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EXHIBIT 1.1
2,500,000 Shares
FINANCIAL PACIFIC INSURANCE GROUP, INC.
Common Stock, Par Value $.001
June __, 1998
UNDERWRITING AGREEMENT
EVEREN Securities, Inc.
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2,500,000 Shares
FINANCIAL PACIFIC INSURANCE GROUP, INC.
Common Stock
Par Value $.001
UNDERWRITING AGREEMENT
June __, 1998
EVEREN Securities, Inc.
As Representative of the Several Underwriters
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
Financial Pacific Insurance Group, Inc., a Delaware corporation (the
"Company"), and ▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, Firemark Advisors, Inc., St. ▇▇▇▇ Fire &
Marine Insurance Company, Celerity Partners, L.P., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇▇ (collectively, the "Selling Stockholders") confirm their agreements with
each other and the several underwriters listed in Schedule I hereto (the
"Underwriters"), for whom EVEREN Securities, Inc. (the "Representative") has
been duly authorized to act as representative, as follows:
1. The Shares. Subject to the terms and conditions set forth in this
agreement (the "Agreement"), the Company proposes to issue and sell 2,000,000
shares of its authorized but unissued Common Stock, $.001 par value (the "Common
Stock"), to the several Underwriters and the Selling Stockholders propose to
sell an aggregate of 500,000 shares of the Company's authorized and outstanding
Common Stock to the several Underwriters, with each of the Selling Stockholders
to sell the number of shares listed beside such Selling Stockholder's name on
Schedule II hereto. The 2,000,000 shares of Common Stock of the Company to be
sold by the Company are hereinafter called the "Company Shares" and the 500,000
shares of Common Stock to be sold by the Selling Stockholders are hereinafter
called the "Selling Stockholder Shares." The Company Shares and the Selling
Stockholder Shares are hereinafter collectively referred to as the "Firm
Shares." The Company also proposes to grant to the Underwriters an option to
purchase up to 375,000 additional shares of Common Stock (the "Option Shares")
if requested by the Underwriters as provided in Section 3 hereof. The Firm
Shares and the Option Shares are herein collectively called the "Shares."
The Company and the Selling Stockholders hereby confirm their respective
agreements with the Underwriters as follows:
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2. Registration Statement and Prospectus. The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Act"), a registration statement on Form S-1 (File No. 333-50511) including a
prospectus, relating to the Shares, which may have been amended; each such
amendment was so prepared and filed. The registration statement, as amended at
the time when it became or becomes effective, including all financial schedules
and exhibits thereto and all of the information (if any) deemed to be part of
the registration statement at the time of its effectiveness pursuant to Rule
430A under the Act ("Rule 430A"), is hereinafter referred to as the
"Registration Statement"; any registration statement filed pursuant to Rule
462(b) under the Act is herein called the "462(b) Registration Statement," and
after such filing the term "Registration Statement" shall include the Rule
462(b) Registration Statement; the prospectus in the form first provided to the
Underwriters by the Company in connection with the offering and sale of the
Shares (whether or not required to be filed pursuant to Rule 424(b) under the
Act ("Rule 424(b)")) is hereinafter referred to as the "Prospectus," except that
if any revised prospectus shall be provided to the Underwriters by the Company
for use in connection with the offering of the Shares that differs from the
Prospectus (whether or not any such revised prospectus is required to be filed
by the Company pursuant to Rule 424(b) under the Act), the term "Prospectus"
shall refer to the revised prospectus from and after the time it is first
provided to the Underwriters for such use; and each preliminary prospectus
included in the Registration Statement prior to the time it became or becomes
effective is herein referred to as a "Preliminary Prospectus."
3. Agreements to Sell and Purchase. On the basis of the representations
and warranties contained in this Agreement, and subject to the terms and
conditions hereof, (i) the Company and the Selling Stockholders agree, severally
and not jointly, to sell to the Underwriters, at a price of $ ________ per Share
(the "Purchase Price"), the Company Shares and the Selling Stockholder Shares,
respectively; and (ii) each Underwriter agrees, severally and not jointly, to
purchase from the Company and the Selling Stockholders, at the Purchase Price,
the aggregate number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto.
On the basis of the representations and warranties contained in this
Agreement, and subject to the terms and conditions hereof, (i) the Company
agrees to sell to the Underwriters, at the Purchase Price, up to 375,000 Option
Shares; and (ii) the Underwriters shall have the right to purchase, severally
and not jointly, from time to time, up to an aggregate of 375,000 Option Shares
at the Purchase Price. Option Shares may be purchased as provided in Section 4
hereof solely for the purpose of covering over-allotments made in connection
with the offering of the Firm Shares. If any Option Shares are to be purchased,
each Underwriter, severally and not jointly, agrees to purchase the number of
Option Shares (subject to such adjustments to eliminate fractional shares as the
Representative may determine) that bears the same proportion to the total number
of Option Shares to be purchased as the number of Firm Shares set forth opposite
the name of such Underwriter in Schedule I bears to the total number of Firm
Shares.
For a period of 180 days from the date this Agreement becomes effective,
the Company will not, without the prior written consent of EVEREN Securities,
Inc. on behalf of the Underwriters (1) offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, or (2) enter
into any swap or other agreement that transfers, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction
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described in clause (1) or (2) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise; provided, however, that
this clause shall not apply to the transactions expressly contemplated hereby,
the issuance of the Warrants pursuant to the Warrant Agreement dated June __,
1998 between the Company and the purchasers party thereto and the granting of
options for shares of Common Stock and involving the Shares the sales of shares
of Common Stock to the Company's employees pursuant to the exercise of options
under those employee benefit plans described in the Prospectus and provided
further, however, that the Company may issue shares of Common Stock
("Acquisition Shares") during such period in connection with acquisitions of
business so long as the purchaser of such Acquisition Shares agrees to be bound
by a lock-up letter in form and substance satisfactory to you pursuant to which
such purchaser agrees with the Company not to sell, offer to sell, solicit an
offer to buy, contract to sell, grant any option to purchase, or otherwise
transfer or dispose of, any such Acquisition Shares at any time before the
expiration of such 180 day period and the certificates evidencing such
Acquisition Shares bear a legend to such effect.
For a period of 180 days from the date this Agreement becomes effective,
the Company will not, without the prior written consent of EVEREN Securities,
Inc. on behalf of the Underwriters, file a registration statement relating to
shares of capital stock (including the Common Stock) or securities convertible
into or exercisable or exchangeable for, capital stock or warrants, options or
rights to purchase or acquire, capital stock, with the exception of the filing
of Registration Statements on Form S-8 with respect to the Company's employee
benefit plans described in the Prospectus and provided further, however, that
the Company may issue shares of Common Stock ("Acquisition Shares") during such
period in connection with acquisitions of business so long as the purchaser of
such Acquisition Shares agrees to be bound by a lock-up letter in form and
substance satisfactory to you pursuant to which such purchaser agrees with the
Company not to sell, offer to sell, solicit an offer to buy, contract to sell,
grant any option to purchase, or otherwise transfer or dispose of, any such
Acquisition Shares at any time before the expiration of such 180 day period and
the certificates evidencing such Acquisition Shares bear a legend to such
effect.
4. Agreements of the Company as to Delivery and Payment. The Company
agrees with each Underwriter that:
(a) Delivery to the Underwriters of and payment for the Firm
Shares shall be made at 9:00 A.M., Los Angeles time, on the third full
business day (such time and date being referred to as the "Closing
Date") following the date of the initial public offering of the Firm
Shares as advised to you by the Company, at such place as you shall
designate. Payment for the Firm Shares shall be made to the Company or
its order upon delivery of the Company Shares, and shall be made to the
Custodian for the account of the Selling Stockholders upon delivery of
the Selling Stockholder Shares, in each case in Federal or other funds
immediately available in Los Angeles.
(b) Delivery to the Underwriters of and payment for any Option
Shares to be purchased by the Underwriters shall be made at such place
as the Representative shall designate, at 9:00 A.M., Los Angeles time,
on such date or dates (individually, an "Option Closing Date" and
collectively, the "Option Closing Dates"), which may be the same as the
Closing Date but shall in no event be earlier than the Closing Date, as
shall be specified in a written notice from the Representative to the
Company of the Underwriters' determination to purchase a number,
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specified in said notice, of Option Shares. Any such notice may be given
at any time within 45 days after the date of this Agreement. Payment for
any Option Shares shall be made to the Company or its order upon
delivery of the Option Shares, in Federal or other funds immediately
available in Los Angeles.
(c) Certificates for the Shares shall be registered in such
names and issued in such denominations as you shall request in writing
not later than two business days prior to the Closing Date or the
applicable Option Closing Date, as the case may be, and shall be made
available for inspection not later than 9:00 A.M., Los Angeles time, on
the business day next preceding the Closing Date or the applicable
Option Closing Date, as the case may be, with any transfer taxes payable
upon initial issuance or the transfer thereof duly paid by the Company
for the respective accounts of the Underwriters against payment of the
Purchase Price therefor.
5. Further Agreements of the Company. The Company also agrees with each
Underwriter that:
(a) it will, if the Registration Statement has not heretofore
become effective under the Act, file an amendment to the Registration
Statement or, if necessary pursuant to Rule 430A under the Act, a
post-effective amendment to the Registration Statement, as soon as
practicable after the execution and delivery of this Agreement, and will
use its best efforts to cause the Registration Statement or such
post-effective amendment to become effective at the earliest possible
time; and the Company will comply fully and in a timely manner with the
applicable provisions of Rule 424(b) and Rule 430A under the Act;
(b) it will advise you promptly and, if requested by you,
confirm such advice in writing, (i) when the Registration Statement has
become effective, if and when the Prospectus is sent for filing pursuant
to Rule 424 under the Act and when any post-effective amendment to the
Registration Statement becomes effective, (ii) of the receipt of any
comments from the Commission that relate to the Registration Statement
or requests by the Commission for amendments to the Registration
Statement or amendments or supplements to the Prospectus or for
additional information, (iii) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement,
or of the suspension of qualification of the Shares for offering or sale
in any jurisdiction, or the initiation or, to the best knowledge of the
Company, threat of any proceedings for such purpose by the Commission or
any state securities commission or other regulatory authority, and (iv)
of the happening of any event or information becoming known during the
period referred to in paragraph (e) below that makes any statement of a
material fact made in the Registration Statement untrue or that requires
the making of any additions to or changes in the Registration Statement
(as amended or supplemented from time to time) in order to make the
statements therein not misleading or that makes any statement of a
material fact made in the Prospectus (as amended or supplemented from
time to time) untrue or that requires the making of any additions to or
changes in the Prospectus (as amended or supplemented from time to time)
in order to make the statements therein not misleading except statements
in or omissions from the Registration Statement and the Prospectus made
or omitted in reliance upon, and in conformity with, information
relating to the Underwriters furnished in writing to the Company by or
on behalf of the Underwriters with your consent expressly for use
therein; if at any time the Commission shall issue or institute
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proceedings (or threaten to institute any such proceedings) to issue any
stop order suspending the effectiveness of the Registration Statement,
or any state securities commission or other regulatory authority shall
issue or institute proceedings (or threaten to institute proceedings) to
issue an order suspending the qualification or exemption of the Shares
under any state securities or Blue Sky laws, the Company shall use its
best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
(c) it will furnish to the Representative without charge one
signed copy of the Registration Statement as first filed with the
Commission and of each amendment to it, including all exhibits filed
therewith, and, from time to time, will furnish to you and each
Underwriter designated by you a reasonable number of conformed copies of
the Registration Statement as so filed and of each amendment to it,
without exhibits;
(d) it will not file any amendment or supplement to the
Registration Statement, whether before or after the time when it becomes
effective, make any filing under Rule 462(b) of the Act or make any
amendment or supplement to the Prospectus of which you shall not
previously have been advised and provided a copy a reasonable period of
time prior to the filing thereof or to which you or your counsel shall
reasonably object; and it will prepare and file with the Commission,
promptly upon your reasonable request, any amendment to the Registration
Statement or supplement to the Prospectus that may be necessary or
advisable in connection with the distribution of the Shares by you in
your or your counsel's opinion, and will use its reasonable commercial
efforts to cause the same to become effective as promptly as possible;
(e) promptly after the Registration Statement becomes effective,
and from time to time thereafter for such period as a prospectus is
required by the Act to be delivered in connection with the sales by an
underwriter or a dealer (in the opinion of your counsel), it will
furnish to each Underwriter and dealer without charge as many copies of
the Prospectus (and any amendment or supplement of the Prospectus) as
such Underwriter or dealer may reasonably request for the purposes
contemplated by the Act; the Company consents to the use of the
Prospectus and any amendment or supplement thereto by any Underwriter or
any dealer, both in connection with the offering or sale of the Shares
and for such period of time thereafter as the Prospectus is required by
the Act to be delivered in connection therewith;
(f) if during the period specified in paragraph (e) any event
shall occur or information become known as a result of which in the
opinion of your counsel or in the judgment of the Company it becomes
necessary to amend or supplement the Prospectus in order to make the
statements therein, in light of the circumstances existing as of the
date the Prospectus is delivered to a purchaser, not misleading, or it
is necessary to amend or supplement the Prospectus to comply with any
law, forthwith to prepare and, subject to paragraph 5(d) above, it will
file with the Commission at the sole expense of the Company an
appropriate amendment or supplement to the Prospectus so that the
statements of any material facts in the Prospectus, as so amended and
supplemented, will not in light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with
law, and it will furnish to the Underwriters and to such dealers as the
Underwriters shall specify, at the sole expense of the Company, such
number of copies thereof as such Underwriters or dealers may reasonably
request;
(g) prior to any public offering of the Shares, it will
cooperate with you and counsel for the Underwriters in connection with
the registration or qualification of the Shares for offer and sale by
the several Underwriters and by dealers under the state securities or
Blue Sky laws of such jurisdictions as you may reasonably request
(provided, that the Company shall not be obligated to qualify as a
foreign corporation in any jurisdiction in which it is not so qualified
or
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to take any action which would subject it to general consent to service
of process in any jurisdiction in which it is not now so subject); the
Company will continue such qualification in effect so long as required
by law for the distribution of the Shares and will file such consents to
service of process or other documents as may be necessary in order to
effect such registration or qualification (provided, that the Company
shall not be obligated to take any action that would subject it to
general consent to service of process in any jurisdiction in which it is
not now so subject);
(h) it will not, prior to the exercise in full or termination or
expiration of the option to purchase the Option Shares, incur any
liability or obligation, direct or contingent, or enter into any
material transaction, other than in the ordinary course of business,
except as contemplated by the Prospectus;
(i) it will not acquire any capital stock of the Company prior
to the exercise in full or termination or expiration of the option to
purchase the Option Shares nor will the Company declare or pay any
dividend or make any other distribution upon the Common Stock payable to
Stockholders of record on a date prior to the exercise in full or
termination or expiration of the option to purchase the Option Shares,
except in either case as contemplated by the Prospectus;
(j) it will make generally available to its security holders as
soon as reasonably practicable a consolidated earnings statement
covering a period of at least 12 months beginning after the "effective
date" (as defined in Rule 158 under the Act) of the Registration
Statement (but in any event not later than the forty-fifth (45th) day
following the end of the fiscal quarter first occurring after the first
anniversary of the effective date of the Registration Statement) that
will satisfy the provisions of Section 11(a) of the Act and Rule 158
thereunder and to advise you in writing when such statement has been
made so available;
(k) during the period of five years after the date of this
Agreement, it will furnish to you a copy (i) as soon as practicable
after the filing thereof, of each report filed by the Company with the
Commission, any securities exchange or the National Association of
Securities Dealers, Inc. ("NASD"); (ii) as soon as practicable after the
release thereof, of each material press release in respect of the
Company; (iii) as soon as available, of each report of the Company
mailed to Stockholders; and (iv) as soon as available, such other
publicly available information concerning the Company as you may
reasonably request;
(l) subject to Section 5(m), whether or not the transactions
contemplated hereby are consummated or this Agreement becomes effective
as to all of its provisions or is terminated, it will pay all costs,
fees, expenses and taxes incident to the performance by the Company of
its obligations hereunder, including (i) the preparation, printing,
filing and distribution under the Act of the Registration Statement
(including financial statements and exhibits), each Preliminary
Prospectus and all amendments and supplements to any of them prior to or
during the period specified in paragraph (e) above of this Section 5,
(ii) the word processing, reproduction and distribution of this
Agreement, the Blue Sky Survey and any other agreements, memoranda,
correspondence and other documents prepared and delivered by the
Underwriters or their counsel in connection with the offering of the
Shares (including in each case any disbursements of counsel for the
Underwriters relating to such preparation and delivery), (iii) the
registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of the several states, including in each
case the fees and disbursements of counsel for the Underwriters,
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relating to such registration or qualification and memoranda relating
thereto, provided that the Company shall not be required to pay more
than $25,000 for legal fees of the counsel for the Underwriters relating
to Blue Sky matters, (iv) the listing of the Shares on The Nasdaq
National Market System ("NMS"); (v) furnishing such copies of the
Registration Statement, each Preliminary Prospectus, the Prospectus and
all amendments and supplements thereto as may be requested for use in
connection with the offering or sale of the Shares by the Underwriters
or by dealers to whom the Shares may be sold, (vi) obtaining the
opinions to be provided pursuant to Section 8 of this Agreement and
(vii) the performance by the Company of all of its other obligations
under this Agreement;
(m) in addition to the expenses set forth in Section 5(l), the
Company shall, as applicable: (A) on the Closing Date, and on each of
the Option Closing Dates, pay to EVEREN Securities, Inc., individually
and not in its capacity as Representative, a non-accountable expense
allowance equal to one percent (1%) of the initial public offering price
of the Shares and Option Shares sold pursuant to this Agreement, or (B)
(i) if the sale of the Shares provided for herein is not consummated
because the Underwriters exercise their right to terminate this
Agreement pursuant to Section 9 hereof and any of the following have
occurred during the term of this Agreement: (1) there has been any
material adverse change in the condition (financial or otherwise),
earnings, affairs, business or prospects of the Company; (2) the
discovery of any defect in the authorization, validity of issuance or
fully paid status of any of the Company's outstanding securities; (3)
the discovery that any of the Company's business plans, prospects,
condition (financial or otherwise) or projections are materially
different from information with respect thereto previously provided to
you; (4) the failure or inability to qualify or register the offer and
sale of the Common Stock on the NASDAQ-NMS or other appropriate
exchange; or (5) the Company or the Selling Stockholders shall refuse or
be unable to comply with any provision hereof (except as the result of
any breach of this Agreement by the Underwriters), the Company will
promptly reimburse the Underwriters upon demand for all reasonable
out-of-pocket expenses (including the fees and disbursements of counsel
for the Underwriters) that shall have been incurred by the Underwriters
in connection with the proposed purchase and sale of Shares, or (ii)
notwithstanding any provision of this Agreement to the contrary, if the
sale of the Shares provided for herein is not consummated or this
Agreement is terminated for any reason other than the reasons set forth
set in clause (B) (i) of this Section 5(m), the Company shall not pay
any out-of-pocket expenses (including the fees and disbursements of
counsel for the Underwriters) that shall have been incurred by the
Underwriters in connection with the proposed purchase and sale of
Shares. For purposes of this Section 5(m), the reimbursable amount for
fees and disbursements of counsel for the Underwriters will be limited
to $100,000.00.
(n) it intends to use the net proceeds received by it from the
sale of the Shares being sold by it in the manner specified under the
caption "Use of Proceeds" in the Prospectus, and it will file such
reports with the Commission with respect to the application of the
proceeds therefrom as may be required in accordance with Rule 463 under
the Act;
(o) if, at the time of effectiveness of the Registration
Statement, any information shall have been omitted therefrom in reliance
upon Rule 430A, then immediately following the execution and delivery of
this Agreement, it will prepare, and file or transmit for filing with
the Commission in accordance with such Rule 430A and Rule 424(b), copies
of an amended prospectus, or, if required by such Rule 430A, a
post-effective amendment to the Registration
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Statement (including an amended prospectus), containing all information
so omitted;
(p) it will cause the Shares to be listed, subject to notice of
issuance or sale, on the NMS; it will comply with all registration,
filing and reporting requirements of the Securities Exchange Act of
1934, as amended, (the "Exchange Act") and the NMS applicable to the
Company;
(q) the Company shall obtain and deliver to you prior to the
Closing Date an agreement from each current officer and director of the
Company, and each beneficial owner of Common Stock (other than ▇▇▇▇ ▇▇▇)
prior to the date hereof a written agreement (the "Lock-up Agreements")
that for a period of 180 days from the date this Agreement becomes
effective, he or she will not, without the prior written consent of the
Representative on behalf of the Underwriters (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or indirectly,
any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, or (2) enter into any swap
or other agreement that transfers, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise;
provided, however, that this clause shall not apply to the transactions
expressly contemplated hereby involving the Shares or the warrants to be
provided under the Warrant Agreement (the "Warrants") or to transfers of
Common Stock to partnerships, limited liability companies, trusts or
similar entities organized for the exclusive benefit of family members
of the transferor for financial and estate planning purposes so long as
any transferee that receives Common Stock as a result of such transfer
shall agree upon such transfer to be bound by the terms of this
paragraph and shall be capable of being so bound; and
(r) it will use its reasonable commercial efforts to do and
perform all things required to be done and performed under this
Agreement by it prior to or after the Closing Date or any Option Closing
Date, as the case may be, and to satisfy all conditions precedent to the
delivery of the Shares.
6. Representations and Warranties.
(a) the Company represents and warrants to each Underwriter as
of the date hereof, the Closing Date and each Option Closing Date that:
(i) the Company has not received from the Commission any
order preventing or suspending the use of any Preliminary
Prospectus relating to the proposed offering of the Shares nor
instituted or threatened any proceedings for that purpose. The
Registration Statement, on the date it became or becomes
effective, any 462(b) Registration Statement, on the date it
became or becomes effective, each Preliminary Prospectus, on the
date of the filing thereof with the Commission, and the
Prospectus and any amendment or supplement thereto, on the date
of filing thereof with the Commission (or if not filed, on the
date provided by the Company to the Underwriters in connection
with the offering and sale of the Shares) and at the Closing
Date and each Option Closing Date conformed or will conform in
all material respects with the requirements of the Act and the
rules and regulations promulgated thereunder ("Rules
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and Regulations"); the Registration Statement, on the date it
became or becomes effective, and any 462(b) Registration
Statement, on the date it became or becomes effective, did not
or will not contain an untrue statement of material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; each
Preliminary Prospectus, on the date of the filing thereof with
the Commission, and the Prospectus and any amendment or
supplement thereto, on the date of filing thereof with the
Commission (or if not filed, on the date provided by the Company
to the Underwriters in connection with the offering and sale of
the Shares) and at the Closing Date and each Option Closing Date
did not and will not include an untrue statement of material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading;
the foregoing shall not apply to statements in or omissions from
the Registration Statement and the Prospectus made or omitted in
reliance upon, and in conformity with, information relating to
the Underwriters furnished in writing to the Company by or on
behalf of the Underwriters with your consent expressly for use
therein; the Company and the Selling Stockholders hereby
acknowledge for all purposes under this Agreement that (A) the
statements set forth under the caption "Underwriting" in the
Prospectus and (B) the stabilization legend on the inside cover
of the Prospectus constitute the only written information
furnished to the Company by or on behalf of the Underwriters for
use in the preparation of the Registration Statement or the
Prospectus or any amendment or supplement thereto;
(ii) the Company has been duly incorporated and is a validly
existing corporation in good standing under the laws of
Delaware, with full corporate power and authority to own or
lease its properties and assets and to conduct its business as
described in the Registration Statement and the Prospectus, is
duly registered as an insurance holding company under the laws
of California, and is duly qualified to do business in each
jurisdiction in which it owns or leases real property or in
which the conduct of its business or the ownership or leasing of
property requires such qualification, except where the failure
to be so qualified, either individually or in the aggregate,
would not have a material adverse effect on the condition
(financial or otherwise), business, assets, prospects, net worth
or results of operations of the Company taken as a whole (a
"Material Adverse Effect");
(iii) the Company has no subsidiaries other than Financial
Pacific Insurance Agency ("FPIA"), Financial Pacific Insurance
Company ("FPIC")and Financial Pacific Technology, Inc., each a
corporation organized and operating under the laws of
California; all issued and outstanding shares of capital stock
or other equity interest of each subsidiary of the Company have
been duly authorized and validly issued and are fully paid and
nonassessable, and were not issued in violation of or subject to
any preemptive right, or other rights to subscribe for or
purchase shares or other equity interest and are owned by the
Company free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest.
(iv) the capitalization of the Company is, and upon
consummation of the transactions contemplated hereby and by the
Prospectus will be, as set forth in the Registration Statement
and the Prospectus under the caption "Capitalization"; all of
the outstanding shares of capital stock of the Company
(including the shares to be sold by
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the Selling Stockholders hereunder) have been duly authorized
and are validly issued, are fully paid and non-assessable and
conform to the description thereof in the Registration Statement
and the Prospectus and were not issued in violation of any
preemptive rights or other rights to subscribe for or purchase
securities; and, except as set forth in the Registration
Statement and the Prospectus with respect to 4,400 shares of
Series A Preferred Stock and the warrants to purchase an
aggregate of 747,216 shares of the Common Stock described under
the Caption "Description of Capital Stock" and the options to
purchase 82,819 shares of the Common Stock under the Company's
1993 Stock Incentive Plan, and except for the Warrants, no
options, warrants or other rights to purchase from the Company,
agreements or other obligations of the Company to issue or other
rights to convert any obligation into, or exchange any
securities for, shares of capital stock of or ownership
interests in the Company are outstanding; the description of the
Company's 1993 Stock Incentive Plan and the options or other
rights granted and exercised thereunder, as set forth in the
Registration Statement and the Prospectus, accurately and fairly
presents the information required to be shown under the Act with
respect to such options and rights;
(v) subsequent to the respective dates as of which
information is given in the Registration Statement and
Prospectus, and except as described therein, (A) the Company has
not incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions not in the
ordinary course of business, (B) the Company has not purchased
any of its outstanding capital stock or declared, paid or
otherwise made any dividend or distribution of any kind on its
capital stock or otherwise and (C) there has not been any
material adverse change in the Company's condition (financial or
otherwise), business, affairs, prospects or results of
operations or any material change in the Company's capital
stock, short-term debt or long-term debt;
(vi) the Company Shares have been duly and validly
authorized and, when issued, delivered and paid for pursuant to
this Agreement, will be validly issued, fully paid and
nonassessable, and will conform to the description thereof
contained in the Prospectus;
(vii) this Agreement has been duly authorized, executed and
delivered by the Company and is a legal, valid and binding
agreement of the Company enforceable in accordance with its
terms, except as enforceability of the same may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and by
general equity principles;
(viii) the Company is not in violation of its Restated
Certificate of Incorporation or By-laws; the Company is not in
violation of or in breach of or in default in (nor has any event
occurred that with notice or lapse of time, or both, would be a
breach of or a default in) the performance of any obligation,
agreement or condition contained in any agreement, lease,
contract, permit, license, franchise agreement, mortgage, loan
agreement, debenture, note, deed of trust, bond, indenture or
other evidence of indebtedness or any other instrument or
obligation (collectively, "Obligations or Instruments") to which
the Company is a party or by which the Company or any of its
properties or assets is bound or affected (except for such
breach or default as would not have a Material Adverse Effect);
the Company is not in violation
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of any statute, judgment, decree, order, rule or regulation
(collectively, "Laws") applicable to the Company or any of its
properties or assets that, alone, or together with other
violations of Laws would result in a Material Adverse Effect;
and to the best knowledge of the Company, no other party under
any contract or other agreement to which the Company is a party
is in material default thereunder except for such defaults as
would not individually or in the aggregate result in a Material
Adverse Effect;
(ix) the execution, delivery and performance of this
Agreement, the delivery of the Shares by the Company and the
Selling Stockholders pursuant to this Agreement, and the
consummation of the transactions contemplated hereby and thereby
will not, alone or upon notice or the passage of time or both,
(A) require any consent, approval, authorization or other order
of any court, regulatory body, administrative agency or other
governmental body or third party, except such consents or
approvals as have been obtained or waived or which would not
result in a Material Adverse Effect (and except in the case of
the Shares such as may be required under the Act and the
securities or Blue Sky laws of the various states or by the
NASD), and except those relating to the acquisition of 10% or
more of the aggregate number of shares of the Common Stock to be
outstanding upon the consummation of the transactions
contemplated by this Agreement by any person or affiliated
persons (other than the purchase and sale of the Shares by the
Underwriters pursuant to this Agreement), (B) except as
described in the Prospectus, result in the creation or
imposition of any lien, charge or encumbrance upon any of the
properties or assets of the Company pursuant to the terms and
provisions of any Obligation or Instrument, (C) conflict with or
constitute a breach or default under any Obligation or
Instrument to which the Company is a party or by which the
Company or any of its properties or assets is bound, (except for
such creation, conflict, breach or default as would not have a
Material Adverse Effect or would not interfere with the
consummation of the transactions contemplated by this
Agreement), or (D) assuming compliance with the Act and all
applicable state securities or Blue Sky laws, violate or
conflict with any Laws applicable to the Company or its
subsidiary or any of their respective properties or assets taken
as a whole (except for such violation or conflict as could not
have a Material Adverse Effect or would not interfere with the
consummation of the transactions contemplated by this
Agreement); no action, suit or proceeding before any court or
arbitrator or any governmental body, agency or official
(domestic or foreign) is pending against or, to the knowledge of
the Company, threatened against the Company, that, if adversely
determined, could reasonably be expected to in any manner
invalidate this Agreement or the Warrant Agreement;
(x) except as set forth in the Prospectus, there is no
action, suit, proceeding, inquiry or investigation, governmental
or otherwise before any court, arbitrator or governmental agency
or body (collectively, "Proceedings") pending to which the
Company or its subsidiary is a party or to which any of their
respective properties or assets are subject, that, if determined
adversely to the Company or its subsidiary, as the case may be,
would result in a Material Adverse Effect, or that would
materially and adversely affect the properties or assets
thereof, or that seeks to restrain, enjoin, prevent the
consummation of or otherwise challenge the issuance or sale of
any of the Shares to be sold hereunder or the consummation of
the transactions contemplated hereunder, or under the Warrant
Agreement and, to the best knowledge of the Company, no such
Proceedings are threatened or contemplated; and (except for such
contracts, documents
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or agreements for which confidential treatment has been granted
by the Commission in accordance with Rule 406 of the Rules and
Regulations) there is no contract, document, agreement or
transaction to which the Company or its subsidiary is a party,
or that involved or involves the Company, its subsidiary or any
of their properties or assets that are required to be described
in or filed as exhibits to the Registration Statement or the
Prospectus by the Act or the Rules and Regulations that have not
been so described or filed; no action has been taken with
respect to the Company, and, to the best knowledge of the
Company, no statute, Rule or regulation or order has been
enacted, adopted or issued by any governmental agency that
suspends the effectiveness of the Registration Statement,
prevents or suspends the use of any Preliminary Prospectus or
the Prospectus, or suspends the sale of the Shares in any
jurisdiction referred to in Section 5(g) hereof; no injunction,
restraining order or order of any nature by a federal or state
court of competent jurisdiction or any insurance regulatory
agency has been issued with respect to the Company that might
prevent the issuance of the Shares, suspend the effectiveness of
the Registration Statement, prevent or suspend the use of any
Preliminary Prospectus or the Prospectus or suspend the sale of
the Shares in any jurisdiction referred to in Section 5(g)
hereof; and every request of the Commission, or any securities
authority or agency of any jurisdiction, for additional
information (to be included in the Registration Statement or the
Prospectus or otherwise) has been complied with in all material
respects;
(xi) the Company and each of its subsidiaries is duly
licensed or authorized as an insurer or insurance agency or
third-party administrator in each jurisdiction where it is
required to be so licensed or authorized to conduct its business
as described in the Prospectus, or is subject to no material
liability or disability by reason of the failure to be so
licensed or authorized in any such jurisdiction; the Company has
made all required filings under applicable insurance holding
company statutes; each subsidiary of the Company is in
compliance with the requirements of the insurance laws and
regulations of California and the insurance laws and regulations
of other jurisdictions which are applicable to such subsidiary,
and has filed all notices, reports, documents or other
information required to be filed thereunder, except where the
failure to so comply or file would not have a Material Adverse
Effect; the Company and each of its subsidiaries have all other
necessary authorizations, approvals, orders, consents,
certificates, permits, registrations or qualifications of and
from all insurance regulatory authorities to conduct its
businesses as described in the Prospectus, or are subject to no
material liability or disability by reason of the failure to
have such authorizations, approvals, orders, consents, licenses,
certificates, permits, registrations or qualifications; and none
of the Company or any of its subsidiaries has received any
notification from any insurance regulatory authority to the
effect that any additional authorization, approval, order,
consent, license, certificate, permit, registration or
qualification from such insurance regulatory authority is needed
to be obtained by any of the Company or its subsidiaries in any
case where it could be reasonably expected that (x) the Company
or its subsidiaries would in fact be required either to obtain
any such additional authorization, approval, order, consent,
license, certificate, permit, registration or qualification, or
cease or otherwise limit writing certain business and (y) the
failure to obtain such authorization, approval, order, consent,
license, certificate, permit, registration or qualification or
the limiting of such business would have a Material Adverse
Effect on the business, financial position or results of
operations of the Company and its subsidiaries;
(xii) the Company is not aware that any of its pending
applications for licenses or permits to act as an insurer or
insurance agent or third-party administrator, or any such
pending application of a subsidiary, is not being processed in
due course;
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(xiii) except as disclosed in the Prospectus, to the best
knowledge of the Company, no change in any insurance laws, rules
or regulations in California has been introduced that would
reasonably be expected to be adopted and if adopted, would
reasonably be expected to have, individually or in the aggregate
with all such changes, a Material Adverse Effect;
(xiv) in addition to the above, the Company and its
subsidiaries believe they have such permits, licenses,
franchises and authorizations of governmental or regulatory
authorities or third parties ("Permits"), including, without
limitation, under any applicable Environmental Laws, as are
necessary to own, lease and operate its properties and assets
and to conduct its businesses, except where the failure to have
any such Permit would not have a Material Adverse Effect; the
Company has fulfilled and performed all of its material
conditions or obligations with respect to such Permits, and no
event has occurred that allows, or after notice or lapse of
time, or both would allow, revocation or termination thereof or
result in any other material impairment of the rights of the
holder of any such Permit;
(xv) all reinsurance treaties and arrangements to which the
Company or any of its subsidiaries is a party are in full force
and effect and none of the Company or its subsidiaries is in
violation of or in default in the performance, observance or
fulfillment of, any material obligation, agreement, covenant or
condition contained therein; neither the Company nor any of its
subsidiaries has received notice from any of the other parties
to such treaties, contracts or agreements that such other party
intends not to perform such treaty, and the Company and its
subsidiaries, to their best knowledge, have no reason to believe
that any of the other parties to such treaties or arrangements
will be unable to perform any such treaties or arrangements
except to the extent adequately and properly reserved for in the
consolidated financial statements of the Company and its
subsidiaries included in the Prospectus.
(xvi) the Company has not violated any foreign, federal, state
or local law or regulation relating to the protection of human
health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental
Laws"), nor any foreign, Federal, state or local law relating to
discrimination in the hiring, promotion or pay of employees nor
any applicable foreign, Federal or state wages and hours laws,
nor any provisions of the Employee Retirement Income Security
Act of 1974, as amended or the rules and regulations promulgated
thereunder or similar foreign laws, that, in each case or in the
aggregate, would have in a Material Adverse Effect; none of the
property leased by the Company is contaminated with any waste or
hazardous substances, and, to the extent that the Company
disposes in the ordinary course of its business products that
may be classified as or contain "hazardous substances," the
disposal of such products (A) is in material compliance with all
applicable laws as of the date hereof and (B) has not and will
not result in a Material
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Adverse Effect;
(xvii) the Company is not, and does not intend to conduct
its business in a manner in which it would become, an
"investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of
1940, as amended (the "Investment Company Act");
(xviii) except as otherwise set forth in the Prospectus, the
Company has good and marketable title, free and clear of all
liens, claims, encumbrances and restrictions (except liens for
taxes not yet due and payable) to all property and assets
described in the Registration Statement as being owned by it;
all leases to which the Company is a party are subsisting, valid
and binding and no default of the Company or, to the best
knowledge of the Company any other person has occurred or is
continuing thereunder that might result in a Material Adverse
Effect; and the Company enjoys peaceful and undisturbed
possession under all such leases to which the Company is a party
as lessee with such exceptions as do not materially interfere
with the use made thereof by the Company;
(xix) the Company believes it maintains adequate insurance
for the conduct of its business with reputable third-party
insurers in accordance with prudent practices in its industry,
and the Company has no reason to believe that it will not be
able to renew its existing coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as
may be necessary to continue its business at a comparable cost;
(xx) to the best of the Company's knowledge, KPMG Peat
Marwick LLP, the accounting firm that has certified or reviewed,
or shall certify or review, the financial statements and
supporting schedules filed or to be filed with the Commission as
part of the Registration Statement and the Prospectus, is an
independent public accounting firm with respect to the Company
as required by the Act;
(xxi) the consolidated financial statements of the Company,
together with related notes and schedules of the Company
included in the Registration Statement and the Prospectus, are
accurate and present fairly, in all material respects, the
financial position, results of operations and cash flows of the
Company at the indicated dates and for the indicated periods;
such financial statements of have been prepared in accordance
with generally accepted accounting principles ("GAAP")
consistently applied throughout the periods involved, except
where such summary and selected financial and operating data
have been prepared or include data prepared in accordance with
statutory accounting principles and the Registration Statement
specifically indicates that this is the case, and all
adjustments necessary for a fair presentation of results for
such periods have been made, and any unaudited financial
statements have been prepared on a basis substantially
consistent with that of the audited operating financial
statements included in the Registration Statement and the
Prospectus; and the summary and selected financial and operating
data included in the Registration Statement and the Prospectus
present fairly, in all material respects, the information shown
therein and have been compiled on a basis consistent with the
audited and any unaudited financial statements, as the case may
be, included therein;
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(xxii) the statutory financial statements of the Company and
its subsidiaries from which certain ratios and other statistical
data filed as part of the Registration Statement or included or
incorporated in the Prospectus have been derived: (i) have for
each relevant period been prepared in conformity with statutory
accounting practices required or permitted by the National
Association of Insurance Commissioners and by the California
Department of Insurance, and such statutory accounting practices
have been applied on a consistent basis throughout the periods
involved, except as may otherwise be indicated therein or in the
notes thereto; and (ii) present fairly the statutory financial
position of the Company and its subsidiaries as at the dates
thereof, and the statutory basis results of operations of the
Company for the periods covered thereby;
(xxiii) FPIC is currently rated A- (excellent) by A.M. Best;
the Company is not aware of any action by A.M. Best that could
lead to a downward change in the rating of FPIC, nor is it aware
of any circumstance that could be the basis for such downward
change;
(xxiv) except for the registration rights of the Selling
Stockholders which have been exercised, all rights of security
holders of the Company to require registration of shares of
Common Stock (a "Registration Right") or any other security of
the Company because of the filing of the Registration Statement
or consummation of the transactions contemplated by this
Agreement or to receive notification of such filing or
consummation have been duly waived with respect to the public
offering contemplated hereby. There are no preemptive rights
with respect to the offering being made by the Prospectus;
(xxv) except as disclosed in the Registration Statement and
the Prospectus, no labor dispute with the employees of the
Company exists, or to the best knowledge of the Company, is
imminent, and the Company has not received notice of any
existing or imminent labor disturbance by the employees of any
of its principle suppliers, customers, manufacturers or
contractors that could result in any Material Adverse Effect;
(xxvi) to the best of the Company's knowledge, the Company
has filed or caused to be filed, or has properly filed
extensions for, all foreign, federal, state and local income,
value added and franchise tax returns and has paid all taxes and
assessments shown thereon as due, except for such taxes and
assessments as are disclosed or adequately reserved against and
that are being contested in good faith by appropriate
proceedings, promptly instituted and diligently conducted;
(xxvii) the Company does not own or require any patents in
connection with the business it now operates and the Company
owns or possesses the licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names
(collectively, "Proprietary Rights") currently employed by it in
connection with the business it now operates except where the
failure to so own such Proprietary Rights would not have a
Material Adverse Effect; and the Company has not received any
notice and is not otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any
Proprietary Rights that, if the subject of any unfavorable
decision, ruling or finding, in the aggregate, would result in a
Material Adverse Effect;
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(xxviii) the Company is conducting and intends to conduct
its business so as to comply in all material respects with
applicable federal, state, local and foreign government Laws,
except where the failure to comply would not have a Material
Adverse Effect; and except as set forth in the Registration
Statement and the Prospectus, the Company is not charged with
or, to the best knowledge of the Company, under investigation
with respect to, any material violation of any such Laws;
(xxix) the Company has not taken and will not take, directly
or indirectly, any action designed to or that might reasonably
be expected to cause or result, under the Exchange Act or
otherwise, in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Shares;
(xxx) neither the Company nor, to the best knowledge of the
Company, any employee or agent of the Company has made any
payment of funds of the Company or received or retained any
funds in violation of any law, rule or regulation (including,
without limitation, the Foreign Corrupt Practices Act) or of a
character required to be disclosed in the Prospectus; the
Company has not, at any time during the past five years, (1)
made any unlawful contributions to any candidate for any
political office, or failed fully to disclose any contribution
in violation of law, or (2) made any unlawful payment to state,
federal or foreign government officer or officers, or other
person charged with similar public or quasi-public duty;
(xxxi) the Company maintains a system of internal accounting
controls which it believes is sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only
in accordance with management's general or specific
authorization, and (iv) the recorded accountability for
inventory is compared with the existing inventory at reasonable
intervals and appropriate action is taken with respect to any
differences;
(b) In addition, the Selling Stockholders, severally and not
jointly, represent and warrant to and agree with each Underwriter and
the Company that:
(i) each such Selling Stockholder now has and on the Closing
Date will have valid marketable title to the Selling Stockholder
Shares to be sold by him or her, free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable
interest other than pursuant to this Agreement; and upon
delivery of such Shares hereunder and payment of the Purchase
Price as herein contemplated, each of the Underwriters will
obtain valid marketable title to the Shares purchased by it from
such Selling Stockholder, free and clear of any pledge, lien,
security interest pertaining to such Selling Stockholder or such
Selling Stockholder's property, encumbrance, claim or equitable
interest, including any liability for estate or inheritance
taxes, or any liability to or claims of any creditor, devisee,
legatee or beneficiary of such Selling Stockholders;
(ii) each such Selling Stockholder has duly executed and
delivered, in the form heretofore furnished to the
Representative, an irrevocable Power of Attorney and Custody
Agreement appointing ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇.
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▇▇▇▇▇▇▇, or any of them, as attorney-in-fact (the "Attorney")
with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as custodian (the "Custodian"); the Power
of Attorney and Custody Agreement constitutes a valid and
binding agreement on the part of each Selling Stockholder,
enforceable in accordance with its terms, except as the
enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by
general equitable principles; and the Attorney, acting alone, is
authorized to execute and deliver this Agreement and the
certificate referred to in Section 8(l) hereof on behalf of such
Selling Stockholder, to determine the Purchase Price to be paid
by the several Underwriters to such Selling Stockholder as
provided in Section 3 hereof, and to duly endorse (in blank or
otherwise) the certificate or certificates representing such
Shares or a stock power or powers with respect thereto, to
accept payment therefor, and otherwise to act on behalf of such
Selling Stockholder in connection with this Agreement;
(iii) all consents, approvals, authorizations and orders
required for the execution and delivery by each Selling
Stockholder of the Power of Attorney and Custody Agreement, the
execution and delivery by or on behalf of such Selling
Stockholder of this Agreement and the sale and delivery of the
Selling Stockholder Shares to be sold by such Selling
Stockholder under this Agreement (other than, at the time of the
execution hereof (if the Registration Statement has not yet been
declared effective by the Commission), the issuance of the order
of the Commission declaring the Registration Statement effective
and such consents, approvals, authorizations or orders as may be
necessary under state or other securities or Blue Sky laws) have
been obtained and are in full force and effect; and such Selling
Stockholder has full legal right, power and authority to enter
into and perform its obligations under this Agreement and such
Power of Attorney and Custody Agreement, and to sell, assign,
transfer and deliver the Shares to be sold by such Selling
Stockholder under this Agreement;
(iv) for a period of 180 days from the date this Agreement
becomes effective, no Selling Stockholder will, without the
prior written consent of EVEREN Securities, Inc. on behalf of
the Underwriters (1) offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock
(except for such transactions contemplated in the Registration
Statement), or (2) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by
delivery of Common Stock or such other securities, in cash or
otherwise; provided, however, that this clause shall not apply
to the transactions expressly contemplated hereby involving the
Shares or to transfers of Common Stock to partnerships, limited
liability companies, trusts or similar entities organized for
the exclusive benefit of family members of a Selling Stockholder
for financial and estate planning purposes so long as any
transferee that receives Common Stock as a result of such
transfer shall agree upon such transfer to be bound by the terms
of this paragraph and shall be capable of being so bound;
(v) the performance of this Agreement and the consummation
of the
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transactions herein contemplated will not result in a breach or
violation of any of the terms and provisions of or constitute a
default under any bond, debenture, note or other evidence of
indebtedness, or under any lease, contract, indenture, mortgage,
deed of trust, loan agreement, joint venture or other agreement
or instrument to which any Selling Stockholder is a party or by
which any Selling Stockholder, may be bound or, to the best of
each Selling Stockholder's knowledge, result in any violation of
any law, order, rule, regulation, writ, injunction, judgment or
decree of any court, government or governmental agency or body,
domestic or foreign, having jurisdiction over such Selling
Stockholder;
(vi) no Selling Stockholder has taken or will take, directly
or indirectly, any action designed to or that might reasonably
be expected to cause or result in stabilization or manipulation
of the price of the Common Stock to facilitate the sale or
resale of the Shares;
(vii) other than as permitted by the Act, no Selling
Stockholder has distributed or will distribute any prospectus or
other offering material in connection with the offering and sale
of the Shares;
(viii) each such Selling Stockholder has reviewed the
Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus) and the Registration Statement,
and the information regarding such Selling Stockholder set forth
therein under the caption "Principal and Selling Stockholders"
is complete and accurate;
(ix) each Selling Stockholder will review the Prospectus and
will comply with all agreements and satisfy all conditions to be
complied with or satisfied by the Selling Stockholders pursuant
to this Agreement on or prior to the Closing Date, and will
advise the Representative prior to the Closing Date if any
statement to be made on behalf of such Selling Stockholder in
the certificate contemplated by Section 8(l) would be inaccurate
if made as of the Closing Date;
(x) no Selling Stockholder has, unless waived prior to the
date hereof, any preemptive right, co-sale right or right of
first refusal or other similar right to purchase any of the
Company Shares; such Selling Stockholder does not have, or has
waived prior to the date hereof, any registration right or other
similar right to participate in the offering made by the
Prospectus, other than such rights of participation as have been
satisfied by the participation of such Selling Stockholder in
the transactions to which this Agreement relates in accordance
with the terms of this Agreement; and such Selling Stockholder
does not own any warrants, options or similar rights to acquire,
and does not have any right or arrangement to acquire, any
capital stock, rights, warrants, options or other securities
from the Company, other than those described in the Registration
Statement and the Prospectus.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each of
the Underwriters and each person, if any, who controls each of the
Underwriters within the meaning of Section 15 of the Act or Section 20
of the Exchange Act (the "indemnified parties") from and against any
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and all losses, claims, damages, liabilities and judgments caused by, arising
out of, related to or based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (as amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto), including the information deemed to be part of the
Registration Statement at the time of effectiveness pursuant to Rule 430A, if
applicable, or the Prospectus or any Preliminary Prospectus or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company shall not be liable in any such case to the
extent that such losses, claims, damages, liabilities or judgments are caused by
an untrue statement or omission made or omitted in reliance upon written
information furnished to the Company by or on behalf of the Underwriters for use
in the preparation of the Registration Statement or the Prospectus or any
amendment or supplement thereto. In addition to its other obligations under this
Section 7(a), the Company agrees that, as an interim measure during the pendency
of any claim, action, investigation, inquiry or other proceeding arising out of
or based upon any statement or omission, or any alleged statement or omission,
described in this Section 7(a), or any inaccuracy in the representations and
warranties of the Company herein or the failure to perform its obligations
hereunder, the Company will pay each Underwriter on a quarterly basis for all
reasonable legal or other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Company's obligation to indemnify hereunder or to pay each
Underwriter for such expenses and the possibility that such payments might later
be held to have been improper by a court of competent jurisdiction. To the
extent that any such interim payment is so held to have been improper, the
Underwriters shall promptly return such payment to the Company. Any such interim
reimbursement payments which are not made to the Underwriters within thirty (30)
days of a request for reimbursement shall bear interest at the prime rate (or
other commercial lending rate for borrowers of the highest credit standing)
listed from time to time in The Wall Street Journal which represents the base
rate on corporate loans posted by a substantial majority of the nation's thirty
(30) largest banks (the "Prime Rate"), from the date of such request.
(b) The Selling Stockholders agree, severally and not jointly, to
indemnify and hold harmless each of the Underwriters and each person, if any,
who controls each of the Underwriters within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act (the "indemnified parties") from and
against any and all losses, claims, damages, liabilities and judgments caused
by, arising out of, related to or based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto), including the information deemed to be part of the
Registration Statement at the time of effectiveness pursuant to Rule 430A, if
applicable, or the Prospectus or any Preliminary Prospectus or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to such Underwriter by a Selling
Stockholder, directly or through such Selling Stockholder's representatives,
specifically for use in the preparation thereof; provided, however, that the
Selling Stockholders shall not be liable in any such case to the extent that
such losses, claims, damages, liabilities or judgments are caused by an untrue
statement or omission made or omitted in reliance
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upon written information furnished to the Underwriters for use in the
preparation of the Registration Statement or the Prospectus or any amendment or
supplement thereto. In addition to any other obligations of the Selling
Stockholders under this Section 7(b), the Selling Stockholders agree that, as an
interim measure during the pendency of any claim, action, investigation, inquiry
or other proceeding arising out of or based upon any statement or omission, or
any alleged statement or omission, described in this Section 7(b), or any
inaccuracy in the representations and warranties of the Selling Stockholders
herein or the failure to perform any of their obligations hereunder, the Selling
Stockholders will, severally and not jointly, pay each Underwriter on a
quarterly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the Selling
Stockholders' obligation to indemnify hereunder or to pay each Underwriter for
such expenses and the possibility that such payments might later be held to have
been improper by a court of competent jurisdiction. To the extent that any such
interim payment is so held to have been improper, the Underwriters shall
promptly return such payment to the Selling Stockholders. Any such interim
reimbursement payments which are not made to the Underwriters within thirty (30)
days of a request for reimbursement shall bear interest at the Prime Rate from
the date of such request.
(c) In case any action shall be brought against any of the indemnified
parties, based upon any Preliminary Prospectus, the Registration Statement or
the Prospectus or any amendment or supplement thereto and with respect to which
indemnity may be sought against the Company and the Selling Stockholders, such
indemnified parties shall promptly notify the Company (and the Selling
Stockholders, care of the Company) in writing (but the failure so to notify
shall not relieve the Company or the Selling Stockholders of any liability that
they may otherwise have to such indemnified parties under this Section 7
(although the Company's and the Selling Stockholder's liability to an
indemnified party may be reduced on a monetary basis to the extent, but only to
the extent, they have been prejudiced by such failure on the part of such
indemnified party), and the Company and the Selling Stockholders shall promptly
assume the defense thereof, including the employment of counsel satisfactory to
such indemnified party and payment of all fees and expenses. The indemnified
parties shall each have the right to employ separate counsel in any such action
and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such indemnified parties unless (i) the
employment of such counsel shall have been specifically authorized by the
Company, (ii) the Company or the Selling Stockholder, as the case may be, shall
have failed to assume promptly the defense or to employ counsel reasonably
satisfactory to such indemnified party or (iii) the named parties to any such
action (including any impleaded parties) include both the indemnified parties
and the Company or the Selling Stockholders, and an indemnified party shall have
been advised by counsel that there may be one or more legal defenses available
to one or more of the indemnified parties that are different from or additional
to those available to the Company or the Selling Stockholders (in which case the
Company and the Selling Stockholders shall not have the right to assume the
defense of such action on behalf of such indemnified party, it being understood,
however, that the Company and the Selling Stockholders shall not, in connection
with any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for the indemnified
parties, which firm shall be designated in writing by the Representative, and
that all
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such fees and expenses shall be reimbursed promptly as they are incurred). The
Company and the Selling Stockholders shall not be liable for any settlement of
any such action effected without their written consent, which consent shall not
be unreasonably withheld, but if settled with the written consent of the Company
and the Selling Stockholders, the Company and the Selling Stockholders agree to
indemnify and hold harmless the indemnified parties from and against any and all
loss or liability by reason of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional and complete release in writing of such indemnified party from any
and all liability on claims that are the subject matter of such proceeding,
which such settlement shall be in form and substance satisfactory to the
indemnified party. The indemnification provided in this Section 7 will be in
addition to any liability which the Company and the Selling Stockholders may
otherwise have.
(d) The Underwriters agree, severally and not jointly, to indemnify and
hold harmless each Selling Stockholder, the Company, its directors, its officers
who sign the Registration Statement and any person controlling the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
(the "indemnified parties"), to the same extent as the foregoing indemnity from
the Company and the Selling Stockholder to the Underwriters but only with
reference to information stated in or omitted from the Registration Statement,
the Prospectus or any Preliminary Prospectus in reliance upon, and in conformity
with, information relating to the Underwriters furnished in writing to the
Company by or on behalf of the Underwriters with your consent expressly for use
therein. In case any action shall be brought against the Company, the Selling
Stockholders, any of the Company's directors, any such officers or any person
controlling the Company based on the Registration Statement, the Prospectus or
any Preliminary Prospectus and in respect of which indemnity may be sought
against the Underwriters, the Underwriters shall have the rights and duties
given to the Company and the Selling Stockholders by Section 7(c) hereof (except
that if the Company and the Selling Stockholders shall have assumed the defense
thereof, such Underwriter shall not be required to do so, but may employ
separate counsel therein and participate in the defense thereof but the fees and
expenses of such counsel shall be at the expense of such Underwriter), and each
Selling Stockholder, the Company, its directors, any such officers and any
person controlling the Company shall have the rights and duties given to the
"indemnified parties" by Section 7(c) hereof. In addition to their other
obligations under this Section 7(d), the Underwriters severally and not jointly
agree that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding described in Section 7(d) hereof,
they will reimburse the Company and the Selling Stockholders on a quarterly
basis for all reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Underwriters' obligation to reimburse
the Company and the Selling Stockholders for such expenses and the possibility
that such payments might later be held to have been improper by a court of
competent jurisdiction. To the extent that any such interim reimbursement
payment is so held to have been improper, the Company and the Selling
Stockholders shall promptly return such payment to the Underwriters together
with interest, compounded daily, determined on the basis of the Prime Rate. Any
such interim reimbursement payments which are not made to the Company or the
Selling Stockholders
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within thirty (30) days of a request for reimbursement shall bear interest at
the Prime Rate from the date of such request.
(e) If the indemnification provided for in this Section 7 is for any
reason unavailable to an indemnified party or insufficient to hold such
indemnified party harmless in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other from the offering
of the Securities or (ii) if the allocation provided in clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company and the Selling Stockholders on the one hand and the
Underwriters on the other in connection with the statements or omissions or
alleged statements or omissions that resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering and
sale of the Shares (before deducting expenses) received by the Company and the
Selling Stockholders on the one hand, and the total underwriting discounts and
commissions received by the Underwriters on the other, bears to the total price
to the public of the Shares, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault of the Company, the Selling
Stockholders and the Underwriters shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or the alleged omission to state a material fact relates to
information supplied by the Company, the Selling Stockholders or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholders and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 7(e)
were determined by pro rata allocation (even if the Underwriters, the Company or
the Selling Stockholders were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities or judgments referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise paid or been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission, and no Selling Stockholder
shall be required to contribute, more in the aggregate than the total selling
price of his or her shares (net of all amounts reimbursed, for any reason, by
the Company or insurance policies paid for or held by the Company). No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations in this Section
7(e) to contribute are several in proportion to the respective amount of Shares
purchased hereunder by
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each Underwriter and not joint.
(f) It is agreed that any controversy arising out of the
operation of the interim payment arrangements set forth in Sections
7(a), 7(b) or 7(d) hereof, including the amounts of any requested
payments and method of determining such amounts, shall be settled by
arbitration conducted under the provisions of the Constitution and Rules
of the Board of Governors of the New York Stock Exchange, Inc. or
pursuant to the Code of Arbitration Procedure of the National
Association of Securities Dealers, Inc. Any such arbitration shall be
commenced by service of a written demand for arbitration or written
notice of intention to arbitrate, therein electing the arbitration
tribunal. In the event the party demanding arbitration does not make
such designation of an arbitration tribunal in such demand or notice,
then the party responding to said demand or notice is authorized to do
so. Such an arbitration shall be limited to the operation of the interim
payment provisions contained in Sections 7(a), 7(b) and 7(d) hereof and
shall not resolve the ultimate propriety or enforceability of the
obligation to indemnify or pay expenses which is created by the
provisions of such Sections 7(a), 7(b) and 7(d) hereof.
(g) The parties to this Agreement hereby acknowledge that they
are sophisticated business persons who were represented by counsel
during the negotiations regarding the provisions hereof including,
without limitation, the provisions of this Section 7, and are fully
informed regarding said provisions. They further acknowledge that the
provisions of this Section 7 fairly allocate the risks in light of the
ability of the parties to investigate the Company and its business in
order to assure that adequate disclosure is made in the Registration
Statement and Prospectus as required by the Act and the Exchange Act.
The parties are advised that federal or state public policy, as
interpreted by the courts in certain jurisdictions, may be contrary to
certain of the provisions of this Section 7, and the parties hereto
hereby expressly waive and relinquish any right or ability to assert
such public policy as a defense to a claim under this Section 7 and
further agree not to attempt to assert any such defense.
(h) Notwithstanding any other provision herein to the contrary,
the liability of each Selling Stockholder under this Agreement,
including under the representations, warranties and agreements contained
herein and under the indemnity and contribution agreements contained in
the provisions of this Section 7, shall be limited to an amount equal to
the initial public offering price of the Shares sold by such Selling
Stockholder to the Underwriters minus the amount of the underwriting
discount paid thereon to the Underwriters by such Selling Stockholder.
8. Conditions to the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Firm Shares on the Closing
Date and the Option Shares on any Option Closing Date are subject to the
fulfillment of each of the following conditions on or prior to the Closing Date
and each Option Closing Date:
(a) All the representations and warranties of the Company and
the Selling Stockholders contained in this Agreement and in any
certificate delivered hereunder shall be true and correct on the Closing
Date and each Option Closing Date with the same force and effect as if
made on and as of the Closing Date or Option Closing Date, as
applicable. The Company and the Selling Stockholders shall not have
failed at or prior to the Closing Date or Option Closing Date, as
applicable, to perform or comply in all respects with any of the
agreements herein contained and required to be performed or complied
with by the Company at or prior to the Closing Date.
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(b) If the Registration Statement is not effective at the time
of the execution and delivery of this Agreement, the Registration
Statement shall have become effective (or, if a post-effective amendment
is required to be filed pursuant to Rule 430A under the Act, such
post-effective amendment shall have become effective) not later than
8:00 A.M., Los Angeles time, on the date of this Agreement or such later
time as you may approve in writing or, if the Registration Statement has
been declared effective prior to the execution and delivery hereof in
reliance on Rule 430A, the Prospectus shall have been filed as required
hereby, if necessary; and at the Closing Date and each applicable Option
Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued, and no proceedings for
that purpose shall have been commenced or shall be pending before or, to
the best knowledge of the Underwriters, the Company or the Selling
Stockholder, threatened by the Commission; every request for additional
information on the part of the Commission shall have been complied with
to the Underwriters' reasonable satisfaction; no stop order suspending
the sale of the Shares in any jurisdiction referred to in Section 5(g)
shall have been issued, and no proceeding for that purpose shall have
been commenced or shall be pending or threatened.
(c) The Shares shall have been qualified for sale under the Blue
Sky laws of such states as shall have been specified by the
Representative.
(d) The legality and sufficiency of the authorization, issuance
and sale or transfer and sale of the Shares hereunder, the validity and
form of the certificates representing the Shares, the execution and
delivery of this Agreement and all corporate proceedings and other legal
matters incident thereto, and the form of the Registration Statement and
the Prospectus (except financial statements) shall have been approved by
counsel for the Underwriters exercising reasonable judgment, and no
Underwriter shall have advised the Company that the Registration
Statement or the Prospectus, or any amendment or supplement thereto,
contains an untrue statement of material fact, or omits to state a fact
that in your opinion is material and is required to be stated therein or
is necessary to make the statements therein not misleading.
(e) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred any material change, or any material
development involving a prospective change, in or affecting particularly
the business or properties of the Company, whether or not arising in the
ordinary course of business, that, in the judgment of the
Representative, makes it impractical or inadvisable to proceed with the
public offering or purchase of the Shares as contemplated hereby.
(f) You shall have received the Lock-up Agreements specified in
Section 5(q) of this Agreement.
(g) You shall have received an opinion (satisfactory to you and
your counsel) dated the Closing Date or the Option Closing Date, as the
case may be, of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Company and the
Selling Stockholders, to the effect set forth on Exhibit A hereto and
incorporated herein.
(h) You shall have received an opinion (satisfactory to you and
your counsel) dated the Closing Date or the Option Closing Date, as the
case may be, of LeBoeuf, Lamb, Greene, MacRae, LLP, special counsel to
the Company with respect to matters involving insurance regulation to
the effect set forth on Exhibit B hereto and incorporated herein.
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(i) You shall have received on the Closing Date and on any later
date on which Option Shares are to be purchased, as the case may be, a
letter from KPMG Peat Marwick, LLP addressed to the Company and the
Underwriters, dated the Closing Date or such later date on which Option
Shares are to be purchased, as the case may be, confirming that they are
independent certified public accountants with respect to the Company
within the meaning of the Act and the applicable published Rules and
Regulations and based upon the procedures described in such letter
delivered to you concurrently with the execution of this Agreement
(herein called the "Original Letter"), but carried out to a date not
more than five (5) business days prior to the Closing Date or such later
date on which Option Shares are to be purchased, as the case may be, (i)
confirming, to the extent true, that the statements and conclusions set
forth in the Original Letter are accurate as of the Closing Date or such
later date on which Option Shares are to be purchased, as the case may
be, and (ii) setting forth any revisions and additions to the statements
and conclusions set forth in the Original Letter which are necessary to
reflect any changes in the facts described in the Original Letter since
the date of such letter, or to reflect the availability of more recent
financial statements, data or information. The letter shall not disclose
any change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and its
subsidiaries considered as one enterprise from that set forth in the
Registration Statement or Prospectus, which, in your sole judgment, is
material and adverse and that makes it, in your sole judgment,
impracticable or inadvisable to proceed with the public offering of the
Shares as contemplated by the Prospectus. The Original Letter from KPMG
Peat Marwick, LLP shall be addressed to or for the use of the
Underwriters in form and substance satisfactory to the Underwriters and
shall (i) represent, to the extent true, that they are independent
certified public accountants with respect to the Company within the
meaning of the Act and the applicable published Rules and Regulations,
(ii) set forth their opinion with respect to their examination of the
balance sheets of the Company as of December 31, 1997, and related
statements of operations, shareholders' equity and cash flows for the
years then ended December 31, 1997, (iii) state that KPMG Peat Marwick,
LLP has performed the procedure set out in Statement on Auditing
Standards No. 71 ("SAS 71") for a review of financial information at
March 31, 1998, and (iv) address other matters agreed upon by KPMG Peat
Marwick, LLP and you. In addition, you shall have received confirmation
from KPMG Peat Marwick, LLP that a letter addressed to the Company has
been delivered to the Company stating that, in performing their audit of
the Company's consolidated financial statements as of March 31, 1998, to
the extent they deemed necessary in determining their auditing
procedures, they considered the Company's system of internal accounting
controls and noted no matters that they considered to be material
weaknesses.
(j) You shall have received from the Company a certificate,
signed by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, in their capacities as
Chief Executive Officer and Chief Financial Officer of the Company,
respectively, addressed to the Underwriters and dated the Closing Date
or Option Closing Date, as applicable, to the effect that:
(i) such officer does not know of any Proceedings
instituted, threatened or contemplated against the Company of a
character required to be disclosed in the Prospectus that are
not so disclosed; such officer does not know of any material
contract required to be filed as an exhibit to the Registration
Statement which is not so filed;
(ii) such officer has carefully examined the Registration
Statement and the Prospectus and all amendments or supplements
thereto and, in such officer's opinion, such Registration
Statement or such amendment as of its effective date and as of
the Closing Date, and the Prospectus or such supplement as of
its date and as of the Closing Date, did not contain an untrue
statement of material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein not misleading and, in such officer's
opinion, since the effective date of the Registration
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Statement, no event has occurred or information become known
that should have been set forth in an amendment to the
Registration Statement or a supplement to the Prospectus which
has not been so set forth in such amendment or supplement;
(iii) the representations and warranties of the Company set
forth in Section 6(a) of this Agreement are true and correct as
of the date of this Agreement and as of the Closing Date or the
Option Closing Date, as the case may be, and the Company has
complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior
to such Closing Date; and
(iv) the Commission has not issued an order preventing or
suspending the use of the Prospectus or any preliminary
prospectus filed as a part of the Registration Statement or any
amendment thereto; no stop order suspending the effectiveness of
the Registration Statement has been issued; and, to the best
knowledge of the respective signers, no proceedings for that
purpose have been instituted or are pending or contemplated
under the Act. The delivery of the certificate provided for in
this subparagraph shall be and constitute a representation and
warranty of the Company as to the facts required in the
immediately foregoing clauses (iii) and (iv) of this
subparagraph to be set forth in said certificate.
(k) You shall have received a certificate, dated the Closing
Date, from each Selling Stockholder to the effect that, as of the
Closing Date, such Selling Stockholder has not been informed that:
(i) The representations and warranties made by any Selling
Stockholder herein are not true or correct in any material
respect on the Closing Date or on any later date on which Option
Shares are to be purchased, as the case may be; or that
(ii) Any Selling Stockholder has not complied with any
obligation or satisfied any condition which is required to be
performed or satisfied on the part of such Selling Stockholder
at or prior to the Closing Date or any later date on which
Option Shares are to be purchased, as the case may be.
(l) You and ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the
Underwriters, shall have received on or before the Closing Date or the
Option Closing Date, as the case may be, such further documents,
opinions, certificates and schedules or instruments relating to the
business, corporate, legal and financial affairs of the Company as you
and they shall have reasonably requested from the Company.
(m) The Company shall have executed and delivered to the
Representative the Warrant Agreement, together with certificates for the
Warrants in the form and under the terms specified therein, registered
in such names and amounts as the Representative shall direct.
9. Effective Date of Agreement, Termination and Defaults. This Agreement
shall become effective upon, and shall not be deemed delivered until, the later
of (i) execution of this Agreement and (ii) when notification of the
effectiveness of the Registration Statement has been released by the Commission.
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This Agreement may be terminated at any time prior to the Closing Date
and any exercise of the option to purchase Option Shares may be canceled at any
time prior to any Option Closing Date by the Underwriters by written notice to
the Company if any of the following has occurred: (i) since the respective dates
as of which information is given in the Registration Statement and the
Prospectus, any material adverse change or development involving a prospective
material adverse change in the condition, financial or otherwise, of the Company
or the earnings, affairs, management, or business of the Company, whether or not
arising in the ordinary course of business, that would, in the Representative's
reasonable judgment, make it impracticable to market the Shares on the terms and
in the manner contemplated in the Prospectus, (ii) any outbreak or escalation of
hostilities or other national or international calamity or crisis or change in
economic conditions or in the financial markets of the United States that, in
the Representative's reasonable judgment, is material and adverse and would, in
the Representative's judgment, make it impracticable to market the Shares on the
terms and in the manner contemplated in the Prospectus, (iii) the suspension or
material limitation of trading in securities on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq Stock Market or limitation on prices for
securities on either such exchange or the Nasdaq Stock Market, (iv) the
enactment, publication, decree or other promulgation of any federal or state
statute, regulation, Rule or order of any court or other governmental authority
that in the Representative's opinion materially and adversely affects, or will
materially and adversely affect, the business or operations of the Company, (v)
the declaration of a banking moratorium by either federal or New York or
California state authorities, (vi) the taking of any action by any Federal,
state or local government or agency in respect of its monetary or fiscal affairs
that in the Representative's reasonable opinion has a material adverse effect on
the financial markets in the United States or (vii) there shall be any change in
financial markets or in political, economic or financial conditions which, in
the reasonable opinion of the Representative, either renders it impracticable or
inadvisable to proceed with the offering and sale of the Shares on the terms set
forth in the Prospectus or materially adversely affects the market for the
Shares.
If on the Closing Date or on any Option Closing Date, as the case may
be, any of the Underwriters shall fail or refuse to purchase the Firm Shares or
Option Shares, as the case may be, which it has agreed to purchase hereunder on
such date, and the aggregate number of Firm Shares or Option Shares, as the case
may be, that such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase does not exceed, in the aggregate, 10% of the total number
of Shares that all Underwriters are obligated to purchase on such date, each
non-defaulting Underwriter shall be obligated, in the proportion which the
number of Firm Shares set forth opposite its name in Schedule I hereto bears to
the total number of Firm Shares or Option Shares, as the case may be, which all
the non-defaulting Underwriters have agreed to purchase, or in such other
proportion as you may specify, to purchase the Firm Shares or Option Shares, as
the case may be, that such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date. If, on the Closing Date or on the
Option Closing Date, as the case may be, any of the Underwriters shall fail or
refuse to purchase the Firm Shares or Option Shares, as the case may be, in an
amount that exceeds, in the aggregate, 10% of the total number of the Shares,
and arrangements satisfactory to you and the Company for the purchase of such
Shares are not made within 48 hours after such default, this Agreement shall
terminate without liability on the part of the non-defaulting Underwriters, the
Company or the Selling Stockholder, except as otherwise provided in this Section
9. In any such case that does not result in termination of this Agreement,
either you or the Company may postpone the Closing Date or the Option Closing
Date, as the case may be, for not longer than seven (7) days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or
any other documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve a defaulting Underwriter from liability in respect
of any
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default of any such Underwriter under this Agreement.
The indemnity and contribution provisions and other agreements,
representations and warranties of the Company, the Selling Stockholders and the
Company's officers and directors set forth in or made pursuant to this Agreement
shall remain operative and in full force and effect, and will survive delivery
of and payment for the Shares, regardless of (i) any investigation, or statement
as to the results thereof, made by or on behalf of any of the Underwriters or by
or on behalf of the Company or the Selling Stockholders or the officers or
directors of the Company or any controlling person of the Company, (ii)
acceptance of the Shares and payment therefor hereunder or (iii) termination of
this Agreement. Notwithstanding any termination of this Agreement, the Company
shall be liable for and shall pay all expenses it has agreed to pay pursuant to
Section 5(l).
Except as otherwise provided, this Agreement has been and is made solely
for the benefit of, and shall be binding upon, the Company, the Selling
Stockholders, the Underwriters, any indemnified person referred to herein and
their respective successors and assigns, all as and to the extent provided in
this Agreement, and no other person shall acquire or have any right under or by
virtue of this Agreement. The terms "successors and assigns" shall not include a
purchaser of any of the Shares from any of the several Underwriters merely
because of such purchase.
10. Effectiveness of Registration Statement. You, the Company and the
Selling Stockholders will use your, its and their best efforts to cause the
Registration Statement to become effective, if it has not yet become effective,
and to prevent the issuance of any stop order suspending the effectiveness of
the Registration Statement and, if such stop order be issued, to obtain as soon
as possible the lifting thereof.
11. Miscellaneous. All communications hereunder will be in writing and,
if sent to the Underwriters will be mailed, delivered or telegraphed and
confirmed to you at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: Syndicate Department, with a copy to EVEREN Securities, Inc., 1901
Avenue of the Stars, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇
▇. ▇▇▇▇▇▇, Senior Managing Director; if sent to the Company will be mailed,
delivered or telegraphed and confirmed to the Company at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President and Chief
Executive Officer with a copy to ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇; and if
sent to the Selling Stockholders will be mailed, delivered or telegraphed to
them care of the Company, with a copy to, or in any case to such other address
as the person to be notified may have requested in writing.
The Underwriters confirm that they will acquire the Shares only for
resale to the public and do not intend to hold the Shares for investment. They
further confirm that they do not intend to exercise control over the Company or
FPIC.
Until the initial public offering of the shares to the public has been
completed (as evidenced by termination of the underwriting syndicate), the
Underwriters will not knowingly sell to a single person or an affiliated group a
number of shares which equals or exceeds 10% or more of the Company's
outstanding voting securities, unless the purchaser or purchasers provide the
Underwriters with evidence satisfactory to the Underwriters that it or they have
obtained all required approvals form the California Department of Insurance or
that such approvals are not required. Absent actual knowledge, the knowledge of
one member of the underwriting syndicate shall not be attributed to other
members of the underwriting syndicate. Until the initial public offering of the
shares to the public has been completed, no Underwriter shall exercise any
voting right associated with shares held for such Underwriter's account.
The Company shall not in any event be liable to any of the Underwriters
for loss of anticipated profits from the transactions covered by this Agreement.
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THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF
LAW THEREOF.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Selling Stockholder and the several Underwriters,
including you.
Very truly yours,
FINANCIAL PACIFIC INSURANCE
GROUP, INC., a California corporation
By: ___________________________________
Its ___________________________________
Selling Stockholders:
▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
By: ___________________________________
Attorney-in-Fact
FIREMARK ADVISORS, INC.
By: ___________________________________
Attorney-in-Fact
ST. ▇▇▇▇ FIRE & MARINE INSURANCE COMPANY
By: ___________________________________
Attorney-in-Fact
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The foregoing Underwriting Agreement is hereby
confirmed and accepted as of the date first
above written.
EVEREN Securities, Inc.
Acting as Representative of the
several Underwriters named in Schedule I.
By: ___________________________________
[Title]
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SCHEDULE I
UNDERWRITER NUMBER OF SHARES
----------- ----------------
Everen Securities, Inc............................. $
$
$
$
$
$
$
$
$
$
TOTAL................................... $
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SCHEDULE II
STOCKHOLDER NAME NUMBER OF SHARES
---------------- ----------------
▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇ 136,971
Firemark Advisors, Inc. 136,971
St. ▇▇▇▇ Fire & Marine Insurance Co. 136,972
Celerity Partners, L.P. 59,367
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 10,000
▇▇▇▇▇ ▇▇▇▇▇▇ 19,719
TOTAL................................... 500,000
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