of Firm Shares (subject, in each case, to such
adjustment as you may determine to eliminate fractional shares).
2. Payment and Delivery. Payment of the purchase price for the
Firm Shares shall be made to the Company by Federal Funds wire transfer against
delivery of the certificates for the Firm Shares to you through the facilities
of the Depository Trust Company ("DTC") for the respective accounts of the
Underwriters. Such payment and delivery shall be made at 10:00 A.M., New York
City time, on June 26, 2002 (unless another time shall be agreed to by you and
the Company or unless postponed in accordance with the provisions of Section 9
hereof). Concurrently with the payment of the purchase price for the Firm
Shares, the Underwriters shall make a payment of $367,500 (such amount divided
by the total number of Firm Shares, the "EXPENSE REIMBURSEMENT AMOUNT") to the
Company by Federal Funds wire transfer to reimburse the Company for a portion of
its expenses incurred in connection with this Agreement. The time at which such
payments and delivery are actually made is hereinafter referred to as the "TIME
OF PURCHASE." Certificates for the Firm Shares shall be delivered to you in
definitive form in such names and in such denominations as you shall specify no
later than the second business day preceding the Time of Purchase. For the
purpose of expediting the checking of the certificates for the Firm Shares by
you, the Company agrees to
------------
1 As used herein "business day" shall mean a day on which the New York
Stock Exchange is open for trading.
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make such certificates available to you for such purpose at least one full
business day preceding the Time of Purchase.
Payment of the purchase price for the Additional Shares shall be made to the
Company at the Additional Time of Purchase in the same manner and at the same
office as the payment for the Firm Shares. Concurrently with the payment of the
purchase price for the Additional Shares, the Underwriters shall make a payment
to the Company by Federal Funds wire transfer to reimburse the Company for a
portion of its expenses incurred in connection with this Agreement in an amount
equal to the product of (a) the number of Additional Shares so purchased and (b)
the Expense Reimbursement Amount. Certificates for the Additional Shares shall
be delivered to you by the Company in definitive form in such names and in such
denominations as you shall specify no later than the second business day
preceding the Additional Time of Purchase. For the purpose of expediting the
checking of the certificates for the Additional Shares by you, the Company
agrees to make such certificates available to you for such purpose at least one
full business day preceding the Additional Time of Purchase.
3. Representations and Warranties of the Company. The Company
represents and warrants to each of the Underwriters that:
(a) The Registration Statement became effective under the
Act on May 14, 2002 and the conditions to the use of Form S-3 have been
satisfied. No order of the Commission preventing or suspending the use
of any Preliminary Prospectus has been issued and no proceedings for
that purpose have been instituted or, to the knowledge of the Company,
are contemplated by the Commission; each Preliminary Prospectus, at the
time of filing thereof, conformed in all material respects to the
requirements of the Act and the last Preliminary Prospectus distributed
in connection with the offering of the Shares, as of its date, did not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; the Registration Statement complied, when it
became effective, complies and will comply in all material respects
with the provisions of the Act and the Prospectus will comply in all
material respects with the provisions of the Act and any statutes,
regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement have been and will be
so described or filed; the Registration Statement did not, when it
became effective, does not and will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading and
the Prospectus will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however, that the
Company makes no warranty or representation with respect to any
statement contained in the Preliminary Prospectus, the Registration
Statement or the Prospectus in reliance upon and in
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conformity with information concerning an Underwriter and furnished in
writing by or on behalf of such Underwriter through you to the Company
expressly for use in the Preliminary Prospectus, Registration Statement
or the Prospectus; and the Company has not distributed any offering
material in connection with the offering or sale of the Shares other
than the Registration Statement, the Preliminary Prospectus, the
Prospectus or any other materials, if any, permitted by the Act;
(b) As of the date of this Agreement, the Company has an
authorized capitalization as set forth under the heading entitled
"Actual" in the section of the Registration Statement and Prospectus
entitled "Capitalization" and, as of the Time of Purchase, the Company
shall have an authorized capitalization as set forth under the heading
entitled "As Adjusted" in the section of the Registration Statement and
Prospectus entitled "Capitalization". All of the issued and outstanding
shares of capital stock or other equity interests of the Company have
been duly authorized and validly issued, are fully paid and
nonassessable and were not issued in violation of any preemptive or
similar right. Attached as Exhibit A is a true and complete list of
each entity in which the Company has, or will have as of the Time of
Purchase, a direct or indirect majority equity or voting interest,
their jurisdictions of incorporation or formation, their stockholders
and percentage equity ownership by the Company. The term "SUBSIDIARIES"
as used herein shall refer to all of the subsidiaries listed on Exhibit
A hereto. All of the issued and outstanding shares of capital stock or
other equity interests of each of the Subsidiaries have been duly and
validly authorized and issued, are fully paid and nonassessable, were
not issued in violation of any preemptive or similar right and, except
as set forth in the Registration Statement and Prospectus or on Exhibit
A hereto, are owned, directly or indirectly, by the Company free and
clear of all liens. Except as set forth in the Registration Statement
and Prospectus, there are no outstanding options, warrants or other
rights to acquire or purchase, or instruments convertible into or
exchangeable for, any shares of capital stock of any of the Company or
any of the Subsidiaries.
(c) Each of the Company and the Subsidiaries (a) is a
corporation, limited liability company, partnership or other entity
duly organized and validly existing under the laws of the jurisdiction
of its organization; (b) has all requisite corporate, limited liability
company, partnership or other similar power and authority, and has all
governmental licenses, authorizations, consents and approvals necessary
to own its property and carry on its business as now being conducted,
except if the failure to obtain any such license, authorization,
consent and approval would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect; and (c) is
qualified to do business and is in good standing in all jurisdictions
in which the nature of the business conducted by it makes such
qualification necessary and where failure to be so qualified and in
good standing, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect. A "MATERIAL ADVERSE EFFECT"
means any material adverse effect on the business, condition (financial
or other), results of
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operations, performance, properties or prospects of the Company and the
Subsidiaries, taken as a whole.
(d) The Company has all requisite corporate power and
authority to execute, deliver and perform all of its obligations under
this Agreement and to consummate the transactions contemplated hereby.
(e) This Agreement has been duly and validly executed and
delivered by the Company.
(f) The capital stock of the Company, including the
Shares, conforms in all material respects to the description thereof
contained in the Registration Statement and Prospectus, the
certificates for the Shares are in due and proper form, and the holders
of the Shares will not be subject to personal liability by reason of
being such holders.
(g) The Shares to be issued and sold by the Company have
been duly and validly authorized and, when issued and delivered against
payment therefor as provided herein, will be duly and validly issued
and fully paid and nonassessable.
(h) No approval, authorization, consent or order of or
filing with any national, state or local governmental or regulatory
commission, board, body, authority or agency is required in connection
with the issuance and sale of the Shares or the consummation by the
Company of the transaction as contemplated hereby other than (A) such
as have been or will be obtained or made on or prior to the Time of
Purchase, (B) registration of the offer and sale of the Shares under
the Act, which has been effected as described herein, (C) such
approvals as have been obtained in connection with the listing of the
Shares on the NYSE, (D) any necessary qualification under the
securities or blue sky laws of the various jurisdictions in which the
Shares are being offered by the Underwriters or under the rules and
regulations of the National Association of Securities Dealers, Inc.
("NASD"), and any approvals, authorizations, consents or orders the
failure to obtain or make would not adversely affect consummation of
the transactions contemplated by this Agreement.
(i) Except as described in the Registration Statement and
Prospectus, no person has the right, contractual or otherwise, to cause
the Company to register under the Act any shares of capital stock or
other equity interests as a result of the filing or effectiveness of
the Registration Statement or the sale of Shares to the Underwriters
contemplated thereby, nor does any person have preemptive rights,
co-sale rights, rights of first refusal or other rights to purchase any
of the Shares other than those that have been expressly waived prior to
the date hereof.
(j) All taxes, fees and other governmental charges that
are due and payable on or prior to the Time of Purchase in connection
with the execution, delivery and per-
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formance of this Agreement and the delivery and sale of the Shares
shall have been paid by or on behalf of the Company at or prior to the
Time of Purchase.
(k) None of the Company or any Subsidiary is (A) in
violation of its charter, bylaws or other constitutive documents, (B)
in default (or, with notice or lapse of time or both, would be in
default) in the performance or observance of any obligation, agreement,
covenant or condition contained in any bond, debenture, note,
indenture, mortgage, deed of trust, loan or credit agreement, lease,
license, franchise agreement, authorization, permit, certificate or
other agreement or instrument to which any of them is a party or by
which any of them is bound or to which any of their assets or
properties is subject (collectively, "AGREEMENTS AND INSTRUMENTS"), (C)
in violation of any law, statute, rule or regulation applicable to the
Company or any Subsidiary or their respective assets or properties or
(D) in violation of any judgment, order or decree of any domestic or
foreign court or governmental agency or authority having jurisdiction
over the Company or any Subsidiary or their respective assets or
properties, which in the case of clauses (B), (C) and (D) herein,
individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect.
(l) The execution, delivery and performance by the
Company of this Agreement, including the consummation of the offer and
sale of the Shares, does not and will not violate, conflict with or
constitute a breach of any of the terms or provisions of or a default
(or an event that with notice or lapse of time or both, would
constitute a default) under, or require consent under, or result in the
creation or imposition of a lien, charge or encumbrance on any property
or assets of the Company or any Subsidiary pursuant to (A) the charter,
bylaws or other constitutive documents of any of the Company or any
Subsidiary, (B) any of the Agreements and Instruments, except as would
not reasonably be expected to have a Material Adverse Effect, (C) any
law, statute, rule or regulation applicable to the Company or any
Subsidiary or their respective assets or properties or (D) any
judgment, order or decree of any domestic or foreign court or
governmental agency or authority having jurisdiction over the Company
or any Subsidiary or their respective assets or properties.
(m) Except as set forth in the Registration Statement and
Prospectus, there is (A) no action, suit or proceeding before or by any
court, arbitrator or governmental agency, body or official, domestic or
foreign, now pending or, to the knowledge of the Company, threatened or
contemplated, to which the Company or any Subsidiary is or may be a
party or to which the business, assets or property of such person is or
may be subject, (B) no statute, rule, regulation or order that has been
enacted, adopted or issued or, to the knowledge of the Company, that
has been proposed by any governmental body or agency, domestic or
foreign, (C) no injunction, restraining order or order of any nature by
a federal or state court or foreign court of competent jurisdiction to
which the Company or any Subsidiary is or may be subject that (x) in
the case of clause (A) above, if determined adversely to the Company or
any Subsidiary, could,
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individually or in the aggregate, reasonably be expected (1) to have a
Material Adverse Effect or (2) to interfere with or adversely affect
the issuance of the Shares in any jurisdiction or adversely affect the
consummation of the transactions contemplated hereby and (y) in the
case of clauses (B) and (C) above, could, individually or in the
aggregate, reasonably be expected (1) to have a Material Adverse Effect
or (2) to interfere with or adversely affect the issuance of the Shares
in any jurisdiction or adversely affect the consummation of the
transactions contemplated hereby. Every request of any securities
authority or agency of any jurisdiction for additional information with
respect to the Shares that has been received by the Company or any
Subsidiary or their counsel prior to the date hereof has been, or will
prior to the Time of Purchase be, complied with in all material
respects.
(n) Except as could not reasonably be expected to have a
Material Adverse Effect, no labor problem or dispute with the employees
of the Company or any of the Subsidiaries exists or, to the best
knowledge of the Company, is threatened.
(o) Except as described in the Registration Statement and
Prospectus, the Company and each Subsidiary (A) is in compliance with,
or not subject to costs or liabilities for violations under, laws,
regulations, rules of common law, orders and decrees, as in effect as
of the date hereof, and any present judgments and injunctions issued or
promulgated thereunder, relating to pollution or protection of public
and employee health and safety, emissions, discharges, releases or
threatened releases of hazardous or toxic substances or wastes into the
environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), pollutants or
contaminants applicable to it or its business or operations or
ownership or use of its property (including, but not limited to, the
(i) the manufacture, processing, distribution, use, generation,
treatment, storage, disposal, transport or handling of hazardous
materials, and (ii) underground and above ground storage tanks and
related piping, and emissions, discharges, releases or threatened
releases therefrom) ("ENVIRONMENTAL LAWS"), other than noncompliance or
such costs or liabilities that, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect, and (B)
possesses all permits, licenses or other approvals required under
applicable Environmental Laws, except where the failure to possess any
such permit, license or other approval could not reasonably be expected
to have, either individually or in the aggregate, a Material Adverse
Effect. All currently pending and, to the knowledge of the Company,
threatened proceedings, notices of violation, demands, notices of
potential responsibility or liability, suits and existing environmental
conditions by any governmental authority which the Company or the
Subsidiaries could reasonably expect to result in a Material Adverse
Effect are fully and accurately described in all material respects in
the Registration Statement and Prospectus.
(p) The Company and each Subsidiary have (A) all
licenses, certificates, permits, authorizations, approvals, franchises
and other rights from, and has made all
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declarations and filings with, all applicable authorities, all
self-regulatory authorities and all courts and other tribunals (each, a
"LICENSE"), necessary to engage in the business conducted by it in the
manner described in the Registration Statement and Prospectus, except
where failure to hold such Licenses could not, individually or in the
aggregate, be reasonably expected to have a Material Adverse Effect,
and (B) no reason to believe that any governmental body or agency,
domestic or foreign, is considering limiting, suspending or revoking
any such License, except where any such limitations, suspensions or
revocations could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. All such Licenses are valid
and in full force and effect and the Company and each Subsidiary are in
compliance in all material respects with the terms and conditions of
all such Licenses and with the rules and regulations of the regulatory
authorities having jurisdiction with respect to such Licenses, except
for any invalidity, failure to be in full force and effect or
noncompliance with any License that could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(q) The Company and each Subsidiary have valid title in
fee simple to all items of real property and valid title to all
personal property owned by each of them (excluding land banks,
homeowners' associations, golf clubs and district properties) described
in the Registration Statement and Prospectus, in each case free and
clear of any pledge, lien, encumbrance, security interest or other
defect or claim of any third party, except (i) such as do not
materially and adversely affect the value of such property and do not
interfere with the use made or proposed to be made of such property by
the Company or such Subsidiary to an extent that such interference
could reasonably be expected to have a Material Adverse Effect, and
(ii) liens securing debt described in the Registration Statement and
Prospectus. Any real property and buildings held under lease by the
Company or any such Subsidiary are held under valid, subsisting and
enforceable leases, with such exceptions as do not materially interfere
with the use made or proposed to be made of such property and buildings
by the Company or such Subsidiary.
(r) Except as set forth in the Registration Statement and
Prospectus, the Company and each Subsidiary owns, possesses or has the
right to employ all patents, patent rights, 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,
the "INTELLECTUAL PROPERTY") necessary to conduct the businesses
operated by it as described in the Registration Statement and
Prospectus, except where the failure to own, possess or have the right
to employ such Intellectual Property could not reasonably be expected
to have a Material Adverse Effect. Except as set forth in the
Registration Statement and Prospectus, none of the Company or any
Subsidiary has received any notice of infringement of or conflict with
(and none of them knows of any such infringement or a conflict with)
asserted rights of others with respect to any of the foregoing that, if
such
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assertion of infringement or conflict were sustained, could reasonably
be expected to have a Material Adverse Effect. Except as set forth in
the Registration Statement and Prospectus, the use of the Intellectual
Property in connection with the business and operations of the Company
and the Subsidiaries does not infringe on the rights of any person,
except for such infringement as could not reasonably be expected to
have a Material Adverse Effect.
(s) All material tax returns required to be filed by the
Company and each Subsidiary have been filed in all jurisdictions where
such returns are required to be filed, except where valid extensions
have been obtained; and all taxes, including withholding, value added
and franchise taxes, penalties and interest, assessments, fees and
other charges that are due and payable have been paid (or, with respect
to those based on good faith estimates, have been paid to the extent of
such estimates), other than those being contested in good faith and for
which reserves have been provided in accordance with generally accepted
accounting principles or those currently payable without penalty or
interest and except where the failure to make such required filings or
payments could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. To the knowledge of the
Company, there are no material proposed additional tax assessments
against any of the Company and the Subsidiaries or their assets or
property.
(t) None of the Company or the Subsidiaries has any
liability for any prohibited transaction or accumulated funding
deficiency (within the meaning of Section 412 of the Internal Revenue
Code of 1986, as amended) or any complete or partial withdrawal
liability with respect to any pension, profit sharing or other plan
which is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), to which the Company or any Subsidiary
makes or ever has made a contribution and in which any employee of the
Company or any Subsidiary is or has ever been a participant. With
respect to such plans, the Company and each Subsidiary are in
compliance in all material respects with all applicable provisions of
ERISA.
(u) None of the Company or any Subsidiary is an
"investment company" or a company "controlled" by an "investment
company" incorporated in the United States within the meaning of the
Investment Company Act of 1940, as amended.
(v) The Company and each Subsidiary maintains a system of
internal accounting controls sufficient to provide reasonable assurance
that: (A) transactions are executed in accordance with management's
general or specific authorizations; (B) transactions are recorded as
necessary to permit preparation of its financial statements in
conformity with generally accepted accounting principles and to
maintain accountability for assets; (C) access to assets is permitted
only in accordance with management's general or specific authorization;
and (D) the recorded accountability for its
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assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(w) The Company and each Subsidiary maintains insurance
covering their properties, assets, operations, personnel and
businesses, and, in the good faith estimate of management, such
insurance is of such type and in such amounts as is in accordance with
customary industry practice in the locations where the Company and each
Subsidiary conduct operations, taking into account the costs and
availability of such insurance.
(x) KPMG LLP and, to the knowledge of the Company,
McGladrey & ▇▇▇▇▇▇, LLP and ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ are independent
accountants within the meaning of the Act. The historical financial
statements and the notes thereto included in the Registration Statement
and Prospectus present fairly in all material respects the consolidated
financial position and results of operations of the Company and the
Subsidiaries, the combined financial position and results of operations
of ▇▇▇▇▇▇▇ Communities Limited Liability Company and HC Builders, Inc.
(collectively, "▇▇▇▇▇▇▇") at the respective dates and for the
respective periods indicated. Such financial statements comply as to
form in all material respects with the applicable requirements of
Regulation S-X promulgated under the Exchange Act and have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods presented (except
as disclosed in the Registration Statement and Prospectus). The other
financial and statistical information and data included in the
Registration Statement and Prospectus are accurately presented in all
material respects and prepared on a basis consistent with the financial
statements and the books and records of the Company and the
Subsidiaries and ▇▇▇▇▇▇▇.
(y) Except as described in the section entitled
"Underwriting" in the Prospectus Supplement, there are no contracts,
agreements or understandings between the Company or any Subsidiary and
any other person other than the Underwriters that would give rise to a
valid claim against the Company, any Subsidiary or the Underwriters for
a brokerage commission, finder's fee or like payment in connection with
the issuance, purchase and sale of the Shares.
(z) The statistical and market-related data included in
the Registration Statement and Prospectus are based on or derived from
sources that the Company believes to be reliable and accurate in all
material respects and represent its good faith estimates that are made
on the basis of data derived from such sources.
(aa) The Company has obtained (or will obtain prior to the
Time of Purchase) the written agreement in substantially the form
attached hereto as Exhibit B (the "LOCK-UP LETTER AGREEMENT") of each
of the Company's directors and executive officers.
-12-
(bb) Neither the Company nor any of the Subsidiaries has
either sent or received any notice of termination of any of the
contracts or agreements expressly referred to or described in the
Prospectus, and no such termination has been threatened by the Company
or any of the Subsidiaries or, to the knowledge of the Company, any
other party to any such contract or agreement.
(cc) Neither the Company nor any of the Subsidiaries or
any of their respective directors and officers has taken, directly or
indirectly, any action designed to or which has constituted or which
might reasonably be expected to cause or result, under 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.
(dd) The Company has not distributed and will not
distribute, prior to the later of the Additional Time of Purchase and
the completion of the Underwriters' distribution of the Shares, any
offering material in connection with the offering and sale of the
Shares other than any Preliminary Prospectus, the Prospectus or the
Registration Statement.
(ee) The Common Stock is registered pursuant to Section
12(b) of the Exchange Act and is listed on the New York Stock Exchange
("NYSE"), and the Company has taken no action designed to, or likely to
have the effect of, terminating the registration of the Common Stock
under the Exchange Act or delisting the Common Stock from the NYSE, nor
has the Company received any notification that the Commission or the
NYSE is contemplating terminating such registration or listing.
(ff) Any certificate signed by an officer of the Company
or any Subsidiary delivered to you or to counsel for the Underwriters
pursuant to this Agreement or in connection with the Closing
contemplated hereby shall be deemed to be a representation and warranty
by the Company to each Underwriter as to the matters covered thereby.
4. Certain Covenants of the Company. The Company hereby agrees:
(a) to furnish such information as may be required and
otherwise to cooperate in qualifying the Shares for offering and sale
under the securities or blue sky laws of such states as you may
designate and to maintain such qualifications in effect so long as
required for the distribution of the Shares; provided that the Company
shall not be required to qualify as a foreign corporation or to consent
to the service of process under the laws of any such state (except
service of process with respect to the offering and sale of the
Shares); and to promptly advise you of the receipt by the Company of
any notification with respect to the suspension of the qualification of
the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose;
-13-
(b) to make available to the Underwriters in New York
City, as soon as practicable after the execution and delivery of this
Agreement and thereafter from time to time to furnish to the
Underwriters, as many copies of the Prospectus (or of the Prospectus as
amended or supplemented if the Company shall have made any amendments
or supplements thereto after the effective date of the Registration
Statement) as the Underwriters may reasonably request for the purposes
contemplated by the Act; in case any Underwriter is required to deliver
a prospectus beyond the nine-month period referred to in Section
10(a)(3) of the Act in connection with the sale of the Shares, the
Company will prepare promptly upon request such amendment or amendments
to the Registration Statement and such prospectuses as may be necessary
to permit compliance with the requirements of Section 10(a)(3) of the
Act;
(c) to advise you promptly and (if requested by you) to
confirm such advice in writing, (i) when any post-effective amendment
to the Registration Statement becomes effective and (ii) when the
Prospectus is filed with the Commission pursuant to Rule 424(b) under
the Act (which the Company agrees to file in a timely manner under such
rule);
(d) to advise you promptly, confirming such advice in
writing, of any request by the Commission for amendments or supplements
to the Registration Statement or Prospectus or for additional
information with respect thereto, or of notice of institution of
proceedings for, or the entry of a stop order suspending the
effectiveness of the Registration Statement and, if the Commission
should enter a stop order suspending the effectiveness of the
Registration Statement, to use its best efforts to obtain the lifting
or removal of such order as soon as possible; to advise you promptly of
any proposal to amend or supplement the Registration Statement or
Prospectus and to file no such amendment or supplement to which you
shall object in writing;
(e) to file in a timely manner all reports and any
definitive proxy or information statement required to be filed by the
Company with the Commission in order to comply with the Exchange Act
subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the offering or
sale of the Shares, and to promptly notify you of such filing;
(f) if necessary or appropriate, to file promptly a
registration statement pursuant to Rule 462(b) under the Act;
(g) upon your request, to furnish to you and each of the
other Underwriters for a period of two years from the date of this
Agreement (i) copies of any reports or other communications which the
Company shall send to its stockholders or shall from time to time
publish or publicly disseminate, (ii) copies of all annual, quarterly
and current reports filed with the Commission on Forms 10-K, 10-Q and
8-K, or such other similar form as may be designated by the Commission,
(iii) copies of documents
-14-
or reports filed with any national securities exchange on which any
class of securities of the Company is listed, and (iv) such other
information as you may reasonably request regarding the Company or its
Subsidiaries, in each case as soon as such communications, documents or
information becomes available;
(h) to advise the Underwriters promptly of the happening
of any event known to the Company within the time during which a
Prospectus relating to the Shares is required to be delivered under the
Act which, in the judgment of the Company, would require the making of
any change in the Prospectus then being used, so that the Prospectus
would not include an untrue statement of material fact or omit to state
a material fact necessary to make the statements therein, in the light
of the circumstances under which they are made, not misleading, and,
during such time, to prepare and furnish, at the Company's expense, to
the Underwriters promptly such amendments or supplements to such
Prospectus as may be necessary to reflect any such change and to
furnish you a copy of such proposed amendment or supplement before
filing any such amendment or supplement with the Commission;
(i) to make generally available to its security holders,
and to deliver to you, as soon as it is practicable to do so, but in
any event not later than 15 months after the effective date of the
Registration Statement, an earnings statement of the Company (which
will satisfy the provisions of Section 11(a) of the Act) covering a
period of twelve months beginning after the effective date of the
Registration Statement (as defined in Rule 158(c) of the Act);
provided, however, that this Section 4(i) will not be construed to
require the Company to file any periodic report referred to in Rule 158
prior to the time at which such report is otherwise due;
(j) to furnish to its stockholders as soon as
practicable, but in no event prior to the delivery of its proxy
statement to its shareholders in accordance with applicable securities
laws, after the end of each fiscal year an annual report (including a
balance sheet and statements of income, stockholders' equity and of
cash flow of the Company) for such fiscal year, accompanied by a copy
of the certificate or report thereon of nationally recognized
independent certified public accountants;
(k) to furnish to you conformed copies of the
Registration Statement, as initially filed with the Commission, and of
all amendments thereto (including all exhibits thereto) in such
quantities as you shall reasonably request for distribution to each of
the Underwriters;
(l) to furnish to you as early as practicable prior to
the Time of Purchase and the Additional Time of Purchase, as the case
may be, but not later than two business days prior thereto, a copy of
the latest available unaudited interim consolidated financial
statements, if any, of the Company and its Subsidiaries which have been
read
-15-
by the Company's independent certified public accountants, as stated in
their letter to be furnished pursuant to Section 7(e) hereof;
(m) not to take, directly or indirectly, any action
designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation
of the price of any securities of the Company to facilitate the sale or
resale of the Shares;
(n) to apply the net proceeds from the sale of the Shares
in the manner set forth under the caption "Use of Proceeds" in the
Prospectus;
(o) to furnish to you, before filing with the Commission
subsequent to the effective date of this Agreement and during the
period referred to in paragraph (e) above, a copy of any document
proposed to be filed pursuant to Section 13, 14 or 15(d) of the
Exchange Act;
(p) not to sell, offer or agree to sell, contract to
sell, grant any option to sell or otherwise dispose of, directly or
indirectly, any shares of Common Stock or securities convertible into
or exchangeable or exercisable for Common Stock or warrants or other
rights to purchase Common Stock or any other securities of the Company
that are substantially similar to Common Stock or permit the
registration under the Act of any shares of Common Stock, for a period
of 90 days after the date hereof, without the prior written consent of
Deutsche Bank Securities Inc. ("DEUTSCHE BANK") and UBS Warburg LLC
("UBS WARBURG"), except for (i) the registration of the Shares and the
sales to the Underwriters pursuant to this Agreement, (ii) issuances of
Common Stock upon the exercise of outstanding options, warrants and
debentures disclosed as outstanding in the Registration Statement,
(iii) the granting of options and the issuances of Common Stock upon
the exercise thereof pursuant to stock option and employee benefit
plans of the Company in existence on the date hereof, and (iv)
issuances as consideration for the acquisition of assets, businesses or
companies; and
(q) to take all action necessary to list the Shares on
the NYSE.
5. Payment of Expenses. The Company agrees with each Underwriter
to pay all expenses, fees and taxes (other than any transfer taxes incurred by
the Underwriters for the resale of the Shares and, except as set forth under
Section 6 hereof and (iv) and (vi) below, fees and disbursements of counsel for
the Underwriters, such transfer taxes, counsel fees and disbursements to be paid
by the Underwriters) in connection with (i) the preparation and filing of the
Registration Statement, each Preliminary Prospectus, the Prospectus, and any
amendments or supplements thereto, and the printing and furnishing of copies of
each thereof to the Underwriters and to dealers (including costs of mailing and
shipment), (ii) all air travel-related expenses incurred by the Company and the
Underwriters and all hotel expenses attributable to the Company, in each case,
in connection with any meetings with prospective investors in the Shares, (iii)
the issuance, sale and delivery of the Shares by the Company, (iv) the word
proc-
-16-
essing and/or printing of this Agreement, any Agreement Among Underwriters, any
dealer agreements, any Statements of Information, the Letter of Instruction and
the reproduction and/or printing and furnishing of copies of each thereof to the
Underwriters and to dealers (including costs of mailing and shipment), (v) the
qualification of the Shares for offering and sale under state laws and the
determination of their eligibility for investment under state law as aforesaid
(including the reasonable legal fees and filing fees and other disbursements of
counsel to the Underwriters) and the printing and furnishing of copies of any
blue sky surveys or legal investment surveys to the Underwriters and to dealers,
(vi) the listing of the Shares on the NYSE, (vii) the filing, if any, for review
of the public offering of the Shares by the NASD (including the reasonable legal
fees and filing fees and other disbursements of counsel to the Underwriters),
and (viii) the performance of the Company's other obligations hereunder.
6. Reimbursement of Underwriters' Expenses.
If the Shares are not delivered for any reason other than the
termination of this Agreement pursuant to clauses (iii) through (vi) of the
second paragraph of Section 8 or the last paragraph of Section 9 hereof, or the
default by one or more of the Underwriters in its or their respective
obligations hereunder, the Company shall, in addition to paying the amounts
described in Section 5 hereof, reimburse the Underwriters for all of their
reasonable out-of-pocket expenses, including the fees and disbursements of their
respective counsel.
7. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters hereunder are subject to the
following conditions:
(a) All of the representations and warranties of the
Company contained in this Agreement shall be true and correct in all
material respects, or true and correct where such representations and
warranties are already qualified by materiality or Material Adverse
Effect, on the date of this Agreement and, in each case after giving
effect to the transactions contemplated hereby, at the Time of Purchase
(and the several obligations of the Underwriters at the Additional Time
of Purchase are subject to the accuracy of the representations and
warranties of the Company contained in Section 3 hereof, on the date
hereof and at the Time of Purchase (unless previously waived) and at
the Additional Time of Purchase, as the case may be), except that if a
representation and warranty is made as of a specific date, and such
date is expressly referred to therein, such representation and warranty
shall be true and correct (or true and correct in all material
respects, as applicable) as of such date. The Company shall have
performed or complied with all of the agreements and covenants
contained in this Agreement and required to be performed or complied
with by them at or prior to the Time of Purchase and at the Additional
Time of Purchase.
(b) The Company shall furnish to you at the Time of
Purchase and at the Additional Time of Purchase, as the case may be, an
opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., counsel for the Company, addressed to
the Underwriters, and dated the Time of
-17-
Purchase or the Additional Time of Purchase, as the case may be, with
reproduced copies for each of the other Underwriters and in form
reasonably satisfactory to ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the
Underwriters, stating that:
(i) each of the Subsidiaries (other than Legacy
Operating Company, L.P. ("LOC"), Meritage Holdings, L.L.C.
("MERITAGE HOLDINGS"), ▇▇▇▇▇ ▇▇▇▇ Venture, L.L.C. ("HPV"),
Texas Home Mortgage Corporation ("THMC"), and MTH-Homes Texas,
L.P. ("MTH-HOMES")) (a) is a corporation, limited liability
company or partnership duly incorporated or formed, as the
case may be, is validly existing and in good standing under
the laws of the jurisdiction of its organization and (b) has
the requisite corporate, limited liability company or
partnership power and authority, as the case may be, necessary
to own its property and carry on its business as now being
conducted;
(ii) the Registration Statement and Prospectus
(except as to the financial statements and schedules and other
financial and statistical data contained therein, as to which
such counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of the Act;
(iii) the Registration Statement has become effective
under the Act and, to such counsel's knowledge, no stop order
proceedings with respect thereto are pending or threatened
under the Act and any required filing of the Prospectus and
any supplement thereto pursuant to Rule 424 under the Act has
been made in the manner and within the time period required by
such Rule 424;
(iv) no approval, authorization, consent or order of
or filing with any national, state or local governmental or
regulatory commission, board, body, authority or agency is
required on the part of the Company in connection with the
issuance and sale of the Shares and consummation by the
Company of the transaction as contemplated hereby other than
such approvals, authorizations, consents, orders and filings
as have been obtained or made (except such counsel need
express no opinion as to any necessary qualification under the
state securities or blue sky laws of the various jurisdictions
in which the Shares are being offered by the Underwriters or
under the rules and regulations of the NASD);
(v) to such counsel's knowledge, there are no
contracts, licenses, agreements, leases or documents of a
character which are required to be filed as exhibits to the
Registration Statement or to be summarized or described in the
Prospectus which have not been so filed, summarized or
described as required;
-18-
(vi) except as set forth in the Registration
Statement and Prospectus or as shown on the litigation
searches referenced on a schedule attached to the opinion, to
such counsel's knowledge there is (a) no action, suit or
proceeding before or by any domestic court, arbitrator or
governmental agency, body or official, now pending or
threatened to which the Company or any Subsidiary is a party
and (b) no injunction, restraining order or order of any
nature by a federal or state court or foreign court of
competent jurisdiction to which the Company or any Subsidiary
is subject that such counsel believes (x) in the case of
clause (a) above, could, individually or in the aggregate,
reasonably be expected (1) to have a Material Adverse Effect
if determined adversely to the Company or any Subsidiary or
(2) to interfere with or adversely affect the issuance of the
Shares in any jurisdiction or adversely affect the
consummation of the transactions contemplated by this
Agreement and (y) in the case of clause (b) above, could,
individually or in the aggregate, reasonably be expected to
(1) have a Material Adverse Effect or (2) interfere with or
adversely affect the issuance of the Shares in any
jurisdiction or adversely affect the consummation of the
transactions contemplated by this Agreement;
(vii) The execution, delivery and performance by the
Company of this Agreement, including the consummation of the
offer and sale of the Shares, does not and will not violate,
conflict with or constitute a breach of any of the terms or
provisions of or a default (or an event that with the giving
of notice or lapse of time or both, would constitute a
default) under, or require consent under, or result in the
creation or imposition of a lien, charge or encumbrance on any
property or assets of the Company or any Subsidiary pursuant
to, (A) the charter, bylaws or other constitutive documents of
the Company or any Subsidiary (other than LOC, Meritage
Holdings, HPV, THMC and MTH-Homes), (B) any agreement or
instrument binding upon the Company or any Subsidiary that is
filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 2001, to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31,
2002 or to the Company's Current Report on Form 8-K dated June
14, 2002, as filed with the Securities and Exchange
Commission, or incorporated by reference therein, (C) any law,
statute, rule or regulation applicable to the Company or any
Subsidiary or their respective assets or properties or (D) any
judgment, order or decree of any domestic court or government
agency or authority having jurisdiction over the Company or
any Subsidiary or their respective assets or properties;
(viii) the Company is not, and after the offering and
sale of the Shares, will not be, an "investment company" or an
entity controlled by an "investment company," as such terms
are defined in the Investment Company Act; and
-19-
(ix) except as described in the Registration
Statement and Prospectus, no person has, pursuant to the terms
of any contract, agreement or other instrument known to such
counsel (i) any preemptive rights, rights of first refusal,
resale rights or similar rights with respect to the sale of
the Shares to the Underwriters or (ii) the right to cause the
Company to register under the Act any shares of capital stock
or other equity interests as a result of the filing or
effectiveness of the Registration Statement or the sale of the
Shares to the Underwriters as contemplated hereby.
In addition, such counsel shall state that, in connection with the
preparation of the Registration Statement and Prospectus, it has, from time to
time, had discussions with officers, directors, employees and representatives of
the Company and the Subsidiaries, the independent accountants who examined the
consolidated financial statements of the Company, the Subsidiaries and ▇▇▇▇▇▇▇
included in the Registration Statement and Prospectus, and the Underwriters and
their counsel and representatives at which the contents of the Registration
Statement and Prospectus and related matters were discussed and, although such
counsel has not independently verified and is not passing upon, and does not
assume responsibility for, the accuracy, completeness or fairness of the
information contained in the Registration Statement and Prospectus, based upon
the participation and discussions described above, such counsel shall state that
(relying as to materiality to the extent it deems appropriate upon officers or
other representatives of the Company) no facts have come to its attention that
cause it to believe that the Registration Statement or any amendment thereto at
the time such Registration Statement or amendment became effective contained an
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein not misleading, or that the Prospectus
or any supplement thereto at the date of such Prospectus or such supplement, and
at all times up to and including the Time of Purchase or Additional Time of
Purchase, as the case may be, contained or contains an untrue statement of a
material fact, or omitted or omits to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading (it being understood that such counsel has not
been requested to and need not make any comment with respect to the financial
statements and the notes thereto, and the other financial, demographic,
statistical and accounting data included in the Registration Statement and
Prospectus).
(c) The Company shall furnish to you at the Time of
Purchase and at the Additional Time of Purchase, as the case may be, an
opinion of Venable, Baetjer, ▇▇▇▇▇▇ and Civiletti LLP, counsel for the
Company, addressed to the Underwriters and dated the Time of Purchase
or the Additional Time of Purchase, as the case may be, with reproduced
copies for each of the other Underwriters and in form reasonably
satisfactory to ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Underwriters,
stating that:
(i) the Company (a) is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Maryland and (b) has the requisite corporate power
and authority to carry on its business as now being
-20-
conducted, as that business is described in the Registration
Statement and Prospectus.
(ii) the Company has the requisite corporate power
and authority to execute, deliver and perform all of its
obligations under this Agreement and to consummate the
transactions contemplated hereby to be consummated by it
including, without limitation, the requisite power and
authority to issue, sell and deliver the Shares. The Company
has duly authorized the execution, delivery and performance of
this Agreement and the Company has duly executed and delivered
this Agreement.
(iii) the execution, delivery and performance by the
Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby do not and will not
violate or conflict with its charter or bylaws.
(iv) the Company has authorized and outstanding
shares of capital stock as set forth in the Registration
Statement and Prospectus; the outstanding shares of capital
stock of the Company have been duly and validly authorized and
issued and are fully paid, non-assessable and, except as
described in the Registration Statement and Prospectus, are
free of any preemptive rights, resale rights, rights of first
refusal and similar rights under the Maryland General
Corporation Law ("MGCL"); the Shares to be issued and sold by
the Company have been duly authorized and when issued and
delivered to and paid for by the Underwriters will be duly and
validly issued and will be fully paid and non-assessable. The
certificates for the Shares are in due and proper form and
conform in all material respects to the requirements of the
MGCL, and the holders of the Shares will not be subject to
personal liability by reason of being such holders; and
(v) the capital stock of the Company, including the
Shares, conforms to the description thereof contained under
the caption "Description of Capital Stock" in the Registration
Statement and Prospectus.
(d) You shall have received at the Time of Purchase and
at the Additional Time of Purchase, as the case may be, an opinion of
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Underwriters, dated the Time
of Purchase or the Additional Time of Purchase, as the case may be,
with respect to matters as the Underwriters may require.
(e) You shall have received from KPMG LLP, independent
public accountants for the Company, from McGladrey & ▇▇▇▇▇▇ LLP,
independent public accountants for ▇▇▇▇▇▇▇ and from ▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, independent public accountants for ▇▇▇▇▇▇▇▇ Homes, Ltd. and
Crystal City Land & Cattle, Ltd., letters dated the date of this
Agreement and, in the case of KPMG LLP, the Time of Purchase and
Additional Time of Purchase, as the case may be, and addressed to the
Underwriters (with
-21-
reproduced copies for each of the Underwriters) in the forms heretofore
approved by ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Underwriters.
(f) The Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) under the Act, at or before 2:00
P.M., New York City time, on the business day following the date of
this Agreement, unless a later time (but not later than 5:00 P.M., New
York City time, on the second full business day after the date of this
Agreement) shall be agreed to by the Company and you in writing or by
telephone, confirmed in writing; provided, however, that the Company
and you and any group of Underwriters, including you, who have agreed
hereunder to purchase in the aggregate at least 50% of the Firm Shares
may from time to time agree on a later date.
(g) Prior to the Time of Purchase or the Additional Time
of Purchase, as the case may be, (i) no stop order with respect to the
effectiveness of the Registration Statement shall have been issued
under the Act and remain in effect and proceedings initiated under
Section 8(d) or 8(e) of the Act shall be pending; (ii) no action shall
have been taken and no statute, rule, regulation or order shall have
been enacted, adopted or issued by any governmental body, agency or
official that would prevent the issuance of the Shares and, except as
disclosed in the Registration Statement and Prospectus, no action, suit
or proceeding shall have been commenced and be pending against or
affecting or, to the best knowledge of the Company, threatened against
the Company before any court or arbitrator or any governmental body,
agency or official that, if adversely determined, could reasonably be
expected to have a Material Adverse Effect; (iii) the Registration
Statement and all amendments thereto, or modifications thereof, if any,
shall not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading; (iii) the Prospectus and
all amendments or supplements thereto, or modifications thereof, if
any, shall not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they are made, not misleading; and (iv) the Company shall not
have amended or supplemented the Registration Statement or Prospectus
unless the Underwriters shall previously have been advised of such
proposed amendment or supplement at least two business days prior to
the proposed use, and shall not have reasonably objected to such
amendment or supplement.
(h) Between the time of execution of this Agreement and
the Time of Purchase or the Additional Time of Purchase, as the case
may be, (a) neither the Company nor any Subsidiary shall have incurred
any liabilities or obligations, direct or contingent, except in the
ordinary course of business and consistent with past practice, that,
individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect and (b) there shall not have been any event
or development in respect of the business or condition (financial or
other) of the Company or the Subsidiaries that,
-22-
individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect.
(i) You shall have received a certificate, dated the Time
of Purchase or Additional Time of Purchase, as the case may be, signed
by a Chief Executive Officer and the Chief Financial Officer of the
Company, confirming, as of the Time of Purchase or the Additional Time
of Purchase, as the case may be, to their knowledge, the matters set
forth in paragraphs (a), (f), (g) and (h) of this Section 7.
(j) You shall have received Lock-Up Letter Agreements,
dated the date of this Agreement, from each of the Company's directors
and executive officers (as set forth on Schedule B hereto);
(k) Between the time of execution of this Agreement and
the Time of Purchase or Additional Time of Purchase, as the case may
be, there shall not have occurred any downgrading, nor shall any notice
or announcement have been given or made of (i) any intended or
potential downgrading or (ii) any review or possible change that does
not indicate an improvement, in the rating accorded any securities of
or guaranteed by the Company or any Subsidiary by any "nationally
recognized statistical rating organization", as that term is defined in
Rule 436(g)(2) under the Act.
(l) All government authorizations required in connection
with the issue and sale of the Shares as contemplated under this
Agreement and the performance of the Company's obligations hereunder
shall be in full force and effect.
(m) The Underwriters shall have been furnished with such
other information as they may reasonably request.
(n) ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to the Underwriters,
shall have been furnished with such documents as they may reasonably
request to enable them to review or pass upon the matters referred to
in this Section 7 and in order to evidence the accuracy, completeness
or satisfaction in all material respects of any of the representations,
warranties or conditions contained in this Agreement.
(o) The NYSE shall have approved the listing (subject to
official notice of issuance) of the Shares.
8. Effective Date of Agreement; Termination. This Agreement shall
become effective when the parties hereto have executed and delivered this
Agreement.
The Underwriters shall have the right to terminate this Agreement at
any time prior to the Time of Purchase or the Additional Time of Purchase, as
the case may be, by notice to the Company from the Underwriters, without
liability (other than with respect to Sections 10 and 11) on the Underwriters'
part to the Company if, on or prior to such date, (i) the Company
-23-
shall have failed, refused or been unable to perform in any material respect any
agreement on its part to be performed under this Agreement when and as required,
(ii) any other condition to the obligations of the Underwriters under this
Agreement to be fulfilled by the Company pursuant to Section 7 is not fulfilled
when and as required and not waived in writing by the Underwriters, (iii)
trading in securities generally on the New York Stock Exchange, the American
Stock Exchange or the Nasdaq National Market shall have been suspended or
materially limited, or minimum prices shall have been established thereon by the
Commission, or by such exchange or other regulatory body or governmental
authority having jurisdiction, (iv) a general banking moratorium shall have been
declared by federal or New York authorities, (v) there is an outbreak or
escalation of hostilities or other national or international calamity, in any
case involving the United States, on or after the date of this Agreement, or if
there has been a declaration by the United States of a national emergency or war
or other national or international calamity or crisis (economic, political,
financial or otherwise) which affects the U.S. and international financial or
capital markets, making it, in the Underwriters' reasonable judgment,
impracticable to proceed with the offering or delivery of the Shares on the
terms and in the manner contemplated in the Registration Statement and
Prospectus or (vi) there shall have been such a material adverse change or
material disruption in the financial, banking or capital markets generally or
the effect (or potential effect if the financial markets in the United States
have not yet opened) of international conditions on the financial markets in the
United States shall be such as, in the Underwriters' reasonable judgment, to
make it inadvisable or impracticable to proceed with the offering or delivery of
the Shares on the terms and in the manner contemplated in the Registration
Statement and Prospectus.
If you or any group of Underwriters elects to terminate this Agreement
as provided in this Section 8, the Company and each other Underwriter shall be
notified promptly by letter or telegram from such terminating Underwriter.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply with any of the terms of this Agreement, the Company shall not
be under any obligation or liability under this Agreement (except to the extent
provided in Sections 5, 6 and 10 hereof), and the Underwriters shall be under no
obligation or liability to the Company under this Agreement (except to the
extent provided in Section 10 hereof) or to one another hereunder.
9. Increase in Underwriters' Commitments. Subject to Sections 7
and 8, if any Underwriter shall default in its obligation to take up and pay for
the Firm Shares to be purchased by it hereunder (otherwise than for reasons
sufficient to justify the termination of this Agreement under the provisions of
Section 8 hereof) and if the number of Firm Shares which all Underwriters so
defaulting shall have agreed but failed to take up and pay for does not exceed
10% of the total number of Firm Shares, the non-defaulting Underwriters shall
take up and pay for (in addition to the number of Firm Shares they are obligated
to purchase pursuant to Section 1 hereof) the number of Firm Shares agreed to be
purchased by all such defaulting
-24-
Underwriters, as hereinafter provided. Such Shares shall be taken up and paid
for by such non-defaulting Underwriter or Underwriters in such amount or amounts
as you may designate with the consent of each Underwriter so designated or, in
the event no such designation is made, such Shares shall be taken up and paid
for by all non-defaulting Underwriters pro rata in proportion to the aggregate
number of Firm Shares set opposite the names of such non-defaulting Underwriters
in Schedule A.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that they
will not sell any Firm Shares hereunder unless all of the Firm Shares are
purchased by the Underwriters (or by substituted Underwriters selected by you
with the approval of the Company or selected by the Company with your approval).
If a new Underwriter or Underwriters are substituted by the
Underwriters or by the Company for a defaulting Underwriter or Underwriters in
accordance with the foregoing provision, the Company or you shall have the right
to postpone the Time of Purchase for a period not exceeding five business days
in order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
The term Underwriter as used in this agreement shall refer to and
include any Underwriter substituted under this Section 9 with like effect as if
such substituted Underwriter had originally been named in Schedule A.
If the aggregate number of Shares which the defaulting Underwriter or
Underwriters agreed to purchase exceeds 10% of the total number of Shares which
all Underwriters agreed to purchase hereunder, and if neither the non-defaulting
Underwriters nor the Company shall make arrangements within the five business
day period stated above for the purchase of all the Shares which the defaulting
Underwriter or Underwriters agreed to purchase hereunder, this Agreement shall
be terminated without further act or deed and without any liability on the part
of the Company to any non-defaulting Underwriter and without any liability on
the part of any non-defaulting Underwriter to the Company. Nothing in this
paragraph, and no action taken hereunder, shall relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
10. Indemnification. (a) The Company agrees to indemnify and hold
harmless each Underwriter, each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, the agents, employees, officers and directors of each Underwriter and the
agents, employees, officers and directors of any such controlling person from
and against any and all losses, liabilities, claims, damages and expenses
(including, but not limited to, reasonable attorneys' fees and any and all
reasonable expenses incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim and any and all reasonable
amounts paid in settlement of any claim or litigation) (collectively, "LOSSES")
to which they or any of them may become subject under
-25-
the Act, the Exchange Act or otherwise insofar as such Losses (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact (i) contained in the Registration Statement
(or in the Registration Statement as amended by any post-effective amendment
thereof by the Company) or arises out of or is based upon any omission or
alleged omission to state a material fact required to be stated in the
Registration Statement or necessary to make the statements therein not
misleading, or (ii) contained in the Prospectus (the term Prospectus for the
purpose of this Section 10 being deemed to include any Preliminary Prospectus,
the Prospectus and the Prospectus as amended or supplemented by the Company), or
arises out of or is based upon any omission or alleged omission to state a
material fact required to be stated in the Prospectus or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading; provided, however, that (A) the Company will not be liable
in any such case to the extent, but only to the extent, that any such Loss
arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission relating to any Underwriter made
therein in reliance upon and in conformity with written information relating to
such Underwriter furnished to the Company by or on behalf of such Underwriter
expressly for use therein and (B) that with respect to any untrue statement or
omission of material fact made in any Preliminary Prospectus, the indemnity
agreement contained in this Section 10(a) shall not inure to the benefit of any
Underwriter from whom the person asserting any such Loss purchased the Shares,
to the extent that any such Loss of such Underwriter occurs under the
circumstance where it shall have been determined by a court of competent
jurisdiction by final and nonappealable judgment that (w) the Company had
previously furnished copies of the Prospectus to you, (x) delivery of the
Prospectus was required by the Act to be made to such person, (y) the untrue
statement or omission of a material fact contained in the Preliminary Prospectus
was corrected in the Prospectus and (z) there was not sent or given to such
person, at or prior to the written confirmation of the sale of such Shares to
such person, a copy of the Prospectus, unless the failure to send or give a copy
of the Prospectus to such person was the result of noncompliance by the Company
with Section 4(b) hereof.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, and each of their respective agents, employees, officers and
directors and the agents, employees, officers and directors of any such
controlling person from and against any Losses to which they or any of them may
become subject under the Act, the Exchange Act or otherwise insofar as such
Losses (or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or in the Registration Statement as amended by any
post-effective amendment thereof by the Company) or in a Prospectus, or arises
out of or is based upon any omission or alleged omission to state a material
fact required to be stated in such Registration Statement or Prospectus or
necessary to make such information (with respect to the Prospectus, in light of
the circumstances under which it was made) not misleading, in each case to the
extent, but only to the extent, that any such Loss arises out of or is based
upon any untrue statement or alleged untrue statement or omission or
-26-
alleged omission relating to such Underwriter made therein in reliance upon and
in conformity with information relating to such Underwriter furnished in writing
to the Company by or on behalf of such Underwriter expressly for use therein.
The only such information furnished by or on behalf of the Underwriters
expressly for use therein is the information set forth in the fifth and ninth
paragraphs under the caption "Underwriting" in the Prospectus (collectively, the
"UNDERWRITER INFORMATION"); provided, however, that with respect to any such
untrue statement or omission made in the Preliminary Prospectus, the indemnity
contained in this Section 10(b) (to the extent and only to the extent that such
Losses resulted from an untrue statement or omission in the Preliminary
Prospectus that was corrected in the Prospectus) shall not inure to the benefit
of the Company if it shall be established that (1) both (A) a copy of the
Prospectus was sent or given by such Underwriter to the person asserting any
such Losses, and (B) the untrue statement or omission in the Preliminary
Prospectus was corrected in the Prospectus or (2) such failure to deliver the
Prospectus was a result of noncompliance by the Company with Section 4.
(c) Promptly after receipt by an indemnified party under
subsection 10(a) or 10(b) above of notice of the commencement of any action,
suit or proceeding (collectively, an "ACTION"), such indemnified party shall, if
a claim in respect thereof is to be made against the indemnifying party under
such subsection, notify each party against whom indemnification is to be sought
in writing of the commencement of such action (but the failure so to notify an
indemnifying party shall not relieve such indemnifying party from any liability
that it may have under this Section 10 except to the extent that it has been
prejudiced in any material respect by such failure or from any liability which
it otherwise may have). In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the commencement of
such action, the indemnifying party will be entitled to participate in such
action, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense of such action with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such action, but the fees and expenses of such counsel shall be
at the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying parties
in connection with the defense of such action, (ii) the indemnifying parties
shall not have employed counsel to take charge of the defense of such action
within a reasonable time after notice of commencement of the action or (iii) the
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them that are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such reasonable fees and expenses of counsel shall be borne by the indemnifying
parties; provided, however, that the indemnifying party will not be liable for
the fees and expenses of more than one counsel (together with appropriate local
counsel) designated by the indemnified party or parties at any time for all
indemnified parties in connection with any one action or separate but similar or
related actions arising out of the same general allegations or
-27-
circumstances. An indemnifying party shall not be liable for any settlement of
any claim or action effected without its written consent which consent may not
be unreasonably withheld. 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 release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.
11. Contribution. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 10 of this
Agreement is for any reason held to be unavailable from the indemnifying party,
or is insufficient to hold harmless a party indemnified under Section 10 of this
Agreement, each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such aggregate Losses (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company, on the one hand, and the Underwriters, on the other hand, from the
offering of the Shares or (ii) if such allocation is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company, on the
one hand, and the Underwriters, on the other hand, in connection with the
statements or omissions that resulted in such Losses, as well as any other
relevant equitable considerations. The relative benefits received by the
Company, on the one hand, and the Underwriters, on the other, shall be deemed to
be in the same respective proportion as (x) the total proceeds from the offering
of the Shares (net of discounts and commissions but before deducting expenses)
received by the Company are to (y) the total underwriting discounts and
commissions received by the Underwriters. The relative fault of the Company, on
the one hand, and Underwriters, on the other, shall be determined by reference
to, among other things, whether the untrue statement or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission or alleged statement or omission.
The Company and each Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 11 were determined by pro
rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to above. Notwithstanding the
provisions of this Section 11, (i) in no case shall any Underwriter be required
to contribute any amount in excess of the amount by which the total price at
which the Shares underwritten by such Underwriter and distributed to the public
were offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of any untrue statement
or alleged untrue statement or omission or alleged omission and (ii) no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 11, each person,
if any, who controls any Underwriter within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act and each director, officer, employee and
agent of such Underwriter shall
-28-
have the same rights to contribution as such Underwriter, and each person, if
any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act and each director, officer, employee and agent
of the Company or person who controls the Company shall have the same rights to
contribution as the Company. Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action against such party in
respect of which a claim for contribution may be made against another party or
parties under this Section 11, notify such party or parties from whom
contribution may be sought, but the omission to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 11 or otherwise, except to
the extent that it has been prejudiced in any material respect by such failure;
provided, however, that no additional notice shall be required with respect to
any action for which notice has been given under Section 10 for purposes of
indemnification. Anything in this section to the contrary notwithstanding, no
party shall be liable for contribution with respect to any action or claim
settled without its written consent, provided, however, that such written
consent was not unreasonably withheld.
12. Notices. All communications with respect to or under this
Agreement, except as may be otherwise specifically provided in this Agreement,
shall be in writing and, if sent to the Underwriters, shall be mailed,
delivered, or telegraphed or telecopied and confirmed in writing to Deutsche
Bank Securities Inc., ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
General Counsel (telecopier no: (▇▇▇) ▇▇▇-▇▇▇▇), with a copy to Deutsche Bank
Securities Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Syndicate Manager (telephone: (▇▇▇) ▇▇▇-▇▇▇▇, fax: (▇▇▇) ▇▇▇-▇▇▇▇), and to UBS
Warburg LLC, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (telephone: (212)
▇▇▇-▇▇▇▇, fax: (▇▇▇) ▇▇▇-▇▇▇▇), Attention: Syndicate Department, with a copy to
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (telephone:
(▇▇▇) ▇▇▇-▇▇▇▇, fax: (▇▇▇) ▇▇▇-▇▇▇▇), Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.; and if
sent to the Company, shall be mailed, delivered or, telegraphed or telecopied
and confirmed in writing to Meritage Corporation, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (telephone: (▇▇▇) ▇▇▇-▇▇▇▇, fax: (480)
▇▇▇-▇▇▇▇), Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, with a copy to ▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., One
Arizona Center, ▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (telephone: (602)
▇▇▇-▇▇▇▇, fax: (▇▇▇) ▇▇▇-▇▇▇▇), Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
13. Governing Law; Construction. This Agreement and any claim,
counterclaim or dispute of any kind or nature whatsoever arising out of or in
any way relating to this Agreement ("CLAIM"), directly or indirectly, shall be
governed by, and construed in accordance with, the laws of the State of New
York. The section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
14. Submission to Jurisdiction. Except as set forth below, no
Claim may be commenced, prosecuted or continued in any court other than the
courts of the State of New York located in the City and County of New York or in
the United States District Court for the Southern District of New York, which
courts shall have jurisdiction over the adjudication of
-29-
such matters, and the Company consents to the jurisdiction of such courts and
personal service with respect thereto. The Company hereby consents to personal
jurisdiction, service and venue in any court in which any Claim arising out of
or in any way relating to this Agreement is brought by any third party against
Deutsche Bank, UBS Warburg or any indemnified party. Each of Deutsche Bank, UBS
Warburg and the Company (on its behalf and, to the extent permitted by
applicable law, on behalf of its stockholders and affiliates) waives all right
to trial by jury in any action, proceeding or counterclaim (whether based upon
contract, tort or otherwise) in any way arising out of or relating to this
Agreement. The Company agrees that a final determination or final judgment in
any such action, proceeding or counterclaim brought in any such court shall be
conclusive and binding upon the Company and may be enforced in any other courts
in the jurisdiction of which the Company is or may be subject, by suit upon such
judgment.
15. Parties at Interest. The Agreement herein set forth has been
and is made solely for the benefit of the Underwriters, the Company, and to the
extent provided in Sections 10 and 11 hereof the controlling persons, directors
and officers referred to in such sections, and their respective successors,
assigns, heirs, personal representatives and executors and administrators. No
other person, partnership, association or corporation (including a purchaser, as
such purchaser, from any of the Underwriters) shall acquire or have any right
under or by virtue of this Agreement.
16. Counterparts. This Agreement may be signed by the parties in
one or more counterparts which together shall constitute one and the same
agreement among the parties.
17. Successors and Assigns. This Agreement shall be binding upon
the Underwriters, the Company and their respective successors and assigns and
any successor or assign of any substantial portion of the Company's and any of
the Underwriters' respective businesses and/or assets.
S-1
If the foregoing correctly sets forth the understanding among the
Company and the Underwriters, please so indicate in the space provided below for
the purpose, whereupon this letter and your acceptance shall constitute a
binding agreement among the Company and the Underwriters, severally.
Very truly yours,
MERITAGE CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
_________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Financial Officer
and Vice President-Finance
S-2
Accepted and agreed to as of the date first above written, on behalf of
themselves and the other several Underwriters named in Schedule A
DEUTSCHE BANK SECURITIES INC.
UBS WARBURG LLC
▇.▇. ▇▇▇▇▇▇▇ & SONS, INC.
JMP SECURITIES LLC
DEUTSCHE BANK SECURITIES INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
____________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Managing Director
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
_________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Director
UBS WARBURG LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇
_________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Director
▇.▇. ▇▇▇▇▇▇▇ & SONS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
JMP SECURITIES LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
_________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: Managing Director
SCHEDULE A
Number of
Underwriter Firm Shares
----------- -----------
DEUTSCHE BANK SECURITIES INC. 700,000
UBS Warburg LLC 700,000
▇.▇. ▇▇▇▇▇▇▇ & SONS, INC. 175,000
JMP SECURITIES LLC 175,000
-------
Total............................................................ 1,750,000
=========
SCHEDULE B
Directors and Executive Officers
1. ▇▇▇▇ ▇. ▇▇▇▇▇▇
2. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
3. ▇▇▇▇▇ ▇. ▇▇▇▇
4. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
5. ▇▇▇▇▇ ▇. Ax
6. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
7. ▇▇▇▇▇▇▇ ▇▇▇▇▇
8. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
9. C. ▇▇▇▇▇▇▇ ▇▇▇▇▇
EXHIBIT A
%
Jurisdiction Owned by
of the Company
Incorporation or (directly or
Subsidiary Formation Stockholders indirectly)
---------- --------- ------------ -----------
Monterey Homes Arizona, Inc. Arizona Meritage Corporation 100%
Monterey Homes Construction, Inc. Arizona Meritage Corporation 100%
Meritage Homes of Arizona, Inc. Arizona Meritage Corporation 100%
Meritage Paseo Crossing, LLC Arizona Meritage Homes of Arizona, 100%
Inc.
Meritage Homes Construction, Inc. Arizona Meritage Corporation 100%
Meritage Paseo Construction, LLC Arizona Meritage Homes 100%
Construction, Inc.
▇▇▇▇▇▇▇-MTH Communities, Inc. Arizona Meritage Corporation 100%
▇▇▇▇▇▇▇-MTH Builders, Inc. Arizona Meritage Corporation 100%
MTH-Texas GP, Inc. Arizona Meritage Corporation 100%
MTH-Texas LP, Inc. Arizona Meritage Corporation 100%
Legacy/Monterey Homes, L.P. Arizona MTH-Texas LP, Inc. 99%
MTH Texas GP, Inc. 1%
Meritage Holdings, L.L.C. Texas Legacy/Monterey Homes, L.P.
Legacy Operating Company, 99%
L.P. 1%
Legacy Operating Company, L.P. Texas Legacy/Monterey Homes, L.P. 100%
▇▇▇▇▇ ▇▇▇▇ Venture, L.L.C. Texas Legacy/Monterey Homes, L.P. 100%
Texas Home Mortgage Corporation Texas Meritage Corporation 100%
Meritage Homes of Northern California Meritage Corporation 100%
California, Inc.
MTH-Homes Texas, L.P. Texas MTH-Texas ▇▇ ▇▇, Inc. 99%
MTH-Texas ▇▇ ▇▇, Inc. 1%
MTH-Texas ▇▇ ▇▇, Inc. Arizona Meritage Corporation 100%
MTH-Texas ▇▇ ▇▇, Inc. Arizona Meritage Corporation 100%
EXHIBIT B
MERITAGE CORPORATION
LOCK-UP AGREEMENT
JUNE 20, 2002
Deutsche Bank Securities Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
UBS Warburg LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Meritage Corporation - Lock-Up Agreement
Ladies and Gentlemen:
The undersigned is an owner of record or beneficially of certain shares
of common stock, par value $0.01 per share ("COMMON STOCK"), of Meritage
Corporation, a Maryland corporation (the "COMPANY"), or securities convertible
into or exchangeable or exercisable for shares of Common Stock. The undersigned
understands that you, as representatives (the "REPRESENTATIVES"), propose to
enter into an Underwriting Agreement on behalf of the several Underwriters named
in such agreement (collectively, the "UNDERWRITERS"), with the Company,
providing for a public offering of newly issued shares of Common Stock (the
"OFFERED SHARES") pursuant to a Registration Statement on Form S-3 (File No.
333-87398) filed with the Securities and Exchange Commission (the "SEC").
In consideration of the agreement by the Underwriters to offer and sell
the Offered Shares, and of other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the undersigned agrees that, during
the period beginning from the date of the final prospectus covering the public
offering of the Offered Shares and continuing to and including the date 90 days
after the date of such final prospectus, the undersigned will not offer, sell,
contract to sell, hypothecate, pledge, loan, grant any option to purchase, make
any short sale or otherwise dispose of or grant any rights with respect to any
shares of Common Stock, or any options or warrants to purchase any shares of
Common Stock, or any securities convertible into, exchangeable for or that
represent the right to receive shares of Common Stock, whether now owned or
hereinafter acquired, owned directly by the undersigned
(including holding as a custodian) or with respect to which the undersigned has
beneficial ownership within the rules and regulations of the SEC (collectively
the "UNDERSIGNED'S SHARES").
The foregoing restriction is expressly agreed to preclude the
undersigned from engaging in any hedging or other transaction which is designed
to or which reasonably could be expected to lead to or result in a sale or
disposition of the Undersigned's Shares even if the Undersigned's Shares would
be disposed of by someone other than the undersigned. Such prohibited hedging or
other transactions would include without limitation any short sale (whether or
not against the box) or any purchase, sale or grant of any right (including,
without limitation, any put or call option) with respect to any of the
Undersigned's Shares or with respect to any security that includes, relates to,
or derives any significant part of its value from the Undersigned's Shares.
Notwithstanding the foregoing, the undersigned may transfer the
Undersigned's Shares (i) as a bona fide gift or gifts, provided that the donee
or donees thereof agree to be bound in writing by the restrictions set forth
herein, (ii) to any trust for the direct or indirect benefit of the undersigned
or the immediate family of the undersigned, provided that the trustee of the
trust agrees to be bound in writing by the restrictions set forth herein, and
provided further that any such transfer shall not involve a disposition for
value, (iii) if the undersigned is a corporation, to any wholly-owned subsidiary
of such corporation, (iv) in connection with a simultaneous sale of all or
substantially all of the Common Stock of the Company (by means of a merger,
consolidation, tender offer or otherwise) or (v) with the prior written consent
of the Representatives on behalf of the Underwriters. For purposes of this
Lock-Up Agreement, "immediate family" shall mean any relationship by blood,
marriage or adoption, not more remote than first cousin. It shall be a condition
to any transfer permitted by the first sentence of this paragraph (other than
clause (iv) thereof) that (a) the transferee execute an agreement stating that
the transferee is receiving and holding the Undersigned's Shares subject to the
provisions of this Agreement and there shall be no further transfer of the
Undersigned's Shares except in accordance with this Agreement and (b) any such
transfer shall not involve a disposition for value. The undersigned also agrees
and consents to the entry of stop transfer instructions with the Company's
transfer agent and registrar against the transfer of the Undersigned's Shares
except in compliance with the foregoing restrictions.
The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
offering. The undersigned further understands that this Lock-Up Agreement is
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors and assigns.
Very truly yours,
______________________________________
Exact Name of Record and/or Beneficial Owner
______________________________________
Authorized Signature
______________________________________
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