SEABRIGHT INSURANCE HOLDINGS, INC.
7,500,000 SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
January __, 2005
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & CO.
as Representatives of the several Underwriters
c/o Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
SeaBright Insurance Holdings, Inc., a Delaware corporation
(the "Company"), confirms its agreement with each of the Underwriters
listed on Schedule I hereto (collectively the "Underwriters"), for whom
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. and
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Co. are acting as Representatives (in such capacity,
the "Representatives"), with respect to (i) the sale by the Company of
an aggregate 7,500,000 shares of Common Stock, par value $0.01 per
share, of the Company ("Common Stock") (the "Initial Shares"), and the
purchase by the Underwriters, acting severally and not jointly, of the
respective number of shares of Common Stock set forth opposite the
names of the Underwriters in Schedule I hereto, and (ii) the grant of
the option described in Section 1(b) hereof to purchase all or any part
of 1,125,000 additional shares of Common Stock to cover
over-allotments, if any, from the Company (the "Option Shares"), to the
Underwriters, acting severally and not jointly, in the respective
numbers of shares of Common Stock set forth opposite the names of the
Underwriters in Schedule I hereto. The Initial Shares and all or any
part of the Option Shares of Common Stock subject to the option
described in Section l(b) hereof are hereinafter called, collectively,
the "Shares."
The Company understands that the Underwriters propose to make
a public offering of the Shares as soon as the Underwriters deem
advisable after this Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange
Commission (the "Commission"), a registration statement on Form S-1
(No. 333-119111) and a related preliminary prospectus for the
registration of the Shares under the Securities Act of 1933, as amended
(the "Securities Act"), and the rules and regulations thereunder (the
"Securities Act Regulations"). The Company has prepared and filed such
amendments thereto, if any, and such amended preliminary prospectuses,
if any, as may have been
required to the date hereof, and will file such additional amendments
thereto and such amended prospectuses as may hereafter be required. The
registration statement has been declared effective under the Securities
Act by the Commission. The registration statement as amended at the
time it became effective (including all information deemed to be a part
of the registration statement at the time it became effective pursuant
to Rule 430A(b) of the Securities Act Regulations) is hereinafter
called the "Registration Statement," except that, if the Company files
a post-effective amendment to such registration statement which becomes
effective prior to the Closing Time (as defined below), "Registration
Statement" shall refer to such registration statement as so amended.
Any registration statement filed pursuant to Rule 462(b) of the
Securities Act Regulations is hereinafter called the "Rule 462(b)
Registration Statement," and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The
preliminary prospectus dated January 3, 2005 relating to the Shares, as
filed with the Commission and as amended and supplemented prior to the
date of the Prospectus, is hereinafter called the "Preliminary
Prospectus." The term "Prospectus" means the final prospectus, as first
filed with the Commission pursuant to Rule 424(b) of the Securities Act
Regulations, and any amendments thereof or supplements thereto. The
Commission has not issued any order preventing or suspending the use of
the Preliminary Prospectus.
The Company and the Underwriters agree as follows:
1. Sale and Purchase:
(a) Initial Shares. Upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the
purchase price per share of $________, the Company agrees to sell to
the Underwriters the Initial Shares, and each Underwriter agrees,
severally and not jointly, to purchase from the Company the number of
Initial Shares set forth in Schedule I opposite such Underwriter's
name, plus any additional number of Initial Shares which such
Underwriter may become obligated to purchase pursuant to the provisions
of Section 8 hereof, subject in each case, to such adjustments among
the Underwriters as the Representatives in their sole discretion shall
make to eliminate any sales or purchases of fractional shares.
(b) Option Shares. In addition, upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the
purchase price per share set forth in paragraph (a), the Company hereby
grants an option to the Underwriters, acting severally and not jointly,
to purchase all or any part of the Option Shares, plus any additional
number of Option Shares which each such Underwriter may become
obligated to purchase pursuant to the provisions of Section 8 hereof.
The option hereby granted will expire 30 days after the date hereof and
may be exercised in whole or in part from time to time only for the
purpose of covering over-allotments which may be made in connection
with the offering and distribution of the Initial Shares upon notice by
the Representatives to the Company setting forth the number of Option
Shares as to which the several Underwriters are then exercising the
option and the time and date of payment and delivery for such Option
Shares. Any such time and date of delivery (a "Date of
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Delivery") shall be determined by the Representatives, but shall not be
later than three full business days (or earlier than two full business
days, without the consent of the Company) after the exercise of such
option, nor in any event prior to the Closing Time, as hereinafter
defined. If the option is exercised as to all or any portion of the
Option Shares, the Company will sell the total number of Option Shares
then being purchased and each of the Underwriters, acting severally and
not jointly, will purchase that proportion of the total number of
Option Shares then being purchased which the number of Initial Shares
set forth in Schedule I opposite the name of such Underwriter bears to
the total number of Initial Shares, subject in each case to such
adjustments among the Underwriters as the Representatives in their sole
discretion shall make to eliminate any sales or purchases of fractional
shares.
2. Payment and Delivery
(a) Initial Shares. Delivery to the Underwriters of the Initial Shares
shall be made in book-entry form through the facilities of the
Depository Trust Company (the "DTC") for the account of such
Underwriters against payment by or on behalf of such Underwriters of
the purchase price therefor by wire transfer of federal (same-day)
funds to the account specified to the Representatives by the Company
upon at least 48 hours' prior notice. The time and date of such
delivery and payment shall be 9:30 a.m. New York City time, on the
third full business day (fourth, if pricing occurs after 4:30 p.m. New
York City time) following the date hereof (unless another time and date
shall be agreed to by the Representatives and the Company). The time at
which such payment and delivery are actually made is hereinafter
sometimes called the "Closing Time" and the date of delivery of both
Initial Shares and Option Shares is hereinafter sometimes called the
"Date of Delivery." The closing shall take place at the offices of
Lord, Bissell & Brook LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, or such other place as the Company and the Representatives may
agree.
(b) Option Shares. Delivery to the Underwriters of any Option Shares to
be purchased by the several Underwriters shall be made in book-entry
form through the facilities of DTC for the account of such Underwriters
against payment by or on behalf of such Underwriters of the purchase
price therefor by wire transfer of federal (same-day) funds to the
account specified to the Representatives by the Company upon at least
48 hours' prior notice. The time and date of such delivery and payment
shall be 9:30 a.m., New York City time on the date specified by the
Representatives in the notice given by the Representatives to the
Company of the Underwriters' election to purchase such Option Shares or
on such other time and date as the Company and the Representatives may
agree upon in writing (the "Option Closing Time").
(c) Manner of Delivery. Unless the Representatives request otherwise,
the Initial Shares and the Option Shares shall be delivered in global
form and shall be deposited with, or on behalf of, DTC and registered
in the name of DTC's nominee. If, at the request of the
Representatives, the Initial Shares or the Option Shares are delivered
in definitive form, certificates for such Shares shall be registered in
such names and in such
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denominations as the Representatives shall request upon at least 48
hours prior notice to the Company preceding the Closing Time or the
Option Closing Time, as the case may be. Such certificates shall be
made available to the Representatives for inspection and packaging not
later than at least 24 hours prior to the Closing Time or the Option
Closing Time, as the case may be.
(d) Directed Shares. It is understood that approximately 375,000 shares
of the Initial Shares ("Directed Shares") initially will be reserved by
the Underwriters for offer and sale to employees and persons having
business relationships with the Company ("Directed Share Participants")
upon the terms and conditions set forth in the Prospectus and in
accordance with the rules and regulations of the National Association
of Securities Dealers, Inc. (the "Directed Share Program"). Under no
circumstances will the Representatives or any Underwriter be liable to
the Company for any action taken or omitted to be taken in good faith
in connection with such Directed Share Program. To the extent that any
Directed Shares are not affirmatively reconfirmed for purchase by any
Directed Share Participant on or immediately after the date of this
Agreement, such Directed Shares may be offered to the public as part of
the public offering contemplated herein.
3. Representations and Warranties of the Company:
The Company represents and warrants to the Underwriters that:
(a) the Company has an authorized capitalization as set forth in the
Prospectus; the outstanding shares of capital stock of the Company and
each subsidiary of the Company (each, a "Subsidiary") have been duly
and validly authorized and issued and are fully paid and
non-assessable, and all of the outstanding shares of capital stock of
the Subsidiaries are directly or indirectly owned of record and
beneficially by the Company; except as disclosed in the Prospectus,
there are no outstanding (i) securities or obligations of the Company
or any of the Subsidiaries convertible into or exchangeable for any
capital stock of the Company or any such Subsidiary, (ii) warrants,
rights or options to subscribe for or purchase from the Company or any
such Subsidiary any such capital stock or any such convertible or
exchangeable securities or obligations, or (iii) obligations of the
Company or any such Subsidiary to issue any shares of capital stock,
any such convertible or exchangeable securities or obligations, or any
such warrants, rights or options; the description of the Company's
stock option and stock purchase plans and the options or other rights
granted and exercised thereunder set forth in the Prospectus accurately
and fairly presents in all material respects the information required
by the Securities Act and the Securities Act Regulations to be shown
with respect to such plans, options and rights;
(b) each of the Company and the Subsidiaries (all of which are named in
Exhibit 21 to the Registration Statement) has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of its respective jurisdiction of incorporation with full
corporate power and authority to own its respective properties and to
conduct its respective businesses as described in the Registration
Statement and Prospectus and, in
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the case of the Company, to execute and deliver this Agreement and to
consummate the transactions contemplated herein;
(c) each of the Company and the Subsidiaries is duly qualified or
licensed and is in good standing in each jurisdiction in which it
conducts its respective business or in which it owns or leases real
property or otherwise maintains an office and in which the failure,
individually or in the aggregate, to be so qualified or licensed would
not reasonably be expected to have a material adverse effect on the
assets, business, operations, earnings or condition (financial or
otherwise) of the Company and the Subsidiaries taken as a whole (any
such effect or change, where the context so requires, is hereinafter
called a "Material Adverse Effect" or "Material Adverse Change"); each
Subsidiary holds such licenses, certificates, permits, consents,
orders, approvals and other authorizations from governmental
authorities (including, without limitation, from the insurance
regulatory agencies of the various jurisdictions where it conducts
business) ("Permits") and has made all necessary filings required under
any federal, state or local law, regulation or rule and has obtained
all necessary authorizations, consents and approvals from other persons
required in order to conduct its respective business as described in
the Prospectus, except where the failure to hold any such Permit or
make such filings required under any federal, state or local law,
regulation or rule or obtain such authorizations, consents and
approvals from other persons would not reasonably be expected to result
in a Material Adverse Effect; each such Permit is valid and in full
force and effect, except where the failure of such Permit to be valid
or in full force and effect would not reasonably be expected to have a
Material Adverse Effect; neither the Company nor any of the
Subsidiaries is in violation of, in default under, or has received any
written notice regarding or alleging a violation of or default under or
revocation of any Permit or a violation of any federal, state or local
law, regulation or rule or any decree, order or judgment applicable to
the Company or any of the Subsidiaries the effect of which, in each
case, would reasonably be expected to result in a Material Adverse
Effect; except as disclosed in the Prospectus, the authority of each
Subsidiary to write or produce the classes and lines of insurance
authorized by such Permit is unrestricted and no such Permit contains a
materially burdensome restriction that is not adequately disclosed in
the Prospectus; neither the Company nor any of the Subsidiaries is a
party to any agreement, formal or informal, with any regulatory
official or other person limiting the ability of the Company or any
Subsidiary of the Company from making full use of the Permits issued to
it; except as disclosed in the Prospectus, no Subsidiary is prohibited
or restricted, directly or indirectly, from paying dividends to the
Company, or from making any other distribution with respect to such
Subsidiary's capital stock or from repaying to the Company or any other
Subsidiary any amounts which may from time to time become due under any
loans or advances to such Subsidiary from the Company or such other
Subsidiary, or from transferring any such Subsidiary's property or
assets to the Company or to any other Subsidiary; other than as
disclosed in the Prospectus, the Company does not own, directly or
indirectly, more than 5% of any capital stock or other equity
securities of any other corporation or any ownership interest of more
than 5% in any partnership, joint venture or other association;
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(d) the Company and each Subsidiary is in compliance with all
applicable laws, rules, regulations, orders, decrees and judgments,
including those relating to transactions with affiliates, except where
such non-compliance, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect;
(e) except as disclosed in the Prospectus, the Company and SeaBright
Insurance Company ("SBIC") have made no material change in their
insurance reserving practices since December 31, 2003;
(f) all reinsurance treaties and arrangements to which the Company or
any Subsidiary is a party are in full force and effect and neither the
Company nor any Subsidiary is in violation of, or in default in the
performance, observance or fulfillment of, any obligation, agreement,
covenant or condition contained therein, except where the failure of
such reinsurance treaties and arrangements to be in full force and
effect or where such violation or default would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect; neither the Company nor any Subsidiary has received any written
notice from any of the other parties to such treaties, contracts or
agreements, or otherwise has knowledge, that such other party will be
unable to perform such treaty or arrangement except to the extent
adequately and properly reserved for in the audited historical
financial statements of the Company included in the Prospectus, except
where such nonperformance would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect;
(g) the statutory financial statements of SBIC from which certain
ratios and other statistical data filed as part of the Registration
Statement have been derived have been prepared for each relevant period
in conformity with statutory accounting principles or practices
required or permitted by the National Association of Insurance
Commissioners, the Illinois Department of Financial and Professional
Regulation - Division of Insurance and 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 present
fairly in all material respects the statutory financial position of
SBIC as of the dates thereof, and the statutory basis results of
operations of SBIC for the periods covered thereby;
(h) neither the Company nor any Subsidiary is in breach of or in
default under (nor has any event occurred which with notice, lapse of
time, or both would constitute a breach of, or default under), its
respective organizational documents, or in the performance or
observance of any obligation, agreement, covenant or condition
contained in any license, indenture, mortgage, deed of trust, loan or
credit agreement or other agreement or instrument to which the Company
or any Subsidiary is a party or by which any of them or their
respective properties is bound, except for such breaches or defaults
which would not have a Material Adverse Effect;
(i) the execution, delivery and performance of this Agreement, and
consummation of the transactions contemplated herein will not conflict
with, or result in any breach of, or
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constitute a default under (nor constitute any event which with notice,
lapse of time, or both would constitute a breach of, or default under):
(i) any provision of the organizational documents of the Company or any
Subsidiary, (ii) any provision of any license, indenture, mortgage,
deed of trust, loan or credit agreement or other agreement or
instrument to which the Company or any Subsidiary is a party or by
which any of them or their respective properties may be bound or
affected, or under any federal, state, local or foreign law, regulation
or rule or any decree, judgment or order applicable to the Company or
any Subsidiary, or (iii) result in the creation or imposition of any
lien, charge, claim or encumbrance upon any property or asset of the
Company or the Subsidiaries; except in the case of this clause (ii) and
(iii) for such breaches, defaults, liens, charges, claims or
encumbrances that would not reasonably be expected to have a Material
Adverse Effect;
(j) 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 may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, and by general equitable
principles, and except to the extent that the indemnification and
contribution provisions of Section 9 hereof may be limited by federal
or state securities laws and public policy considerations in respect
thereof;
(k) no approval, authorization, consent or order of or filing with any
federal, state or local governmental or regulatory commission, board,
body, authority or agency is required to be obtained by the Company or
any of its Subsidiaries in connection with the Company's execution,
delivery and performance of this Agreement, its consummation of the
transactions contemplated herein, and its sale and delivery of the
Shares, other than (A) such as have been obtained, or will have been
obtained at the Closing Time or the relevant Date of Delivery, as the
case may be, under the Securities Act and the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), (B) such approvals as have
been obtained in connection with the approval of the listing of the
Shares on the Nasdaq National Market and (C) any necessary
qualifications under the securities or blue sky laws of the various
jurisdictions in which the Shares are being offered by the
Underwriters;
(l) the Registration Statement has become effective under the
Securities Act and no stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement has
been issued under the Securities Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the
Company, are threatened by the Commission, and the Company has complied
to the Commission's satisfaction with any request on the part of the
Commission for additional information;
(m) the Preliminary Prospectus and the Registration Statement complies,
and the Prospectus and any further amendments or supplements thereto
will comply, when they have become effective or are filed with the
Commission, as the case may be, in all material respects with the
requirements of the Securities Act and the Securities Act
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Regulations; the Registration Statement did not, and any amendment
thereto will not, in each case as of the applicable effective date,
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and the Preliminary Prospectus does
not, and the Prospectus or any amendment or supplement thereto will
not, as of the applicable filing date and at the Closing Time and on
each Date of Delivery, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however, that the
Company makes no warranty or representation with respect to any
statement contained in the Registration Statement or the Prospectus in
reliance upon and in conformity with the information concerning the
Underwriters and furnished in writing by or on behalf of the
Underwriters through the Representatives to the Company expressly for
use in the Registration Statement or the Prospectus (that information
being limited to that described in the second to last sentence of the
first paragraph of Section 9(b) hereof);
(n) the Preliminary Prospectus was and the Prospectus delivered to the
Underwriters for use in connection with this offering will be identical
to the versions of the Preliminary Prospectus and Prospectus created to
be transmitted to the Commission for filing via the Electronic Data
Gathering Analysis and Retrieval System ("▇▇▇▇▇"), except to the extent
permitted by Regulation S-T or Rule 424 of the Securities Act
Regulations;
(o) except as disclosed in the prospectus, there are no actions, suits,
proceedings, inquiries or investigations pending or, to the knowledge
of the Company, threatened against the Company or any Subsidiary or any
of their respective officers and directors or to which the properties,
assets or rights of any such entity are subject, at law or in equity,
before or by any federal, state, local or foreign governmental or
regulatory commission, board, body, authority, arbitral panel or agency
which would reasonably be expected to result in a judgment, decree,
award or order having a Material Adverse Effect;
(p) the consolidated financial statements of the Company and the
combined financial statements of Eagle Pacific Insurance Company,
Pacific Eagle Insurance Company and PointSure Insurance Services, Inc.
(which are collectively referred to as "Predecessor"), in each case
including the notes thereto, included in the Registration Statement and
the Prospectus present fairly in all material respects the consolidated
and combined financial position of the Company and the Predecessor,
respectively, as of the dates indicated and the consolidated and
combined results of operations and changes in financial position and
cash flows of the Company and the Predecessor, respectively, for the
periods specified; such financial statements have been prepared in
conformity with generally accepted accounting principles as applied in
the United States and on a consistent basis during the periods involved
and in accordance with Regulation S-X promulgated by the Commission;
the financial statement schedules included in the Registration
Statement and the amounts in the Prospectus under the captions
"Prospectus Summary - Summary Financial Information," "Unaudited Pro
Forma Financial Information" and "Selected Financial Information"
fairly present the information shown therein and have been
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compiled on a basis consistent with the financial statements included
in the Registration Statement and the Prospectus; the unaudited pro
forma financial information (including the related notes) included in
the Prospectus and the Preliminary Prospectus complies as to form in
all material respects with the applicable accounting requirements of
the Securities Act and the Securities Act Regulations, and management
of the Company believes that the assumptions underlying the pro forma
adjustments are reasonable; such pro forma adjustments have been
properly applied to the historical amounts in the compilation of the
information and such information fairly presents with respect to the
Company and the Subsidiaries, the financial position, results of
operations and other information purported to be shown therein at the
respective dates and for the respective periods specified;
(q) KPMG LLP, whose reports on the consolidated financial statements of
the Company and the Subsidiaries are filed with the Commission as part
of the Registration Statement and Prospectus, is and was during the
periods covered by its reports, independent public accountants as
required by the Securities Act and the Securities Act Regulations, and
their appointment has been ratified by the Audit Committee of the
Company's board of directors, which is comprised entirely of
independent directors as defined under the applicable standards of the
Nasdaq Stock Market and the applicable rules and regulations of the
Commission;
(r) subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, and except as may be
otherwise stated in the Registration Statement or Prospectus, there has
not been (A) any Material Adverse Change or any development that would
reasonably be expected to result in a Material Adverse Change, whether
or not arising in the ordinary course of business, (B) any transaction
or agreement in principle that is material to the Company and the
Subsidiaries taken as a whole, entered into by the Company or any of
the Subsidiaries, (C) any obligation, contingent or otherwise, directly
or indirectly incurred by the Company or any Subsidiary that is
material to the Company and Subsidiaries taken as a whole or (D) any
dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock;
(s) the Shares conform in all material respects to the description
thereof contained in the Registration Statement and the Prospectus;
(t) except as described in the Prospectus, there are no persons with
registration or other similar rights to have any equity or debt
securities, including securities which are convertible into or
exchangeable for equity securities, registered pursuant to the
Registration Statement or otherwise registered by the Company under the
Securities Act;
(u) the Shares have been duly authorized and, when issued and duly
delivered against payment therefor as contemplated by this Agreement,
will be validly issued, fully paid and non-assessable, free and clear
of any pledge, lien, encumbrance, security interest or other claim, and
the issuance and sale of the Shares by the Company is not subject to
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preemptive or other similar rights arising by operation of law, under
the organizational documents of the Company or under any agreement to
which the Company or any Subsidiary is a party or otherwise that is not
described in the Prospectus; and no further approval or authority of
the stockholders or the board of directors of the Company will be
required for the issuance and sale of the Shares to be sold by the
Company as contemplated herein;
(v) the Shares have been approved for listing on the Nasdaq National
Market, subject only to official notice of issuance, and the Company is
in compliance in all material respects with all applicable listing
standards of the Nasdaq National Market;
(w) the Company has not taken, and will not take, directly or
indirectly, any action which is designed to or which has constituted or
which might reasonably be expected to cause or result in stabilization
or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares;
(x) neither the Company nor any of its affiliates (i) is required to
register as a "broker" or "dealer" in accordance with the provisions of
the Exchange Act, or the rules and regulations thereunder (the
"Exchange Act Regulations"), or (ii) directly, or indirectly through
one or more intermediaries, controls or has any other association with
(within the meaning of Article I of the By-Laws and the applicable
rules of the National Association of Securities Dealers, Inc. (the
"NASD")) any member firm of the NASD, other than certain affiliates of
Summit Partners, which hold 2,443,519 shares of convertible preferred
stock of optionsXpress, Inc., constituting an approximately 32%
interest;
(y) the Company has not relied upon the Representatives or legal
counsel for the Representatives for any legal, tax or accounting advice
in connection with the offering and sale of the Shares;
(z) the form of certificate used to evidence the Common Stock complies
in all material respects with all applicable statutory requirements,
any applicable requirements of the organizational documents of the
Company and the requirements of the Nasdaq National Market;
(aa) neither the Company nor the Subsidiaries own any real property.
The Company and the Subsidiaries have good title to all personal
property owned by them, in each case free and clear of all liens,
security interests, pledges, charges, encumbrances, mortgages and
defects, except such as are disclosed in the Prospectus or such as
would not reasonably be expected to have a Material Adverse Effect; and
any real property and buildings held under lease by the Company or any
Subsidiary are held under valid, existing and enforceable leases, with
such exceptions as are disclosed in the Prospectus or would not
reasonably be expected to have a Material Adverse Effect;
(bb) the descriptions in the Registration Statement and the Prospectus
of the legal or governmental proceedings, contracts, leases and other
legal documents therein described
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present fairly in all material respects the information required to be
described by the Securities Act or by the Securities Act Regulations;
all agreements between the Company or one or more of its Subsidiaries
and third parties expressly referenced in the Prospectus have been duly
authorized, executed and delivered by the Company or one or more of its
Subsidiaries and are legal, valid and binding obligations of the
Company or one or more of its Subsidiaries, enforceable in accordance
with their respective terms, except where the failure of any such
agreement to be duly authorized, executed and delivered would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect or to the extent enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and by general equitable
principles; such contracts are in full force and effect on the date
hereof except where the failure of any such contracts to be in full
force and effect would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect; and neither
the Company nor any of its Subsidiaries nor, to the Company's
knowledge, any other party thereto, is in breach of or default under
any of such contracts, except for such breaches or defaults that would
not result in a Material Adverse Change;
(cc) the Company and each Subsidiary owns or possesses adequate
licenses or other rights to use all patents, trademarks, service marks,
trade names, copyrights, software and design licenses, trade secrets,
manufacturing processes, other intangible property rights and know-how
(collectively "Intangibles") necessary to entitle the Company and each
Subsidiary to conduct its business as described in the Prospectus, and
neither the Company nor any Subsidiary has received notice of
infringement of or conflict with (and the Company does not know of any
such infringement of or conflict with) asserted rights of others with
respect to any Intangibles which would have a Material Adverse Effect;
(dd) the Company and each of the Subsidiaries maintains a system of
internal accounting controls 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 generally accepted accounting principles as applied in the United
States 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 assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences; and the
Company shall maintain a system of information disclosure controls and
procedures designed to ensure that information required to be disclosed
by the Company in its periodic filings with the Commission is recorded,
processed, summarized and reported within the time periods specified by
the Commission;
(ee) each of the Company and the Subsidiaries has filed on a timely
basis all necessary federal, state, local and foreign income and
franchise tax returns required to be filed through the date hereof,
each of which has been true and correct in all material respects, and
has paid all taxes shown as due thereon; and no tax deficiency has been
asserted against any such entity, nor does any such entity know of any
tax deficiency which is
-11-
likely to be asserted against any such entity which, if determined
adversely to any such entity, would reasonably be expected to have a
Material Adverse Effect;
(ff) each of the Company and the Subsidiaries maintains insurance
(issued by insurers of recognized financial responsibility) of the
types and in the amounts generally deemed adequate for their respective
businesses and consistent with insurance coverage maintained by similar
companies in similar businesses, including, but not limited to,
insurance covering real and personal property owned or leased by the
Company and the Subsidiaries against theft, damage, destruction, acts
of vandalism and all other risks customarily insured against, all of
which insurance is in full force and effect, it being understood that
no representation is made in this subsection (ff) as to the reinsurance
obtained by the Company or the Subsidiaries;
(gg) neither the Company nor any of the Subsidiaries is in violation,
or has received notice, of any violation with respect to any applicable
environmental, safety or similar law applicable to the business of the
Company or any of the Subsidiaries; the Company and the Subsidiaries
have received all permits, licenses or other approvals required of them
under applicable federal and state occupational safety and health and
environmental laws and regulations to conduct their respective
businesses, and the Company and the Subsidiaries are in compliance with
all terms and conditions of any such permit, license or approval,
except any such violation of law or regulation, failure to receive
required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals which
would not, individually or in the aggregate, result in a Material
Adverse Change;
(hh) neither the Company nor any Subsidiary is in violation of or has
received notice of any violation with respect to any federal or state
law relating to discrimination in the hiring, promotion or pay of
employees, nor any applicable federal or state wages and hours law, nor
any applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published
interpretations thereunder, the violation of any of which would
reasonably be expected to have a Material Adverse Effect;
(ii) neither the Company nor any of the Subsidiaries nor any officer or
director purporting to act on behalf of the Company or any of the
Subsidiaries has at any time (i) made any contributions to any
candidate for political office, or failed to disclose fully any such
contributions, in violation of law; (ii) made any payment to any state,
federal or foreign governmental officer or official, or other person
charged with similar public or quasi-public duties, other than payments
required or allowed by applicable law; (iii) engaged in any
transactions, maintained any bank account or used any corporate funds
except for transactions, bank accounts and funds which have been and
are reflected in the normally maintained books and records of the
Company and the Subsidiaries;
(jj) there are no outstanding loans or advances or material guarantees
of indebtedness by the Company or any of the Subsidiaries to or for the
benefit of any of the executive
-12-
officers or directors of the Company or any of the Subsidiaries or any
of the members of the families of any of them;
(kk) all securities issued by the Company, any of the Subsidiaries or
any trusts established by the Company or any Subsidiary, have been
issued and sold in compliance with (i) all applicable federal and state
securities laws, (ii) the laws of the applicable jurisdiction of
incorporation of the issuing entity and, (iii) to the extent applicable
to the issuing entity, the requirements of the Nasdaq National Market;
(ll) in connection with this offering, the Company has not offered and
will not offer its Common Stock or any other securities convertible
into or exchangeable or exercisable for Common Stock in a manner in
violation of the Securities Act or the Securities Act Regulations. The
Company has not distributed and will not distribute any offering
material other than the Preliminary Prospectus and the Prospectus in
connection with the offer and sale of the Shares;
(mm) except as otherwise contemplated by this Agreement, the Company
has not incurred any liability for any finder's fees or similar
payments in connection with the transactions herein contemplated;
(nn) no relationship, direct or indirect, exists and no transaction has
occurred between or among the Company or any of the Subsidiaries on the
one hand, and the directors, officers, stockholders, customers or
suppliers of the Company or any of the Subsidiaries on the other hand,
which is required by the Securities Act and the Securities Act
Regulations to be described in the Registration Statement and the
Prospectus and which is not so described;
(oo) neither the Company nor any of the Subsidiaries is or, after
giving effect to the offering and sale of the Shares, will be an
"investment company" or an entity "controlled" by an "investment
company," as such terms are defined in the Investment Company Act of
1940, as amended (the "Investment Company Act");
(pp) there are no existing or, to the knowledge of the Company,
threatened labor disputes with the employees of the Company or any of
the Subsidiaries which are likely to have individually or in the
aggregate a Material Adverse Effect;
(qq) no consent, approval, authorization or order of, or qualification
with, any governmental body or agency, other than those obtained, is
required in connection with the offering of the Directed Shares in any
jurisdiction where the Directed Shares are being offered. The Company
has not offered, or caused the Representatives to offer, Shares to any
person pursuant to the Directed Share Program with the specific intent
to unlawfully influence (i) a customer or supplier of the Company to
alter the customer's or supplier's level or type of business with the
Company or (ii) a trade journalist or publication to write or publish
favorable information about the Company or its products; and
-13-
(rr) the Company has taken all necessary actions to ensure that,
upon and at all times after the effectiveness of the Registration
Statement, it will be in compliance in all material respects with all
applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the
"▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act") and the related rules and regulations of the
Commission that are then in effect and is actively taking steps to
ensure that it will be in compliance in all material respects with
other applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the related
rules and regulations of the Commission not currently in effect upon
and at all times after the effectiveness of such provisions.
4. Certain Covenants by the Company:
The Company hereby agrees with each Underwriter:
(a) to furnish such information as may be required and
otherwise to cooperate in qualifying the Shares for offering and sale
under the securities or blue sky laws of such jurisdictions (both
domestic and foreign) as the Representatives may designate and to
maintain such qualifications in effect as long as requested by the
Representatives for the distribution of the Shares, provided that the
Company shall not be required to qualify as a foreign corporation, to
subject itself to taxation or to consent to the service of process
under the laws of any such state (except service of process with
respect to the offering and sale of the Shares);
(b) if, at the time this Agreement is executed and delivered,
it is necessary for a post-effective amendment to the Registration
Statement to be declared effective before the offering of the Shares
may commence, the Company will endeavor to cause such post-effective
amendment to become effective as soon as reasonably practicable and
will advise the Representatives promptly and, if requested by the
Representatives, will confirm such advice in writing, when such
post-effective amendment has become effective;
(c) to prepare the Prospectus in a form approved by the
Underwriters and file such Prospectus (or a term sheet as permitted by
Rule 434) with the Commission pursuant to Rule 424(b) under the
Securities Act not later than 12:00 noon (New York City time), on the
business day following the execution and delivery of this Agreement or
on such other day as the parties may mutually agree and to furnish
promptly (and with respect to the initial delivery of such Prospectus,
not later than 12:00 noon (New York City time) on the second business
day following the execution and delivery of this Agreement, or on such
other day as the parties may mutually agree, to the Underwriters copies
of the Prospectus (or of the Prospectus as amended or supplemented if
the Company shall have made any amendments or supplements thereto after
the effective date of the Registration Statement) in such quantities
and at such locations as the Underwriters may reasonably request for
the purposes contemplated by the Securities Act Regulations, which
Prospectus and any amendments or supplements thereto furnished to the
Underwriters will be identical to the versions created to be
transmitted to the Commission for filing via ▇▇▇▇▇, except to the
extent permitted by Regulation S-T and Rule 424 of the Securities Act
Regulations;
-14-
(d) to advise the Representatives promptly and (if requested
by the Representatives) to confirm such advice in writing, when the
Registration Statement has become effective and when any post-effective
amendment thereto becomes effective under the Securities Act
Regulations;
(e) to advise the Representatives immediately, confirming such
advice in writing, of (i) the receipt of any comments from, or any
request by, the Commission for amendments or supplements to the
Registration Statement or Prospectus or for additional information with
respect thereto, or (ii) the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of
any order preventing or suspending the use of the Preliminary
Prospectus or the Prospectus, or of the suspension of the qualification
of the Shares for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes
and, if the Commission or any other government agency or authority
should issue any such order, to make every reasonable effort to obtain
the lifting or removal of such order as soon as possible; to advise the
Representatives promptly of any proposal to amend or supplement the
Registration Statement or Prospectus and to file no such amendment or
supplement to which the Representatives shall reasonably object;
(f) to furnish to the Underwriters for a period of five years
from the date of this Agreement (i) as soon as available, copies of all
annual, quarterly and current reports or other communications supplied
to holders of shares of Common Stock, (ii) as soon as practicable after
the filing thereof, copies of all reports filed by the Company with the
Commission, the Nasdaq National Market or any securities exchange and
(iii) such other non-confidential information concerning the business
and financial condition of the Company as the Underwriters may
reasonably request regarding the Company and the Subsidiaries; provided
that the Company shall not be required to furnish reports,
communications or information that are otherwise available on ▇▇▇▇▇ or
other publicly available electronic means;
(g) to advise the Underwriters promptly of the happening of any
event known to the Company within the time during which a Prospectus
relating to the Shares is required to be delivered under the Securities
Act Regulations which, in the judgment of the Company or in the
reasonable opinion of the Representatives or counsel for the
Underwriters, would require the making of any change in the Prospectus
then being used so that the Prospectus would not include an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading,
or if it is necessary at any time to amend the Registration Statement
or supplement the Prospectus to comply with the Securities Act and the
Securities Act Regulations and, during such time, to promptly prepare
and furnish to the Underwriters copies of the proposed amendment or
supplement before filing any such amendment or supplement with the
Commission and thereafter promptly furnish at the Company's own expense
to the Underwriters and to dealers, copies in such quantities and at
such locations as the Representatives may from time to time reasonably
request of an appropriate amendment
-15-
to the Registration Statement or supplement to the Prospectus so that
the Prospectus as so amended or supplemented will not include an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading,
and so that the Prospectus will comply with the Securities Act and the
Securities Act Regulations;
(h) to file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or in the
reasonable opinion of the Representatives, be required by the
Securities Act or requested by the Commission;
(i) prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any
Prospectus pursuant to Rule 424 under the Securities Act, to furnish a
copy thereof to the Representatives and counsel for the Underwriters,
and not to file any amendment to the Registration Statement or the
Prospectus or any supplement to the Prospectus to which the
Representatives reasonably object in writing;
(j) to furnish promptly to each Representative a signed copy of
the Registration Statement, as initially filed with the Commission, and
of all amendments or supplements thereto (including all exhibits filed
therewith or incorporated by reference therein);
(k) to apply the net proceeds of the sale of the Shares in
accordance with its statements under the caption "Use of Proceeds" in
the Prospectus and in a manner such that the Company will not become an
"investment company" as that term is defined in the Investment Company
Act;
(l) to make generally available to its security holders and to the
Representatives as soon as practicable, but in any event not later than
the end of the fiscal quarter first occurring after the first
anniversary of the effective date of the Registration Statement an
earnings statement complying with the provisions of Section 11(a) of
the Securities Act (in form, at the option of the Company, complying
with the provisions of Rule 158 of the Securities Act Regulations)
covering a period of 12 months beginning after the effective date of
the Registration Statement;
(m) to use its best efforts to maintain the listing of the Shares
on the Nasdaq National Market and to file with the Nasdaq National
Market all documents and notices required thereby of companies that
have securities for which quotations are reported by the Nasdaq
National Market;
(n) to engage and maintain, at its expense, a registrar and
transfer agent for the Shares;
-16-
(o) except with respect to the Shares to be sold hereunder,
during the period commencing on the date hereof and ending on the
180-day anniversary of the date of the Prospectus, (1) not to offer,
pledge, sell, contract to sell, sell any option or contract to
purchase, not to 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 any
shares of Common Stock (whether such shares or any such securities are
now owned by the undersigned or are hereafter acquired), or (2) enter
into any swap or other arrangement that transfers to another, 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
notwithstanding the foregoing, the Company shall be permitted to grant
options to purchase Common Stock or issue shares of restricted stock or
other equity-based awards pursuant to the Company's benefit and equity
incentive plans described in the Registration Statement, and may issue
shares of Common Stock upon the exercise of outstanding options,
provided that in the event any holder of such shares would become a 1%
or greater stockholder as a result of such issuance, the Company shall
cause such holder to furnish the Representatives a letter substantially
similar to Exhibit A hereto;
(o) not to, and to use its best efforts to cause its officers,
directors and affiliates not to, (i) take, directly or indirectly prior
to termination of the underwriting syndicate contemplated by this
Agreement, any action designed to stabilize or manipulate the price of
any security of the Company, or which may cause or result in, or which
might in the future reasonably be expected to cause or result in, the
stabilization or manipulation of the price of any security of the
Company, to facilitate the sale or resale of any of the Shares, (ii)
sell, bid for, purchase or pay anyone any compensation for soliciting
purchases of the Shares or (iii) pay or agree to pay to any person any
compensation for soliciting any order to purchase any other securities
of the Company;
(p) to cause each 1% or greater stockholder, officer and director
of the Company to furnish to the Representatives, prior to the first
Date of Delivery, a letter or letters, substantially in the form of
Exhibit A hereto;
(q) during the 30-day period after the Registration Statement
becomes effective, subject to the Company's obligations under
applicable law and listing requirements, the Company will provide the
Representatives the opportunity to review any press release or other
public statement within a reasonable time prior to its release;
(r) that the Company (i) shall comply with all applicable
securities and other applicable laws, rules and regulations, including
without limitation, the rules and regulations of the NASD, in each
jurisdiction in which the Directed Shares are offered in connection
with the Directed Share Program and (ii) shall pay all reasonable fees
and disbursements of counsel incurred by the Underwriters in connection
with the Directed
-17-
Share Program and any stamp duties, similar taxes or duties or other
taxes, if any, incurred by the Underwriters in connection with the
Directed Share Program.
5. Payment of Expenses:
(a) The Company agrees to pay all costs and expenses incident to
the performance of its obligations under this Agreement, whether or not
the transactions contemplated hereunder are consummated or this
Agreement is terminated, including expenses, fees and taxes in
connection with (i) the preparation and filing of the Registration
Statement, each Preliminary Prospectus, the Prospectus, and any
amendments or supplements thereto, and the printing and furnishing of
copies of each thereof to the Underwriters and to dealers (including
costs of mailing and shipment), (ii) the preparation, issuance and
delivery of the certificates for the Shares to the Underwriters,
including any stock or other transfer taxes or duties payable upon the
sale of the Shares to the Underwriters, (iii) the printing of this
Agreement and any dealer agreements and furnishing of copies of each to
the Underwriters and to dealers (including costs of mailing and
shipment), (iv) the qualification of the Shares for offering and sale
under state and foreign laws that the Company and the Representatives
have mutually agreed are appropriate and the determination of their
eligibility for investment under such laws as aforesaid, including the
legal fees and filing fees and other disbursements of counsel for the
Underwriters assuming that the Common Stock is approved for listing on
the Nasdaq National Market, and the printing and furnishing of copies
of any blue sky or foreign securities law surveys or legal investment
surveys to the Underwriters and to dealers; (v) filing for review of
the public offering of the Shares by the NASD (including the filing
fees and other disbursements of counsel for the Underwriters relating
thereto), (vi) the fees and expenses of any transfer agent or registrar
for the Shares and miscellaneous expenses referred to in the
Registration Statement, (vii) the fees and expenses incurred in
connection with the inclusion of the Shares for listing on the Nasdaq
National Market, (viii) the cost and expenses of making road show
presentations with respect to the offering of the Shares (but excluding
the costs and expenses of travel and accommodations for the
Underwriters); and (ix) the performance of the Company's other
obligations hereunder. Upon the request of the Representatives, the
Company will provide funds in advance for filing fees.
(b) In addition to the expenses to be paid by the Company
pursuant to subsection (a) above, upon consummation of the sale of the
Initial Shares pursuant to this Agreement, the Company agrees to
reimburse the Representatives for their reasonable out-of-pocket
expenses in connection with the performance of its activities under
this Agreement, including, but not limited to, the fees and expenses of
the Underwriters' outside legal counsel and any other advisors,
accountants, appraisers, etc., up to $250,000 (two hundred fifty
thousand dollars).
(c) If this Agreement shall be terminated by the Underwriters, or
any of them, because of any failure or refusal on the part of the
Company to comply with the terms or to fulfill any of the conditions of
this Agreement to be fulfilled by it, or if for any reason
-18-
the Company shall be unable to perform its obligations under this
Agreement, the Company also shall reimburse the Underwriters or such
Underwriters as have so terminated this Agreement with respect to
themselves, severally, for all out-of-pocket expenses (such as
printing, facsimile, courier service, direct computer expenses,
accommodations, travel and the fees and disbursements of Underwriters'
counsel and any other advisors, accountants, appraisers, etc.)
reasonably incurred by such Underwriters in connection with this
Agreement or the transactions contemplated herein.
6. Conditions of the Underwriters' Obligations:
(a) The obligations of the Underwriters hereunder to purchase
Shares at the Closing Time or on each Date of Delivery, as applicable,
are subject to the accuracy of the representations and warranties on
the part of the Company hereunder on the date hereof and at the Closing
Time and on each Date of Delivery, as applicable, the performance by
the Company of its obligations hereunder and the satisfaction of the
following further conditions at the Closing Time or on each Date of
Delivery, as applicable:
(b) The Company shall furnish to the Underwriters at the Closing
Time and on each Date of Delivery an opinion of ▇▇▇▇ Wax, Counsel for
the Company and the Subsidiaries, addressed to the Underwriters and
dated the Closing Time and each Date of Delivery and in form and
substance reasonably satisfactory to Lord, Bissell & Brook LLP, counsel
for the Underwriters, in substantially the form attached.
(c) The Company shall furnish to the Underwriters at the Closing
Time and on each Date of Delivery an opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP,
counsel for the Company and the Subsidiaries, addressed to the
Underwriters and dated the Closing Time and each Date of Delivery and
in form and substance reasonably satisfactory to Lord, Bissell & Brook
LLP, counsel for the Underwriters, in substantially the form attached.
(d) The Representatives shall have received from KPMG LLP letters
dated, respectively, as of the date of this Agreement, the Closing Time
and each Date of Delivery, as the case may be, addressed to the
Representatives, in form and substance satisfactory to the
Representatives, relating to the financial statements of the Company
and the Subsidiaries, including any pro forma financial statements, and
such other matters customarily covered by comfort letters issued in
connection with registered public offerings.
In the event that the letters referred to above set forth any
change in the capital stock, increase in long-term debt or any
decreases in stockholders' equity, operating income or net income of
the Company, it shall be a further condition to the obligations of the
Underwriters that such changes, decreases or increases do not, in the
sole judgment of the Representatives, make it impractical or
inadvisable to proceed with the purchase and delivery of the Shares as
contemplated by the Registration Statement.
-19-
(e) The Representatives shall have received at the Closing Time
and on each Date of Delivery the favorable opinion of Lord, Bissell &
Brook LLP, dated the Closing Time or such Date of Delivery, addressed
to the Representatives and in form and substance satisfactory to the
Representatives.
(f) No amendment or supplement to the Registration Statement or
Prospectus shall have been filed to which the Underwriters shall have
objected in writing prior to its filing.
(g) Prior to the Closing Time and each Date of Delivery (i) no
stop order suspending the effectiveness of the Registration Statement
or any order preventing or suspending the use of the Preliminary
Prospectus or Prospectus has been issued, and no proceedings for such
purpose shall have been initiated or threatened, by the Commission, and
no suspension of the qualification of the Shares for offering or sale
in any jurisdiction, or the initiation or threatening of any
proceedings for any of such purposes, has occurred; (ii) the Company
shall have responded to all comments of the Commission to the
Registration Statement to the reasonable satisfaction of the
Representatives; and (iii) the Registration Statement or any amendment
thereto, in each case as of their respective effective dates, shall not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and the Preliminary Prospectus, the
Prospectus, and any amendment or supplement thereto, as of the
applicable filing dates and at the Closing Time and each Date of
Delivery, shall not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(h) All filings with the Commission required by Rule 424 under the
Securities Act to have been filed by the Closing Time shall have been
made within the applicable time period prescribed for such filing by
such Rule.
(i) Between the time of execution of this Agreement and the
Closing Time or the relevant Date of Delivery, there shall not have
been any Material Adverse Change and no transaction which is material
and unfavorable to the Company shall have been entered into by the
Company or any of the Subsidiaries, in each case, which in the
Representatives' sole judgment, makes it impracticable or inadvisable
to proceed with the public offering of the Shares as contemplated by
the Registration Statement.
(j) The Shares shall have been approved for inclusion in the
Nasdaq National Market.
(k) The NASD shall have confirmed in writing that it has decided
to raise no objection with respect to the fairness and reasonableness
of the underwriting terms and arrangements and shall not have raised
any such objection after the date of such confirmation.
(l) The Representatives shall have received lock-up agreements
from each officer, director, 1% or greater stockholder of the Company
and holder of a security convertible
-20-
or exercisable into 1% or more of the Company's Common Stock, in the
form of Exhibit A attached hereto, and such letter agreements shall be
in full force and effect.
(m) The Company will, at the Closing Time and on each Date of
Delivery, deliver to the Underwriters a certificate of its Chief
Executive Officer and Chief Financial Officer to the effect that:
(i) the representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of
the date of such certificate, 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 the date of such certificate; and
(ii) subsequent to the respective dates as of which
information is given in the Registration Statement and
Prospectus, there has not been any change in the capital
stock or increase in the outstanding indebtedness of the
Company or any Subsidiary that is material to the Company
and the Subsidiaries considered as one enterprise.
(n) The Company shall have furnished to the Underwriters such
other documents and certificates as to the accuracy and completeness of
any statement in the Registration Statement and the Prospectus, the
representations, warranties and statements of the Company contained
herein, the performance by the Company of its covenants contained
herein, and the fulfillment of any conditions contained herein, as of
the Closing Time or any Date of Delivery, as the Underwriters may
reasonably request.
7. Termination:
The obligations of the several Underwriters hereunder shall
be subject to termination in the absolute discretion of the
Representatives, at any time prior to the Closing Time or any Date of
Delivery, (i) if any of the conditions specified in Section 6 shall not
have been fulfilled when and as required by this Agreement to be
fulfilled, or (ii) if there has been since the respective dates as of
which information is given in the Registration Statement, any (A)
Material Adverse Change, (B) development involving a prospective
Material Adverse Change other than as set forth or contemplated in the
Preliminary Prospectus and the Prospectus, the effect of which is such
as to make it, in the judgment of the Representatives, impracticable or
inadvisable to market the Shares or enforce contracts for the sale of
the Shares, or (C) material change in management of the Company or any
Subsidiary, whether or not arising in the ordinary course of business,
or (iii) if there has occurred any outbreak or escalation of
hostilities or other national or international calamity or crisis or
change in economic, political or other conditions the effect of which
on the financial markets of the United States is such as to make it, in
the judgment of the Representatives, impracticable to market the Shares
or enforce contracts for the sale of the Shares, or (iv) if trading in
any securities of the Company has been suspended by the Commission or
by the Nasdaq National Market, or if trading generally
-21-
on the New York Stock Exchange or in the Nasdaq over-the-counter market
has been suspended (including an automatic halt in trading pursuant to
market-decline triggers, other than those in which solely program
trading is temporarily halted), or limitations on prices for trading
(other than limitations on hours or numbers of days of trading) have
been fixed, or maximum ranges for prices for securities have been
required, by such exchange or the NASD or the over-the-counter market
or by order of the Commission or any other governmental authority, or
(v) if there has been any downgrade in the ratings of the Company or
its Subsidiaries by A.M. Best Company, or (vi) any federal or state
statute, regulation, rule or order of any court or other governmental
authority has been enacted, published, decreed or otherwise promulgated
which, in the reasonable opinion of the Representatives, materially
adversely affects or will materially adversely affect the business or
operations of the Company.
If the Representatives elect to terminate this Agreement as
provided in this Section 7, the Company and the Underwriters shall be
notified promptly by telephone, promptly confirmed by facsimile or
e-mail.
If the sale to the Underwriters of the Shares, as contemplated
by this Agreement, is not carried out by the Underwriters for any
reason permitted under this Agreement or if such sale is not carried
out because the Company shall be unable to comply in all material
respects with any of the terms of this Agreement, the Company shall not
be under any obligation or liability under this Agreement (except to
the extent provided in Sections 5 and 9 hereof) and the Underwriters
shall be under no obligation or liability to the Company under this
Agreement (except to the extent provided in Section 9 hereof) or to one
another hereunder.
8. Increase in Underwriters' Commitments:
If any Underwriter shall default at the Closing Time or on a
Date of Delivery in its obligation to take up and pay for the Shares to
be purchased by it under this Agreement on such date, the
Representatives shall have the right, within 36 hours after such
default, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less
than all, of the Shares which such Underwriter shall have agreed but
failed to take up and pay for (the "Defaulted Shares"). Absent the
completion of such arrangements within such 36-hour period, (i) if the
total number of Defaulted Shares does not exceed 10% of the total
number of Shares to be purchased on such date, each non-defaulting
Underwriter shall take up and pay for (in addition to the number of
Shares which it is otherwise obligated to purchase on such date
pursuant to this Agreement) the portion of the total number of Shares
agreed to be purchased by the defaulting Underwriter on such date in
the proportion that its underwriting obligations hereunder bears to the
underwriting obligations of all non-defaulting Underwriters; and (ii)
if the total number of Defaulted Shares exceeds 10% of such total, the
Representatives may terminate this Agreement by notice to the Company,
without liability of any party (other than any defaulting underwriter)
to any other party except that
-22-
the provisions of Sections 5 and 9 hereof shall at all times be
effective and shall survive such termination.
Without relieving any defaulting Underwriter from its
obligations hereunder, the Company agrees with the non-defaulting
Underwriters that it will not sell any Shares hereunder on such date
unless all of the Shares to be purchased on such date are purchased on
such date by the Underwriters (or by substituted Underwriters selected
by the Representatives with the approval of the Company or selected by
the Company with the approval of the Representatives).
If a new Underwriter or Underwriters are substituted for a
defaulting Underwriter in accordance with the foregoing provision, the
Company or the non-defaulting Underwriters shall have the right to
postpone the Closing Time or the relevant Date of Delivery for a period
not exceeding five business days in order that any necessary changes in
the Registration Statement and Prospectus and other documents may be
effected.
The term "Underwriter" as used in this Agreement shall refer
to and include any Underwriter substituted under this Section 8 with
the same effect as if such substituted Underwriter had originally been
named in this Agreement.
9. Indemnity and Contribution by the Company and the Underwriters:
(a) The Company agrees to indemnify, defend and hold harmless
each Underwriter and any person who controls any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any loss, expense, liability, damage or
claim (including the reasonable cost of investigation) which, jointly
or severally, any such Underwriter or controlling person may incur
under the Securities Act, the Exchange Act or otherwise, insofar as
such loss, expense, liability, damage or claim arises out of or is
based upon (A) any failure on the part of the Company to comply with
any applicable law, rule or regulation relating to the offering of
securities being made pursuant to the Prospectus, (B) any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement (or in the Registration Statement as amended
by any post-effective amendment thereof by the Company), the Prospectus
(the term Prospectus for the purpose of this Section 9 being deemed to
include the Preliminary Prospectus, the Prospectus and the Prospectus
as amended or supplemented by the Company), (C) any application or
other document, or any amendment or supplement thereto, executed by the
Company or based upon written information furnished by or on behalf of
the Company filed in any jurisdiction (domestic or foreign) in order to
qualify the Shares under the securities or blue sky laws thereof or
filed with the NASD or the Nasdaq Stock Market (each an "Application"),
(D) any omission or alleged omission to state a material fact required
to be stated in any such Registration Statement or necessary to make
the statements made therein not misleading, or (E) any omission or
alleged omission to state a material fact required to be stated in any
such Prospectus or necessary to make the statements made therein, in
light of the circumstances under which they were made, not misleading;
except insofar as any such
-23-
loss, expense, liability, damage or claim arises out of or is based
upon any untrue statement or alleged untrue statement or omission or
alleged omission of a material fact contained in and in conformity with
information furnished in writing by the Underwriters through the
Representatives to the Company expressly for use in such Registration
Statement, Prospectus or Application; provided, further, that with
respect to any untrue statement or alleged untrue statement in or
omission or alleged omission from the Preliminary Prospectus the
foregoing indemnity agreement shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, expenses,
liabilities, damages or claims purchased the Shares, or any person
controlling such Underwriter, if a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) was not sent or given by or on
behalf of such Underwriter to such person, if required by law so to
have been delivered, at or prior to the written confirmation of the
sale of the Shares to such person, and if the Prospectus (as so amended
or supplemented) would have cured the defect giving rise to such
losses, expenses, liabilities, damages or claims, unless such failure
is the result of noncompliance by the Company in furnishing copies of
the Prospectus (or amendments or supplements thereto) pursuant to
Section 4(c) hereof. The indemnity agreement set forth in this Section
9(a) shall be in addition to any liability which the Company may
otherwise have.
If any action is brought against an Underwriter or controlling
person in respect of which indemnity may be sought against the Company
pursuant to subsection (a) above, such Underwriter shall promptly
notify the Company in writing of the institution of such action, and
the Company shall assume the defense of such action, including the
employment of counsel and payment of expenses; provided, however, that
any failure or delay to so notify the Company will not relieve the
Company of any obligation hereunder, except to the extent that its
ability to defend is actually impaired by such failure or delay. Such
Underwriter or controlling person shall have the right to employ its or
their own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of such Underwriter or such controlling
person unless the employment of such counsel shall have been authorized
in writing by the Company in connection with the defense of such
action, or the Company shall not have employed counsel to have charge
of the defense of such action within a reasonable time after notice of
the institution of such action is given by the Underwriter or
controlling person or such indemnified party or parties shall have
reasonably concluded (based on the advice of counsel) that there may be
defenses available to it or them which are different from or additional
to those available to the Company (in which case the Company shall not
have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events such fees and
expenses shall be borne by the Company and paid as incurred (it being
understood, however, that the Company shall not be liable for the
expenses of more than one separate firm of attorneys for the
Underwriters or controlling persons in any one action or series of
related actions in the same jurisdiction (other than local counsel in
any such jurisdiction) representing the indemnified parties who are
parties to such action).
-24-
Anything in this paragraph to the contrary notwithstanding, the Company
shall not be liable for any settlement of any such claim or action
effected without its consent.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify, defend and hold harmless the Company, the Company's
directors, the Company's officers that signed the Registration
Statement, and any person who controls the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any loss, expense, liability, damage or claim
(including the reasonable cost of investigation) which, jointly or
severally, the Company or any such person may incur under the
Securities Act, the Exchange Act or otherwise, but only insofar as such
loss, expense, liability, damage or claim arises out of or is based
upon (A) any untrue statement or alleged untrue statement of a material
fact contained in and in conformity with information furnished in
writing by such Underwriter through the Representatives to the Company
expressly for use in the Registration Statement (or in the Registration
Statement as amended by any post-effective amendment thereof by the
Company), the Prospectus, or any Application, (B) any omission or
alleged omission to state a material fact in connection with such
information required to be stated in such Registration Statement or
necessary to make such information not misleading, or (C) any omission
or alleged omission to state a material fact in connection with such
information required to be stated in such Prospectus or any Application
or necessary to make such information, in light of the circumstances
under which they were made, not misleading. The concession and
reallowance figures appearing in the fourth paragraph and the
statements set forth in the seventh, tenth, twelfth and fourteenth
paragraphs under the caption "Underwriting" in the Preliminary
Prospectus and the Prospectus (to the extent such statements relate to
the Underwriters) constitute the only information furnished by or on
behalf of any Underwriter through the Representatives to the Company
for purposes of Section 3(m) and this Section 9. The indemnity
agreement set forth in this Section 9(b) shall be in addition to any
liabilities that such Underwriters may otherwise have.
If any action is brought against the Company or any such
person in respect of which indemnity may be sought against any
Underwriter pursuant to the foregoing paragraph, the Company or such
person shall promptly notify the Representatives in writing of the
institution of such action and the Representatives, on behalf of the
Underwriters, shall assume the defense of such action, including the
employment of counsel and payment of expenses. The Company or such
person shall have the right to employ its own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of
the Company or such person unless the employment of such counsel shall
have been authorized in writing by the Representatives in connection
with the defense of such action or the Representatives shall not have
employed counsel to have charge of the defense of such action within a
reasonable time after notice of the institution of such action is given
by the Company or such indemnified party or parties shall have
reasonably concluded (based on the advice of counsel) that there may be
defenses available to it or them which are different from or additional
to those available to the Underwriters (in which case the
Representatives shall not have the right to direct the
-25-
defense of such action on behalf of the indemnified party or parties),
in any of which events such fees and expenses shall be borne by such
Underwriter and paid as incurred (it being understood, however, that
the Underwriters shall not be liable for the expenses of more than one
separate firm of attorneys in any one action or series of related
actions in the same jurisdiction (other than local counsel in any such
jurisdiction) representing the indemnified parties who are parties to
such action). Anything in this paragraph to the contrary
notwithstanding, no Underwriter shall be liable for any settlement of
any such claim or action effected without the written consent of the
Representatives.
(c) If the indemnification provided for in this Section 9 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) and (b) of this Section 9 in respect of any losses,
expenses, liabilities, damages or claims referred to therein, then each
applicable 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, expenses, liabilities,
damages or claims (i) in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Underwriters from
the offering of the Shares or (ii) if (but only if) the allocation
provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of
the Company and of the Underwriters in connection with the statements
or omissions which resulted in such losses, expenses, liabilities,
damages or claims, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the
Underwriters shall be deemed to be in the same proportion as the total
proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company bear
to the underwriting discounts and commissions received by the
Underwriters. The relative fault of the Company and of the Underwriters
shall be determined by reference to, among other things, whether the
untrue statement or alleged untrue statement of a material fact or
omission or alleged omission relates to information supplied by the
Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages and liabilities referred to above
shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or
defending any claim or action.
(d) The Company and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 9 were
determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations
referred to in subsection (c)(i) and, if applicable (ii), above.
Notwithstanding the provisions of this Section 9, no Underwriter shall
be required to contribute any amount in excess of the underwriting
discounts and commissions applicable to the Shares purchased by such
Underwriter pursuant to this Agreement. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be
-26-
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 9 are several in proportion to
their respective underwriting commitments and not joint.
(e) The Company agrees to indemnify and hold harmless each
Underwriter and its affiliates and each person, if any, who controls
each Underwriter and its affiliates within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably
incurred in connection with defending or investigating any such action
or claim) (i) caused by any untrue statement or alleged untrue
statement of a material fact contained in any material prepared by or
with the consent of the Company for distribution to participants in
connection with the Directed Share Program, 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; (ii) as a result of the failure of any participant to pay
for and accept delivery of Directed Shares that the participant has
agreed to purchase, except to the extent such Directed Shares are
offered to the public and purchased as part of the public offering
contemplated herein; or (iii) related to, arising out of, or in
connection with the Directed Share Program; provided, however, that the
Company shall not be liable under this clause (iii) to the extent that
a court of competent jurisdiction shall have determined by a final
judgment that such loss, claim, damage, liability or action resulted
directly from any such acts or failures to act undertaken or omitted to
be taken by any Underwriter through its bad faith or willful
misconduct.
10. Survival:
The indemnity and contribution agreements contained in Section
9 and the covenants, warranties and representations of the Company
contained in Sections 3, 4 and 5 of this Agreement shall remain in full
force and effect regardless of any investigation made by or on behalf
of any Underwriter, or any person who controls any Underwriter within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, or by or on behalf of the Company, its directors and
officers, or any person who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, and
shall survive any termination of this Agreement or the sale and
delivery of the Shares. The Company and each Underwriter agree promptly
to notify the others of the commencement of any litigation or
proceeding against it and, in the case of the Company, against any of
the Company's officers and directors, in connection with the sale and
delivery of the Shares, or in connection with the Registration
Statement or Prospectus.
11. Notices:
Except as otherwise provided herein, all statements, requests,
notices and agreements shall be in writing and, if to the Underwriters,
shall be delivered or sent by mail or facsimile transmission in care of
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc., ▇▇▇▇
-▇▇-
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Syndicate
Department; facsimile number ▇▇▇-▇▇▇-▇▇▇▇; if to the Company, shall be
delivered or sent by mail or facsimile transmission to the offices of
the Company at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇; facsimile number ▇▇▇-▇▇▇-▇▇▇▇.
12. Governing Law; Headings:
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES. The section headings in this Agreement
have been inserted as a matter of convenience of reference and are not
a part of this Agreement.
13. Parties at Interest:
The Agreement herein set forth has been and is made solely for
the benefit of the Underwriters, the Company and the controlling
persons, directors and officers referred to in Sections 9 and 10
hereof, and their respective successors, assigns, executors and
administrators. No other person, partnership, association or
corporation (including a purchaser, as such purchaser, from any of the
Underwriters) shall acquire or have any right under or by virtue of
this Agreement.
14. Counterparts and Facsimile Signatures:
This Agreement may be signed by the parties in counterparts
which together shall constitute one and the same agreement among the
parties. A facsimile signature shall constitute an original signature
for all purposes.
If the foregoing correctly sets forth the understanding among
the Company and the Underwriters, please so indicate in the space
provided below, whereupon this Agreement shall constitute a binding
agreement among the Company and the Underwriters.
Very truly yours,
SEABRIGHT INSURANCE HOLDINGS, INC.
By:_____________________________
Name:
Title:
-28-
Accepted and agreed to as of the date first above written:
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & CO.
As Representatives of the other Underwriters named on Schedule I hereto.
By: FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
By: _______________________________________
Name:_______________________________
Title:________________________________
-29-
Schedule I
Number of Initial Maximum Number
Shares to be of Option Shares to
Underwriter Purchased be Purchased
------------------------------------------------------- -------------------------- --------------------------
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc. [ ] [ ]
--- ---
▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. [ ] [ ]
--- ---
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Co. [ ] [ ]
--- ---
Total [ ]
---
EXHIBIT A
FORM OF LOCK-UP LETTER
January ___, 2005
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & CO.
as Representatives of the several Underwriters
c/o Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned understands that Friedman, Billings, ▇▇▇▇▇▇ & Company,
Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. and ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Co. (the "Representatives")
propose to enter into an Underwriting Agreement (the "Underwriting Agreement"),
as Representatives of several underwriters (the "Underwriters"), with SeaBright
Insurance Holdings, Inc., a Delaware corporation (the "Company"), providing for
the public offering (the "Public Offering") by the Underwriters of shares (the
"Shares") of Common Stock of the Company (the "Common Stock").
To induce the Underwriters to continue their efforts in connection with
the Public Offering, the undersigned hereby irrevocably agrees that, without the
prior written consent of the Representatives, it will not, during the period
commencing on the date hereof and ending on the 180-day anniversary of the date
of the final prospectus relating to the Public Offering (the "Prospectus"), (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 any shares of Common Stock (whether such shares or any such
securities are now owned by the undersigned or are hereafter acquired), or (2)
enter into any swap or other arrangement that transfers to another, 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, excluding any Shares to be sold under the Underwriting Agreement. In
addition, the undersigned agrees that, without prior written consent of the
Representatives, it will not, during the period commencing on the date hereof
and ending on the 180-day anniversary of the date of the Prospectus, make any
demand for or exercise any right with respect to, the registration under the
Securities Act
of 1933, as amended (the "Securities Act"), of any shares of Common Stock or any
security convertible into or exercisable or exchangeable for Common Stock.
Notwithstanding the foregoing, the undersigned may transfer the
Undersigned's Shares (i) as a bona fide gift or gifts, provided that the donee
or donees thereof agree to be bound in writing by the restrictions set forth
herein, (ii) to any trust, partnership, corporation or other entity formed for
the direct or indirect benefit of the transferor or the immediate family of the
transferor, provided that a duly authorized officer, representative or trustee
of the transferee agrees in writing to be bound by the restrictions set forth
herein, and provided further that any such transfer shall not involve a
disposition for value, (iii) if the transfer occurs by operation of law, such as
rules of descent and distribution, statutes governing the effects of a merger or
a qualified domestic order, provided that the transferee executes an agreement
acknowledging that the transferee is receiving and holding the shares subject to
the provisions hereof, (iv) to an affiliate (as that term is defined in Rule 405
under the Securities Act) of the undersigned, provided that such affiliate
agrees to be bound in writing by the restrictions set forth herein, or (v) with
the prior written consent of Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc. on behalf of
the Underwriters. For purposes of this Lock-Up Letter Agreement, "immediate
family" shall mean any relationship by blood, marriage or adoption, not more
remote than first cousin.
In furtherance of the foregoing, the Company and its transfer agent are
hereby authorized to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Lock-Up Letter Agreement.
The undersigned understands that the Company and the Underwriters will
proceed with the Public Offering in reliance on this Lock-Up Letter Agreement.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
agreement between the Company and the Representatives. The terms of this Lock-Up
Letter Agreement shall expire in the event the Public Offering of the firm
Shares is not consummated on or before March 1, 2005.
If (A) the Company (i) withdraws the registration statement registering
the Shares (the "Registration Statement") or (ii) deregisters all of the Shares
covered by the Registration Statement or (B) the Underwriting Agreement is
executed but is terminated by the Representatives prior to payment for and
delivery of any of the Shares, the undersigned will be released from the
undersigned's obligations under this Lock-Up Letter Agreement.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Letter Agreement and that,
upon request, the undersigned will execute any additional documents reasonably
necessary in connection with the enforcement hereof. Any obligations of the
undersigned shall be
binding upon the heirs, personal representatives, successors and assigns of the
undersigned.
Very truly yours,
Dated:
--------------------------
-------------------------------
(Signature)
-------------------------------
(Printed or Typed Name)