UP TO 2,750,000 SHARES
eZ BANCORP, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
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_____________ __, 2001
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Markets,
a division of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
SECTION 1. Introduction. eZ Bancorp, Inc. ("Company"), a Michigan
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corporation, has authorized capital consisting of 9,000,000 shares of common
stock ("Common Stock") and 1,000,000 shares of Preferred Stock ("Preferred
Stock"). As of the date hereof, sixty (60) shares and only sixty (60) shares of
Common Stock and no Preferred Stock have been issued. The Company proposes to
issue and sell a minimum of 2,250,000 and a maximum of 2,750,000 shares of
Common Stock ("Shares") at a price of $10.00 per share (the "Offering"). No
Shares will be sold unless acceptable subscriptions for a minimum of 2,250,000
Shares are received, and preliminary regulatory approvals are obtained for the
Company to become a bank holding company and ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, a Michigan
banking corporation (the "Bank") receives preliminary approvals from the
Michigan Department of Financial Institutions and the FDIC.
The Company wishes to confirm your engagement as the exclusive agent of
the Company in connection with the issuance and sale of the Shares. You are
referred to in the balance of this Agreement as the "Underwriter."
The Company agrees with the Underwriter as follows:
SECTION 2. Representations, Warranties and Agreements of the
----------------------------------------------------
Company. The Company represents and warrants to, and agrees with, the
Underwriter that:
(a) A registration statement on Form SB-2 (No. 333-50728),
including a prospectus, relating to the Shares has been filed by the
Company pursuant to the Securities Act of 1933, as amended (the "Act"),
with the Securities and Exchange Commission (the "Commission"). Such
registration statement either (i) is not proposed to be amended and has
been declared effective under the Act, and any post-effective
amendments filed with the Commission prior to the execution and
delivery of this Agreement have been declared effective, or (ii) is
proposed to be amended by amendment
or post-effective amendment. For purposes of this Agreement, "Effective
Time" means, in the case of clause (i) in the preceding sentence, the
date and time as of which such registration statement or the most
recent post-effective amendment thereto (if any) filed prior to the
execution and delivery of this Agreement was declared effective by the
Commission or, in the case of clause (ii) in the preceding sentence,
the date and time as of which such registration statement, as amended
by such amendment or post-effective amendment, as the case may be, is
declared effective by the Commission. "Effective Date" means the date
of the Effective Time. If the Effective Time is prior to the execution
and delivery of this Agreement, no other document relating to such
registration statement has been filed with the Commission; and no
proceeding for the purpose of suspending such effectiveness has been
initiated or threatened or, to the knowledge of the Company, is
contemplated by the Commission. Such registration statement as amended
at the Effective Time, including all material incorporated by reference
therein and all exhibits thereto and including all information (if any)
contained in a prospectus subsequently filed with the Commission and
deemed to be part of the registration statement at the Effective Time
pursuant to Rule 430A under the Act, is hereinafter referred to as the
"Registration Statement," and the prospectus, in the form first filed
pursuant to Rule 424(b) under the Act ("Rule 424(b)") or, if no such
filing is required, as included in the Registration Statement,
including all material incorporated by reference in such prospectus is,
hereinafter referred to as the "Prospectus."
(b) If the Effective Time is prior to the execution and
delivery of this Agreement: (i) on the Effective Date, the Registration
Statement conformed, on the date of this Agreement, the Registration
Statement conforms, and at the time of filing of any Prospectus
pursuant to Rule 424(b), the Registration Statement and the Prospectus
will conform in all respects to the requirements of the Act and the
rules and regulations of the Commission thereunder (the "Rules and
Regulations"); (ii) on the Effective Date, neither the Registration
Statement nor the Prospectus included any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading; (iii) any amendment to the Registration Statement, as of
its date and as of its effective date, did not and will not include any
untrue statement of material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading; and (iv) the Prospectus on the date of this
Agreement, as of its date, as of the date of any amendment or
supplement thereto, and as amended or supplemented at the Closing Date
(as defined in Section 3), does not and will not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If the
Effective Time is subsequent to the execution and delivery of this
Agreement: (i) on the Effective Date, the Registration Statement and
the Prospectus will conform in all respects to the requirements of the
Act and the Rules and Regulations, and neither the Registration
Statement nor the Prospectus will include any untrue statement of a
material fact or will omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading; (ii) any amendment to the Registration Statement, as of its
date and as of its effective date, will not include any untrue
statement of material fact or omit to state any material fact required
to be stated therein or necessary to make
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the statements therein not misleading; and (iii) the Prospectus, as of
its date, as of the date of any amendment or supplement thereto, and as
amended or supplemented at the Closing Date, will not contain any
untrue statement of any material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The
foregoing representations and warranties do not apply to statements or
omissions in the Registration Statement or any amendment thereto or the
Prospectus, as amended or supplemented, if applicable, based upon the
information furnished to the Company by the Underwriter specified in
Section 8(a).
(c) The consolidated financial statements included in the
Registration Statement and Prospectus present fairly the consolidated
financial position of the Company and its consolidated subsidiaries as
of the dates indicated and the results of their operations and the
statements of their cash flows for the periods specified; such
financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis during the
periods involved, except as indicated therein; and the supporting
schedules included in the Registration Statement present fairly the
information required to be stated therein.
(d) Since the respective dates as of which information is
given in the Registration Statement and in the Prospectus, except as
otherwise stated therein, (i) there has been no material adverse change
in the condition, financial or otherwise, earnings, business or
prospects of the Company and its subsidiaries considered as a whole,
whether or not arising in the ordinary course of business, and (ii)
there have been no material transactions entered into by the Company or
any of its subsidiaries other than those in the ordinary course of
business.
(e) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Michigan with power and authority to own, lease and operate its
properties and conduct its business as described in the Registration
Statement and Prospectus. The Bank, the Company's subsidiary, will
become a body corporate under the Michigan Banking Code of 1999 (the
"Banking Code") upon filing of its Articles of Incorporation and is
currently limited to the transaction of only such business as is
incidental and necessary preliminary to its organization until the
satisfaction of the conditions contained in DFI Order (as defined
below) and the FDIC Order (as defined below). Neither the Company nor
the Bank has any properties or conducts any business outside of the
State of Michigan which would require either of them to be qualified as
a foreign corporation or bank, as the case may be, in any jurisdiction
outside of Michigan. Neither the Company nor the Bank has any directly
or indirectly held subsidiary, except that the Bank will be a
subsidiary of the Company. Upon completion of the Offering and the
capitalization of the Bank, all of the issued and outstanding capital
stock of the Bank will have been duly authorized and validly issued and
be fully paid and nonassessable (except to the extent provided in
Section 3807 of the Banking Code), and all such capital stock of the
Bank will be owned by the Company, free and clear of any mortgage,
pledge, lien, encumbrance, adverse claim or equity (except as provided
in Section 3803 of the Banking Code). The Company
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has all power, authority, authorizations, approvals, consents, orders,
licenses, certificates and permits needed to enter into, deliver and
perform this Agreement and to issue and sell the Shares.
(f) The application for permission to organize the Bank (the
"DFI Application") was approved by the Commissioner of the Office of
Financial and Insurance Services, Division of Financial Institutions
for the State of Michigan (the "Commissioner") on September 7, 2000,
pursuant to Order No. _____________, subject to certain conditions
specified in the Order and supplemental correspondence from the
Commissioner dated the same date. The Order and supplemental
correspondence from the Commissioner are collectively referred to in
this Agreement as the "DFI Order." All conditions contained in the DFI
Order have been satisfied, except those conditions relating to paid-in
capital of the Bank, maintenance of capital ratios and valuation
reserves, the certificate of paid-in capital and surplus, completion of
the Commissioner's pre-opening investigation and the issuance by the
Commissioner of a certificate to commence business. The application to
the Federal Deposit Insurance Corporation (the "FDIC") to become an
insured depository institution under the provisions of the Federal
Deposit Insurance Act (the "FDIC Application") was approved by order of
the FDIC dated _______________________, 2001 (the "FDIC Order") subject
to certain conditions specified in the FDIC Order. All conditions
contained in the FDIC Order required to be satisfied before the date of
this Agreement have been satisfied except the
following:_____________________________________________________________
______________________________________________________________________.
The Company's application to become a bank holding company and acquire
all issued capital stock of the Bank (the "Bank Holding Company
Application") under the Bank Holding Company Act of 1956, as amended,
was approved on _____________________, 2001 (the "Federal Reserve Board
Approval"), subject to certain conditions specified in the Federal
Reserve Board Approval. All conditions in the Federal Reserve Board
Approval required to be satisfied before the date of this Agreement
have been satisfied. Each of the DFI Application, FDIC Application, and
Bank Holding Company Application, at the time of their respective
approvals, contained all required information and such information was
complete and accurate in all material respects. Other than the
remaining conditions to be fulfilled under the DFI Order, FDIC Order
and the Federal Reserve Board Approval specified above, no
authorization, approval, consent, order, license, certificate or permit
of and from any federal, state or local governmental or regulatory
official, body, or tribunal, is required for the Company or the Bank to
commence and conduct their respective businesses and to own their
properties as described in the Prospectus, except such authorizations,
approvals, consents, orders, licenses, certificates or permits as are
not material to the commencement or conduct of their respective
businesses or to the ownership of their respective properties.
(g) Neither the Company nor any of its subsidiaries is (i) in
violation of its or any of their Articles of Incorporation or bylaws,
as the case may be, or other organizational documents, or (ii) in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any material contract, indenture,
mortgage, loan agreement, note, lease or other agreement or instrument
to
4
which it or any of them is a party or by which it or any of them or
their properties may be bound, except in the case of (ii) above, where
such default would not, individually or in the aggregate, result in a
material adverse change in (A) the condition, financial or otherwise,
earnings, business or prospects of the Company and its subsidiaries
taken as a whole, or (B) the ability of the Company and any subsidiary
to enter into, perform and effect the transactions contemplated hereby;
no consent, approval, authorization, order, registration, filing or
qualification of or with any court or governmental authority or agency
is required for the issue and sale of the Shares as contemplated herein
or the consummation by the Company of the transactions contemplated by
this Agreement, except such as may be required under the Act and the
Rules and Regulations or state securities or Blue Sky laws in
connection with the distribution of the Shares by the Underwriter; and
the issue and sale of the Shares as contemplated herein, the execution
and delivery of this Agreement and the consummation of the transactions
contemplated herein will not conflict with or constitute a breach of,
or default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
of its subsidiaries pursuant to, any contract, indenture, mortgage,
loan agreement, note, lease or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which it or any
of them may be bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will any such action
result in any violation of, the provisions of the charter or code of
regulation of the Company or any law, administrative regulation or
administrative or court decree or order applicable to the Company or
any of its subsidiaries.
(h) The Company and its subsidiaries possess all certificates,
authorities or permits issued by the appropriate state, federal or
foreign regulatory agencies or bodies necessary to conduct the business
now operated by them, and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such certificate, authority or permit
which, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and adversely
affect the condition, financial or otherwise, earnings, business or
prospects of the Company and its subsidiaries considered as a whole.
(i) Except as set forth in the Prospectus, as amended or
supplemented, there is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending,
or, to the knowledge of the Company, contemplated or threatened against
the Company or any of its subsidiaries, which might result in any
material adverse change in the condition, financial or otherwise,
earnings, business or prospects of the Company and its subsidiaries
considered as a whole, or might materially and adversely affect the
properties or assets thereof or might adversely affect the lawful
issuance and offering of the Shares in the manner contemplated by the
Prospectus; and there are no material contracts or other documents
which are required to be described in the Registration Statement or the
Prospectus or filed as exhibits to the Registration Statement by the
Act or by the Rules and Regulations which have not been so described or
have not been so filed.
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(j) Each of the Company and its subsidiaries has good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by it, in each case
free and clear of all liens, encumbrances and defects except (i) such
as are referred to in the Prospectus, or (ii) such as do not materially
and adversely affect the value of such property to the Company or such
subsidiary, and do not materially interfere with the use made and
proposed to be made of such property by the Company or such subsidiary;
and any real property and buildings held under lease by the Company and
its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made by the Company and
its subsidiaries.
(k) The Company has an authorized capitalization as set forth
in the Prospectus, and sixty (60) shares and only sixty (60) shares of
Common Stock and no other capital stock of the Company will be
outstanding prior to the issuance of the Shares. The Shares have been
duly authorized and, when issued and delivered in accordance with the
terms of this Agreement, will be validly issued, fully paid and
non-assessable and will conform to the description of them contained in
the Prospectus. The issuance and sale of all the Shares is not subject
to pre-emptive or other similar rights or to restrictions on transfer
(other than those imposed by the Act, the Rules and Regulations or
state securities or Blue Sky laws). Upon issuance, sale, deliver
thereof against payment therefor, all of the capital stock of the Bank
will be duly authorized and validly issued, fully paid and
nonassessable and will be owned by the Company, free and clear of all
liens, encumbrances and security interests (subject to the provisions
of the Banking Code, without limitation, Sections 3803 and 3807 of the
Banking Code). There is no outstanding option, warrant or other right
calling for the issuance of, and no binding commitment to issue, any
share of stock of the Company or the Bank or any security convertible
into or exchangeable for stock of the Company or the Bank, except for
stock options and the Warrant (as defined below) described in the
Registration Statement (the "Stock Options"). The Common Stock, the
Shares and the Stock Options conform to all statements in relation
thereto contained in the Registration Statement and the Prospectus.
(l) This Agreement has been duly authorized, executed and
delivered by the Company and is the legal, valid and binding agreement
and obligation of the Company, except (i) as enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
laws relating to or affecting enforcement of creditors rights or by
general equity principles, including requirements of reasonableness and
good faith in the exercise of rights and remedies, whether applied by a
court of equity or a court of law in an action at law or in equity, or
by the discretionary nature of specific performance, injunctive relief,
and other equitable remedies, including the appointment of a receiver
and (ii) with respect to provisions relating to indemnification and
contribution, to the extent they are held by a court of competent
jurisdiction to be void or unenforceable as against public policy or
limited by applicable laws or the policies embodied in them.
(m) Neither the Company nor any of its officers, directors or
holders of five percent or more of any class of its capital stock or
any of their respective affiliates is a
6
member of, or is associated or affiliated with a member of, the
National Association of Securities Dealers, Inc. ("NASD").
(n) There are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the Act with
respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities under the
Registration Statement.
(o) Ernst & Young LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the Rules and Regulations.
(p) Neither the Company, nor the Bank, nor, to the Company's
knowledge, any director, officer, agent, employee or other person
associated with the Company or the Bank, acting on behalf of the
Company or the Bank, has used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate
funds; violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(q) Neither the Company nor the Bank nor any affiliate of
either of them has taken, and they will not take, directly or
indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Shares in order to
facilitate the sale or resale of any of the Shares as contemplated by
the Rules and Regulations.
(r) No transaction has occurred between or among the Company
or the Bank and any of their respective officers, directors, organizers
or any affiliate or affiliates of any such officer, director, organizer
or shareholder, that is required to be described in and is not
described in the Prospectus.
(s) The Company is not and will not, upon completion of the
Offering, be an "investment company," or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act
of 1940, as amended.
(t) The Company has obtained from all of its officers and
directors listed in the Prospectus their written agreement ("Holdback
Agreement") that for a period of 180 days after the termination of the
Offering ("Holdback Period") they will not offer to sell, sell,
transfer, contract to sell or grant any option for the sale of or
otherwise dispose of, directly or indirectly, any Shares of Common
Stock of the Company (or any securities convertible into or exercisable
for such Shares of Common Stock), except for (A) the exercise of Stock
Options under the terms of the option plans and agreements pursuant to
which the Stock Options were issued (including, as available, by means
of "cashless exercise"); (B) gifts of Common Stock (or other
securities) to a donee or donees who
7
agree in writing to be bound by their donor's Holdback Agreement; and
(C) the Holdback Period for Common Stock held by trusts or estates on
the death of an executive office or director of the Company shall be
the lesser of 90 days or the expiration of the Holdback Period.
(u) The Warrant to Purchase Common Stock of eZ Bancorp, Inc.
(the "Warrant") in the form of Exhibit A has been duly authorized,
executed, and delivered by the Company and is the legal, valid, and
binding obligation of the Company. The Company has the full power and
authority to enter into and perform its obligations under the Warrant.
SECTION 3. Engagement of the Underwriter and Closing. On the basis of
------------------------------------------
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the parties have agreed as follows:
(a) The Company shall and does hereby engage the Underwriter
as the Company's exclusive agent to sell for the Company's account a
minimum of 2,250,000 and a maximum of 2,750,000 Shares.
(b) The Underwriter agrees to use its best efforts as agent,
promptly after the Registration Statement becomes effective ("Effective
Time"), to offer and obtain purchase subscriptions for all of the
Shares subject to the terms, provisions and conditions set forth below.
There is no assurance that any or all of the Shares to be offered by
the Company will be sold, and the Underwriter is under no obligation to
purchase or take down any of the Shares on its own behalf or on behalf
of others.
(c) Underwriter acknowledges that (i) all subscription funds
will be held in escrow and if the minimum amount of Shares is not
subscribed on or before _____________, 2001, unless extended by the
Company to a date no later than _________________, 2001 (the "Final
Termination Date"), the Offering will be terminated and the escrowed
funds will be promptly returned to the investors by the Escrow Agent
(as defined in the Prospectus); (ii) all subscribers' checks shall be
made payable to the Escrow Agent and deposited with the Escrow Agent in
accordance with applicable NASD regulations. Subscribers' funds will be
held in escrow and invested in compliance with SEC Rule 15c2-4. All
subscriber checks will be transmitted directly to the Escrow Agent by
the next business day after receipt by the Underwriter.
(d) The Company understands that the Underwriter may effect
sales of Shares through dealers selected by the Underwriter and pay
such dealers out of the fees received by the Underwriter whatever
compensation the Underwriter may determine.
(e) At the "Closing" as defined below, the Underwriter shall
be entitled to a financing fee equal to $.70 for each Share subscribed
in the Offering, provided, however, the transaction fee shall not apply
to funds (in an amount not to exceed 30 percent of the total Offering)
invested by "Company Identified Investors" as defined below and further
provided, an amount of $50,000 shall be deducted from the total
transaction fee payable
8
by the Company to the Underwriter. At the Closing, the Company shall
also deliver to the Underwriter as additional compensation for its
services in selling the Shares the Warrant duly executed by the
Company's authorized officers. It is understood and agreed that the
$.70 per Share transaction fee and warrant shall represent the
Underwriter's entire compensation and commission, inclusive of any
financial arrangements that the Underwriter may make with dealers as
contemplated by subsection (d) above (subject to reimbursement of
certain of the Underwriter's expenses as described below) for the
Underwriter's services in selling the Shares. "Company Identified
Investors" means the Company's directors and officers and their
affiliates who have expressed a willingness and intention to invest a
minimum of $4,000,000 in the Offering.
(f) The Closing for the sale of Shares contemplated by this
Agreement and the release of funds from the Escrowed Funds to the
Company shall be held on a business date mutually agreeable to the
Company and the Underwriter after subscriptions have been received and
accepted for the minimum number of Shares ("Closing Date") subject to
the satisfaction of the conditions set forth in Section 6 of this
Agreement. At the Closing, the Escrowed Funds will be released to the
Company and the Company will deliver certificates representing all of
the Shares sold during the Offering Period to the subscribers to the
Shares whose subscriptions were accepted.
SECTION 4. Offering by the Underwriter. After the Effective Time, the
Underwriter will, as Company's agent, offer the Shares for sale to the public on
the terms and conditions as set forth in the Prospectus.
SECTION 5. Covenants of the Company. The Company covenants and agrees
------------------------
with the Underwriter that:
(a) The Company will advise the Underwriter promptly of any
proposal to amend or supplement the Registration Statement as filed, or
the related Prospectus, prior to the Closing Date, and will not effect
such amendment or supplement without Underwriter's consent which will
not be unreasonably withheld; the Company will also advise the
Underwriter promptly of the effectiveness of the Registration Statement
(if the Effective Time is subsequent to the execution and delivery of
this Agreement), of any amendment or supplement to the Registration
Statement or the Prospectus, and of receipt of notification of the
institution by the Commission of any stop order proceedings in respect
of the Registration Statement or of any order preventing or suspending
the use of any prospectus relating to the Shares, of the suspension of
the qualification of the Shares for offering or sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose, or of any request by the Commission to amend or
supplement the Registration Statement or Prospectus or for additional
information and will use its best efforts to prevent the issuance of
any such stop order or of any order preventing or suspending the use of
any prospectus relating to the Shares or suspending any such
qualification and to obtain as soon as possible its lifting, if issued.
(b) If, at any time when a prospectus relating to the Shares
is required to be delivered under the Act, any event occurs as a result
of which the Prospectus as then
9
amended or supplemented would, in the judgment of the Underwriter,
include an untrue statement of a material fact, or omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if it
is necessary at any time to amend or supplement the Prospectus to
comply with the Act, or any other law, the Company promptly will
prepare and file with the Commission an amendment or supplement which
will correct such statement or omission or an amendment which will
effect such compliance and will notify the Underwriter and, upon the
Underwriter's request prepare and furnish without charge to the
Underwriter and to any dealer in securities as many copies as the
Underwriter may from time to time reasonably request, of an amended
Prospectus or a supplement to the Prospectus complying with Section
8(a) of the Act which will correct such statement or omission or effect
such compliance.
(c) The Company will deliver to the Underwriter as many signed
and conformed copies of the Registration Statement (as originally
filed) and of each amendment thereto (including exhibits filed
therewith and documents incorporated therein by reference) as the
Underwriter may reasonably request and will also deliver to the
Underwriter a conformed copy of the Registration Statement and each
amendment thereto (including documents incorporated therein by
reference).
(d) The Company will take such action as the Underwriter may
reasonably request to qualify the Shares for offering and sale under
the applicable securities laws of such states and other jurisdictions
of the United States as the Underwriter may designate, and will
maintain such qualifications in effect for as long as may be required
for the distribution of the Shares. The Company will file such
statements and reports as may be required by the laws of each
jurisdiction in which the Shares have been qualified as above provided.
(e) During the period of three years hereafter, the Company
will furnish to the Underwriter as soon as practicable after the end of
each fiscal year, a copy of its annual report to shareholders for such
year, and the Company will furnish to the Underwriter (i) as soon as
available, a copy of each report or definitive proxy statement of the
Company filed with the Commission under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or mailed to shareholders, and
(ii) from time to time, such other information concerning the Company
as the Underwriter may reasonably request.
(f) The Company, during the period when the Prospectus
relating to the Shares is required to be delivered under the Act, will
file promptly all documents required to be filed with the Commission
pursuant to Section 13, 14 or 15 of the Exchange Act.
(g) The Company will use its best efforts to obtain the
inclusion of the Shares for listing on the Nasdaq Small Cap Market.
(h) The Company agrees that, without Underwriter's prior
written consent, it will not during the Holdback Period, offer to sell,
transfer, contract to sell or grant any
10
option for the sale of or otherwise dispose of, directly or indirectly,
any Shares of Common Stock of the Company (or any securities
convertible into or exercisable for such Shares of Common Stock),
except the Company may issue Shares upon the exercise of Stock Options
under the terms of the option plans and agreements pursuant to which
the Stock Options were issued and except with respect to the Warrant.
(i) If the Company, directly or indirectly, raises debt or
equity capital or sells any business, assets, division or subsidiary
within (A) the period ending August 23, 2001 or (B) not later than 24
months after the earlier of (i) completion of the Offering or (ii) the
period ending August 23, 2001, the Company agrees to retain or cause
any entity which is selling such business or raising such capital to
retain the Underwriter and to pay the Underwriter separate fees in
connection with such transactions, which fees shall be mutually
determined and customary for services rendered in similar circumstances
by major investment banking firms.
(j) Following the Closing, the Company will use its best
efforts to as quickly as practicable satisfy all of the conditions
contained in the DFI Order, the FDIC Order and the Federal Reserve
Board approval and complete the installation and implementation of
operating systems and software required for the Bank to commence
business operations.
SECTION 6. Conditions to Closing and Release of Escrow Fund. The
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Underwriter's consent to the release of funds from Escrow on the Closing Date
will be subject to the accuracy of the representations and warranties on the
part of the Company herein as of the date hereof and as of the Closing Date with
the same force and effect as if made as of that date, to the performance by the
Company of its obligations hereunder and to the following additional conditions
precedent:
(a) If the Effective Time is not prior to the execution and
delivery of this Agreement, the Effective Time shall have occurred not
later than 5:00 p.m., Eastern Time, on the date of this Agreement, or
such later time or date as shall have been consented to by the
Underwriter. Prior to the Closing Date no stop order suspending the
effectiveness of the Registration Statement shall have been issued and
no proceedings for that purpose shall have been instituted or
threatened, or to the knowledge of the Company or the Underwriter,
shall be contemplated by the Commission; and the Company shall have
complied with all requests for additional information on the part of
the Commission to your reasonable satisfaction.
(b) The Underwriter shall not have advised the Company that
the Registration Statement or Prospectus, or any amendment or
supplement thereto, contains any untrue statement of fact or omits to
state any fact which, you concluded, is material and in the case of an
omission is required to be stated therein or is necessary to make the
statements therein not misleading.
11
(c) The Underwriter shall have received a favorable opinion of
▇▇▇▇▇▇▇▇ Ronon ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP, counsel for the Company, dated the
Closing Date, to the effect that:
(i) The Company (A) has been duly incorporated and
is validly existing as a corporation in good standing under
the laws of the State of Michigan and (B) is qualified to do
business in Michigan. The Bank (x) will become a body
corporate under the Banking Code upon the filing of its
Articles of Incorporation and is currently limited to the
transaction of any such business as is incidental and
necessarily preliminary to its organization until
satisfaction of the conditions contained in the DFI Order
and the FDIC Order, and (y) is qualified to do business in
Michigan.
(ii) Each of the Company and the Bank has full
corporate power and authority and all material
authorizations, approvals, orders, licenses, certificates
and permits of and from all governmental bank regulatory
officials and bodies necessary to own its properties and to
commence and conducts its business as described in the
Registration Statement and Prospectus, including, without
limitation, the DFI Order, the FDIC Order and the Federal
Reserve Board Approval, subject to the fulfillment of the
conditions with respect to the DFI Order, the FDIC Order and
the Federal Reserve Board Approval, all as described in
Section 2(f) above, except for such authorizations,
approvals, orders, licenses, certificates and permits as are
not material to the ownership of their properties or
commencement or conduct of their businesses.
(iii) The Company has authorized capital stock as set
forth in the Prospectus and, prior to the Closing, had sixty
(60) and only sixty (60) Shares of Common Stock and no
shares of Preferred Stock issued or outstanding; the Shares
have been duly and validly authorized and issued and upon
receipt by the Company of payment therefor in accordance
with the terms of this Agreement will be fully paid and
nonassessable and are not and will not be subject to
preemptive rights or other similar rights or to restrictions
on transfer (other than those imposed by the Act, the rules
and regulations or state securities or Blue Sky Laws); the
Shares and the other capital stock and Stock Options of the
Company and the Warrant conform in all material respects to
the descriptions thereof contained in the Registration
Statement and the Prospectus.
(iv) This Agreement has been duly authorized, executed
and delivered by the Company and is the legal, valid and
binding agreement and obligation of the Company, except (A)
as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws
relating to or affecting enforcement of creditors rights or
by general equity principles, including requirements of
reasonableness and good faith in the exercise of rights and
remedies, whether applied by a court of equity or a court of
law in an action at law or in equity, or by the
discretionary nature of specific performance, injunctive
12
relief, and other equitable remedies, including the
appointment of a receiver and (B) with respect to provisions
relating to indemnification and contribution, to the extent
they are held by a court of competent jurisdiction to be void
or unenforceable as against public policy or limited by
applicable laws or the policies embodied in them.
(v) The certificates evidencing the Shares are in the
form approved by the Board of Directors of the Company, comply
with the Bylaws and Articles of Incorporation of the Company
and comply as to form and in all other material respects with
applicable legal requirements.
(vi) The Registration Statement is effective under
the Act and, to the best of their actual knowledge, no stop
order suspending the effectiveness of the Registration
Statement or any part thereof has been issued under the Act or
proceedings therefor initiated or threatened or are pending or
contemplated by the Commission.
(vii) Statements set forth in the Registration
Statement and Prospectus, insofar as they are descriptions of
corporate documents, stock option plans, contracts, agreements
or descriptions of laws, regulations or regulatory
requirements, or refer to compliance with laws or to
statements of laws or legal conclusions, are correct in all
material respects.
(viii) No consent, approval, authorization, order,
filing, registration or qualification of or with any court or
governmental authority or agency is required for the issue and
sale of the Shares or the consummation of the transactions
contemplated by this Agreement, except such as may be required
and have been obtained under the Act and the Rules and
Regulations and such as may be required under state securities
or Blue Sky laws in connection with the sale of the Shares by
the Underwriter; and, the issue and sale of the Shares, the
execution and delivery of this Agreement and the consummation
of the transactions contemplated herein will not conflict with
or constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or the Bank pursuant to,
any material contract filed with the Registration Statement in
response to paragraphs (4) and (10) of Item 601(b) of
Regulation S-B promulgated under the Act and the Exchange Act
("Regulation S-B") or other instrument to which the Company or
the Bank is a party or by which it or any of them may be bound
or to which any of the property or assets of the Company or
the Bank is subject, that is disclosed or referred to in the
Prospectus or which is actually known by such counsel, nor
will such action result in any violation of, the provisions
of the Articles of Incorporation or bylaws of the Company,
or any Michigan corporate or Michigan or federeral banking
law, or administrative regulation or, to the actual knowledge
of such counsel, any administrative or court decree or order
applicable to the Company or the Bank.
(ix) To the actual knowledge of such counsel, (A) there
is no governmental action or proceeding and no litigation
pending against the Company or the Bank which would adversely
affect the lawful issuance and offering of the
13
Shares or that is required to be described in the Registration
Statement or Prospectus and is not so described, and (B) there
are no material contracts or other documents that are required
to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration
Statement that are not so described or filed as required.
(x) The Registration Statement, as of its date or as
of its effective date, and the Prospectus, as of the Effective
Date and as of its date (other than the financial statements
and related schedules and other financial and statistical data
included therein, as to which no opinion need be expressed)
complies as to form in all material respects with the
requirements of the Act and the Rules and Regulations.
In rendering the foregoing opinion, such counsel may rely upon
certificates of public officials (as to matters of fact and law) and
officers of the Company (as to matters of fact), and include
qualifications in its opinion as are reasonably acceptable to
Underwriter. In addition, as to certain matters relating to the laws of
the state of Michigan, such counsel may rely on the opinion of Michigan
counsel. Copies of all such certificates shall be furnished to counsel
to the Underwriter on the Closing Date.
In addition, such counsel shall state that they have
participated in conferences with officers of the Company and
representatives of the Underwriter at which the contents of the
Registration Statement and Prospectus and related matters were
discussed and although such counsel did not independently verify the
accuracy or completeness of the statements made in the Registration
Statement and Prospectus and does not assume any responsibility for the
accuracy or completeness of the statements in the Registration
Statement and Prospectus, on the basis of the foregoing, nothing has
come to the attention of such counsel that would lead them to believe
that the Registration Statement or Prospectus, as amended or
supplemented, if amended or supplemented, contains any untrue statement
of a material fact or omits a material fact required to be stated
therein or necessary to make the statements therein not misleading;
except that such statement may exclude financial statements, financial
data, and statistical information included in the Registration
Statement and Prospectus.
(d) The Underwriter shall have received from Varnum,
Riddering, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel for the Underwriter, an
opinion, dated the Closing Date, with respect to such matters as the
Underwriter may reasonably request.
(e) The Underwriter shall have received from the President or
any Vice President and a principal financial or accounting officer of
the Company a certificate, dated the Closing Date, in which such
officers, to the best of their knowledge and after reasonable
investigation, shall state that there has not been, since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, (i) any material adverse change in the
condition, financial or otherwise, earnings, business or prospects of
the Company and its subsidiaries considered as a whole, whether or not
arising in the ordinary course of business, or (ii) any material
transactions entered into by
14
the Company or any of its subsidiaries other than those in the ordinary
course of business, except in the case of clause (i) and clause (ii) as
set forth in or contemplated by the Prospectus; the representations and
warranties of the Company contained in Section 2 are true and correct
with the same force and effect as though made on and as of the Closing
Date and the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or
prior to the Closing Date; and no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been initiated or threatened or are
contemplated by the Commission.
(f) The Underwriter shall have received from Ernst & Young,
LLP, independent public accountants, two letters, the first dated the
date of this Agreement and the other dated such Closing Date, addressed
to the Underwriter, substantially in the form of Annex I hereto with
such variations as are reasonably acceptable to the Underwriter.
(g) At the Closing Date counsel for the Underwriter shall have
been furnished with such other documents and opinions as they may
reasonably require.
(h) The Shares shall have been duly included for listing on
the Nasdaq Small Cap Market.
(i) The Underwriter shall have received from each director and
executive officer of the Company a written agreement to the effect set
forth in Section 2(v).
(j) At or prior to the Closing Date, the Underwriter shall
have received a "blue sky" memorandum of Stradley, Ronon, ▇▇▇▇▇▇▇ &
Young, LLP, counsel for the Company, addressed to the Underwriter and
in form and scope reasonably satisfactory to the Underwriter,
concerning compliance with the blue sky or securities laws of the
states listed in Exhibit B attached to this Agreement.
(k) No order suspending the sale of the Shares prior to the
Closing Date, in any jurisdiction listed in Exhibit C, shall have been
issued on the Closing Date, and no proceedings for that purpose shall
have been instituted or, to the Underwriter's knowledge or that of the
Company, shall be contemplated.
(l) The NASD, upon review of the terms of the public offering
of the Shares, shall not have objected to the Underwriter's
participation in the same.
If any condition to be fulfilled prior to or at the Closing Date is not
so fulfilled, the Underwriter may terminate this Agreement or, if the
Underwriter so elects, waive any such conditions which have not been fulfilled
or extended the time of their fulfillment.
SECTION 7. Payment of Expenses. The Company will pay all costs,
---------------------
expenses, fees, disbursements and taxes incident to (i) the preparation by the
Company, printing, filing and distribution of the Registration Statement
(including financial statements and exhibits), the Prospectus; and all
amendments and supplements to any of them prior to or during the period
15
specified in Section 5(b), (ii) the preparation, printing (including word
processing and duplication costs) and delivery of this Agreement (other than the
fees of Varnum, Riddering, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP), Preliminary and Supplemental
Blue Sky Memoranda, and all other agreements, memoranda, correspondence and
other documents printed and delivered in connection with the offering of the
Shares, (iii) the registration with the Commission, and the issuance by the
Company, of the Shares, (iv) the registration or qualification of the Shares for
offer and sale under the securities or Blue Sky laws of the several states
(including the reasonable fees and disbursements of the counsel relating to such
registration or qualification), (v) filings and clearance with the NASD in
connection with the offering, (vi) fees and expenses, if any, incurred in
connection with the inclusion of the Shares on the Nasdaq Small Cap Market,
(vii) the fees and expenses of the Registrar and Transfer Agent for the Shares,
and (viii) the performance by the Company of its other obligations under this
Agreement, and all other costs and expenses incident to the performance of its
obligations hereunder in this Section 7. The Company shall also reimburse the
Underwriter from time to time upon the Underwriter's request for all properly
documented reasonable expenses incurred by the Underwriter in connection with
the performance of its services hereunder, not to exceed $75,000. Generally,
these expenses will represent travel, document procurement and delivery and
related matters, but will also include the fees and expenses of Underwriter's
attorneys and other professional advisors should their advice be required. Such
expenses are to be paid on a current basis within 10 days of receipt of the
statement from the Underwriter.
If this Agreement is terminated by the Underwriter in accordance with
the provisions of Section 10 hereof, the Company shall not then be under any
liability to the Underwriter except as provided in Sections 7 and 8 hereof, but,
if for any other reason the Shares are not delivered by or on behalf of the
Company as provided herein, the Company shall reimburse the Underwriter for all
of its out-of-pocket expenses reasonably incurred in connection with marketing
and preparing for the purchase, sale and delivery of the Shares, including the
reasonable fees and disbursements of counsel for the Underwriter but the Company
shall then be under no further liability to the Underwriter except as provided
in Sections 7 and 8 hereof.
SECTION 8. Indemnification and Contribution.
--------------------------------
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls the Underwriter
within the meaning of the Act or the Exchange Act, from and against any
and all losses, claims, damages and liabilities (or actions in respect
thereof) (including, without limiting the foregoing, the reasonable
legal and other expenses incurred in connection with investigating or
defending any action, suit or proceeding or any claim asserted, as such
expenses are incurred) arising out of or based on any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus, or caused by any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses
are due to the gross negligence or willful misconduct of the
Underwriter, are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon the information
furnished to the Company in writing by the Underwriter in the
Prospectus concerning the terms of the offering by the
16
Underwriter; provided, however, that the Company shall not be liable to
-------- -------
the Underwriter under this subsection (a) for any such loss, claim,
damage or liability arising from the Prospectus to the extent that such
loss, claim, damage or liability results from the fact that such
Underwriter sold Shares to a person to whom there was not sent or
given, at or prior to the written confirmation of such sale, a copy of
the Prospectus as then amended or supplemented, in any case where (i)
such delivery of the Prospectus as then amended or supplemented to such
person is required by the Act, (ii) the Company has previously
furnished sufficient copies thereof to the Underwriter at such time as
is sufficient to permit such delivery prior to such confirmation, and
(iii) the loss, claim, damage or liability of the Underwriter results
from an untrue statement or omission of a material fact contained in
the Prospectus which was corrected in the Prospectus as amended or
supplemented, excluding documents incorporated therein by reference.
This indemnity agreement will be in addition to any liability which the
Company may otherwise have.
(b) The Underwriter agrees to indemnify and hold harmless the
Company, the directors of the Company, the officers of the Company who
sign the Registration Statement and each person, if any, who controls
the Company within the meaning of the Act or the Exchange Act from and
against any and all losses, claims, damages and liabilities (or actions
in respect thereof) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or
the Prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, but only with reference to
the information furnished to the Company by the Underwriter set forth
in the first sentence of Section 8(a). This indemnity agreement will be
in addition to any liability which the Underwriter may otherwise have.
(c) In case any action or proceeding (including any
governmental or regulatory investigation or proceeding) shall be
instituted involving any person in respect of which indemnity may be
sought pursuant to any of the two preceding paragraphs, such person
(hereinafter called the indemnified party) shall promptly notify the
person against whom such indemnity may be sought (hereinafter called
the indemnifying party) in writing; provided, however, the omission to
so notify the indemnifying party shall relieve the indemnifying party
from liability under the two preceding paragraphs only to the extent
prejudiced thereby. The indemnifying party, upon request of the
indemnified party, shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the indemnified party
to represent the indemnified party and any others that the indemnifying
party may designate and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such action or proceeding
any indemnified party shall have the right to retain its own counsel,
but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such
counsel, or (ii) the named parties to any such proceeding (including
any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in
the same
17
jurisdiction, be liable for (i) the reasonable fees and expenses of
more than one separate firm (in addition to any local counsel) for the
Underwriter and all persons, if any, who control the Underwriter within
the meaning of the Act or the Exchange Act, and (ii) the reasonable
fees and expenses of more than one separate firm (in addition to any
local counsel) for the Company, its directors, its officers who sign
the Registration Statement and each person, if any, who controls the
Company within the meaning of the Act or the Exchange Act, and that all
such fees and expenses shall be reimbursed as they are incurred. In the
case of any such separate firm for the Underwriter and such control
persons of the Underwriter, such firm shall be designated in writing by
the Underwriter. In the case of any such separate firm for the Company,
and such directors, officers and control persons of the Company, such
firm shall be designated in writing by the Company. The Company shall
not, without the prior written consent of any indemnified party, effect
any settlement of any pending or threatened proceeding in respect of
which any such indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject
matter of such proceeding.
(d) If the indemnification provided for in this Section 8 is
insufficient or unavailable to an indemnified party in respect of any
losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities and expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on
the one hand and the Underwriter on the other from the offering of the
Shares, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law or if the indemnified party shall have
failed to the prejudice of the indemnifying party to give the notice
required by Section 8(c), 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 on the one hand and the
Underwriter on the other in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the
Underwriter on the other shall be deemed to be in the same proportions
as the total net proceeds from the offering (before deducting expenses)
received by the Company bear to the total commissions received by the
Underwriter. The relative fault of the Company on the one hand and the
Underwriter on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company or by the
Underwriter and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
(e) The Company and the Underwriter agree that it would not be
just and equitable if contribution pursuant to Section 8(d) were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to
in the immediately preceding paragraph. The amount paid
18
or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to in
the immediately preceding paragraph shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of Section 8(d), in no event shall the
Underwriter be required to contribute any amount in excess of the
amount by which the total price at which the Shares underwritten by it
and distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 12(f) of the Act)
shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
SECTION 9. Representations Warranties and Agreements to Survive
----------------------------------------------------------
Delivery. All representations, warranties and agreements contained in the
--------
Agreement, or contained in certificates of officers of the Company submitted
pursuant hereto, including indemnity and contribution agreements, shall remain
operative and in full force and effect, regardless of any termination of this
Agreement, or any investigation, or any statement as to the results thereof,
made by or on behalf of any Underwriter or any person controlling any
Underwriter or by or on behalf of the Company, its officers or directors or
controlling persons and shall survive acceptance of and payment for Shares
hereunder.
If this Agreement is terminated pursuant to Section 10 or if for any
reason the sale of Shares by the Underwriter is not consummated, the Company
shall remain responsible for the reasonable expenses to be paid or reimbursed by
it pursuant to Section 7 and the respective obligations of the Company and the
Underwriter pursuant to Section 8 shall remain in effect.
SECTION 10. Termination. This Agreement may be terminated for any
-----------
reason at any time prior to the delivery and payment of the Shares on the
Closing Date, by the Underwriter upon the giving of written notice of such
termination to the Company, if prior to such time (i) there has been, since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, (A) any material adverse change in the condition, financial
or otherwise, earnings, business or prospects of the Company and its
subsidiaries considered as a whole, whether or not arising in the ordinary
course of business or as described in the Prospectus, or (B) any material
transaction entered into by the Company or any subsidiary other than in the
ordinary course of business, (ii) there has occurred any outbreak or escalation
of hostilities or other calamity or crisis or material change in existing
national or international financial, political, economic or securities market
conditions, the effect of which is such as to make it, in the judgment of the
Underwriter; impracticable or inadvisable to market the Shares in the manner
contemplated in the Prospectus or Subscriptions for purchase of the Shares, or
(iii) trading generally on the Nasdaq National Market or the New York Stock
Exchange has been suspended, or minimum or maximum prices for trading have been
fixed, or maximum ranges for prices for securities have been required, by either
of said exchanges or by order of the Commission or any other governmental
authority, or if a banking moratorium has been declared by either Federal or
Michigan authorities. This Agreement may also be terminated as provided
19
in Section 6. In the event of any such termination, the provisions of Sections 7
through 14 shall remain in effect.
SECTION 11. Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriter shall be directed to the Underwriter c/o ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital
Markets, a division of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated, One World Financial Center,
Tower A, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; and notices to
the Company shall be directed to it at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇.▇., ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, facsimile transmission no. ______________,
attention of the Secretary with a copy to the Treasurer.
SECTION 12. Parties. This Agreement shall inure to the benefit of and
-------
be binding upon the Company, its directors and officers who signed the
Registration Statement, the Underwriter, any controlling persons referred to
herein and their respective successors and assigns. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person, firm or corporation any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision herein contained. No purchaser
of Shares from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
SECTION 13 Governing Law. This Agreement shall be governed by, and
--------------
construed in accordance with, the laws of the State of __________________.
SECTION 14 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
If the foregoing is in accordance with your understanding of our
agreement, please sign this Agreement and return to us four counterparts hereof.
Very truly yours,
eZ BANCORP, INC.
By:
-----------------------------------
Its:
-------------------------------
Confirmed and Accepted, as of the
date first above written:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CAPITAL MARKETS,
a Division of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated
By:
------------------------------------
Its:
------------------------------
20
SCHEDULE I
----------
Underwriter Number of Shares
----------- ----------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Markets ---------
---------
Total
----- ---------
EXHIBIT A
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED FOR SALE,
SOLD, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT FILED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT.
Warrant to Purchase
_________ Shares of
Common Stock (equal
to 2% of the shares
of eZ Bancorp, Inc.
sold in its initial
public offering)
WARRANT TO PURCHASE COMMON STOCK OF
eZ BANCORP, INC.
This is to certify that, for value received, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CAPITAL
MARKETS, a division of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated, or its registered assigns
("Holder"), is entitled to purchase, subject to the provisions of this Warrant,
from eZ BANCORP, INC., incorporated under the laws of the state of Michigan, to
be a bank holding company, ("Company"), at any time on or after ___________,
2001, and not later than the third anniversary of such date, shares of common
stock of the Company ("Common Stock") at a purchase price per share of $10.00;
provided, however, that the number of shares of Common Stock to be received upon
the exercise of this Warrant and the price to be paid for a share of Common
Stock shall be adjusted from time to time as hereinafter set forth. The shares
of Common Stock deliverable upon such exercise, and as adjusted from time to
time, are hereinafter sometimes referred to as "Warrant Stock" and the exercise
price of a share of Common Stock in effect at any time and as adjusted from time
to time is hereinafter sometimes referred to as the "Exercise Price."
(a) EXERCISE OF WARRANT. Subject to the provisions of Section (k) hereof,
this Warrant may be exercised in whole or in part at any time or from time to
time on or after _____________, 2001, but not later than the third anniversary
of such date, by presentation and surrender hereof to the Company with the
Purchase Form annexed hereto duly executed and accompanied by payment of the
Exercise Price for the number of shares as to which exercise of this Warrant
pertains, together with all federal and state taxes applicable upon such
exercise. Upon receipt by the Company of this Warrant at the office or agency of
the Company, in proper form for exercise, the Holder shall be deemed to be the
Holder of record of the number of fully paid and nonassessable shares of Common
Stock issuable upon such exercise, notwithstanding that the stock transfer books
of the Company shall then be closed or that certificates representing such
shares of Common Stock shall not then be actually delivered to the Holder.
(b) RESERVATION OF SHARES. The Company hereby agrees that at all times
----------------------
there shall be reserved for issuance and/or delivery upon exercise of this
Warrant such number of shares of its Common Stock as shall be required for
issuance or delivery upon exercise of this Warrant.
(c) FRACTIONAL SHARES. No fractional shares or scrip representing
-------------------
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Holder an amount in cash equal to such fraction
multiplied by the current market value of such fractional share, determined as
follows:
(1) If the Common Stock is listed on a national securities exchange,
the current value shall be the last reported sales price of the Common Stock on
the composite tape of such exchange on the last trading day prior to the date of
exercise of this Warrant, or if no such sale is made on such day, the average
closing bid and asked prices for such day on the composite tape of such
exchange; or
(2) If the Common Stock is not so listed, the current value shall be
the mean of the last reported bid and asked prices reported by the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") or the
NASDAQ Small Cap Market on the last trading day prior to the date of the
exercise of this Warrant; or
(3) If the Common Stock is not so listed and bid and asked prices are
not so reported, the current value shall be an amount, not less than fully
diluted book value, determined in such reasonable manner as may be prescribed by
the Board of Directors of the Company.
(d) EXCHANGE, ASSIGNMENT, OR LOSS OF WARRANT. This Warrant is not
---------------------------------------------
assignable or transferable except that it may be (i) transferred to any
affiliate of the Holder, in whole or in part, and (ii) transferred by operation
of law. Any such assignment shall be made by surrender of this Warrant to the
Company or at the office of its stock transfer agent, if any, with the
Assignment Form annexed hereto duly executed and funds sufficient to pay any
transfer tax; whereupon the Company shall, without charge, execute and deliver a
new Warrant in the name of the assignee named in such instrument of assignment
with respect to the portion hereof of which has been assigned and a new Warrant
in the name of the Holder with respect to the portion hereof (if any) which has
not been assigned, and this Warrant shall promptly be cancelled. Upon receipt by
the Company of evidence satisfactory to it of the loss, theft, destruction, or
mutilation of this Warrant, and (in the case of loss, theft, or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will execute and deliver a new Warrant
of like tender and date.
(e) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
---------------------
entitled to any rights of a shareholder of the Company, either at law in equity,
and the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth herein.
(f) ANTI-DILUTION PROVISIONS. If the Company shall at any time issue Common
------------------------
Stock or any stock or other securities convertible into or exchangeable for
Common Stock (such convertible or exchangeable stock or securities being
hereinafter referred to as "Convertible Securities") by way of dividend or other
distribution on any stock of the Company or subdivide or combine the outstanding
shares of Common Stock, then the Exercise Price shall be proportionately
decreased in the case of such issuance (on the day following the date fixed for
-2-
determining shareholders entitled to receive such dividend or other
distribution), or decreased in the case of such subdivision or increased in the
case of such combination (on the date that such subdivision or combination shall
become effective). Upon any adjustment of the Exercise Price, the Holder of this
Warrant shall thereafter (until another such adjustment) be entitled to
purchase, at the new Exercise Price, the number of shares, calculated to the
nearest full share, obtained by multiplying the number of shares of Common Stock
initially issuable upon exercise of this Warrant by the Exercise Price in effect
on the date hereof and dividing the product so obtained by the new Exercise
Price. Whenever reference is made in this Section (f) to the issue or sale of
shares of Common Stock, the term "Common Stock" shall mean the Common Stock of
the Company of the class authorized as of the date hereof and any other class of
stock ranking on a parity with such Common Stock. However, subject to the
provisions of Section (i) hereof, shares issuable upon exercise hereof shall
include only shares of the class designated as Common Stock of the Company as of
the date hereof.
(g) OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be adjusted as
---------------------
required by the provisions of Section (f) hereof, the Company shall forthwith
file in the custody of its Secretary or an Assistant Secretary at its principal
office, and with its stock transfer agent, if any, an officer's certificate
showing the adjusted Exercise Price determined as herein provided and setting
forth in reasonable detail the facts requiring such adjustment. Each such
officer's certificate shall be made available at all reasonable times for
inspection by the Holder and the Company shall, forthwith after each such
adjustment, deliver a copy of such certificate to the Holder. Such certificate
shall be conclusive as to the correctness of such adjustment.
(h) NOTICES TO WARRANT HOLDERS. As long as this Warrant shall be
-----------------------------
outstanding and unexercised (i) if the Company shall pay any dividend or make
any distribution upon the Common Stock, or (ii) if the Company shall offer to
the Holders of Common Stock for subscription or purchase by them any shares of
stock of any class or any other rights, or (iii) if any capital reorganization
of the Company, reclassification of the capital stock of the Company,
consolidation or merger of the Company with or into another corporation, sale,
lease, or transfer of all or substantially all of the property and assets of the
Company to another corporation, or voluntary or involuntary dissolution,
liquidation, or winding up of the Company shall be affected, then, in any such
case, the Company shall cause to be delivered to the Holder, at least ten (10)
days prior to the date specified in (x) or (y) below, as the case may be, a
notice containing a brief description of the proposed action and stating the
date on which (x) a record is to be taken for the purpose of such dividend,
distribution or rights, or (y) such reclassification, reorganization,
consolidation, merger, conveyance, lease, dissolution, liquidation, or winding
up is to take place and the date, if any is to be fixed as of which the Holders
of Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable upon such reclassification,
reorganization, consolidation, merger, conveyance, dissolution, liquidation, or
winding up.
(i) RECLASSIFICATION, REORGANIZATION, OR MERGER. In case of any
------------------------------------------------
reclassification, capital reorganization, or other change of outstanding shares
of Common Stock of the Company other than as a result of an issuance of Common
Stock by way of dividend or other distribution or of a subdivision or
combination), or in case of any consolidation or merger of the Company with or
into another corporation (other than a merger with a subsidiary in which merger
the
-3-
Company is the continuing corporation and which does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the class issuable upon exercise of this Warrant), or in case
of any sale or conveyance to any other corporation or the property and assets of
the Company as an entirety or substantially as an entirety, the Company shall
cause effective provision to be made so that the Holder shall have the right
thereafter, by exercising this Warrant, to purchase the kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, capital reorganization, or other change, consolidation,
merger, sale, or conveyance as if the Holder had exercised this Warrant prior to
such transaction. Any such provision shall include provision for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Warrant. The foregoing provisions of this Section (i) shall
similarly apply to successive reclassifications, capital reorganizations, and
changes of shares of Common Stock and to successive consolidations, mergers,
sales, or conveyances. In the event that in any such capital reorganization or
reclassification, consolidation, merger, sale, or conveyance, additional shares
of Common Stock shall be issued in exchange, conversion, substitution, or
payment, in whole or in part, for or of a security of the company other than
Common Stock, any such issue shall be treated as an issue of Common Stock
covered by the provisions of subsection (f)(1) hereof with the amount of the
consideration received upon the issue thereof being determined by the Board of
Directors of the Company, such determination to be final and binding on the
Holder.
(j) SPIN-OFFS. In the event the Company spins-off a subsidiary by
---------
distributing to the shareholders of the Company, as a dividend or otherwise, the
stock of the subsidiary, the Company shall reserve, for the life of the Warrant,
shares of the subsidiary to be delivered to the Holders of the Warrants upon
exercise to the same extent as if they were owners of record of the Warrant
Stock on the record date for payment of the shares of the subsidiary.
(k) REGISTRATION UNDER THE SECURITIES ACT OF 1933.
---------------------------------------------
(1) In the event that at any time after ___________, 2001, and on or
before the third anniversary of such date, the Company files a registration
statement or an offering statement under Regulation A under the Securities Act
of 1933, as amended ("Act"), which relates to a current offering of securities
of the Company (except a registration statement filed for a purpose which would
render inappropriate the covenants of the Company contained in this subsection
(1) of a registration statement on Form S-8 or Form S-4 or any other such form),
such registration statement and the prospectus included therein or such offering
statement, as the case may be, shall also, at the written request to the Company
of Holder, relate to, and meet the requirements of the Act with respect to, any
public offering of the Warrants and/or the Warrant Stock so as to permit the
public sale thereof in compliance with the Act, provided Holder holds Warrant
Stock. As long as there are shares of Warrant Stock outstanding and/or shares of
Warrant Stock which may be acquired upon exercise of outstanding Warrants, the
Company shall give written notice to the Holder of its intention to file a
registration statement or offering statement under Regulation A under the Act
relating to a current offering of the aforesaid securities of the Company,
forty-five (45) or more days prior to the filing of such registration statement
or offering statement, and the written request provided for in the first
sentence of this subsection shall be made by the Holder fifteen (15) or more
days prior to the date specified in such notice as the date on which the Company
intends to file such registration statement or offering statement.
-4-
Neither the delivery of such notice by the Company nor of such request by the
Holder shall in any way obligate the Company to file such registration statement
or offering statement, and, notwithstanding the filing thereof the Company may,
at any time prior to the effective date thereof, determine not to offer the
securities to which it relates, without liability to the Holder, except that the
Company shall pay such expenses as are contemplated to be paid by it under
subsection (4) of this Section (k). Any right of Holder to request registration
or qualification pursuant to this subsection (1) will expire three (3) years
after _____________, 2001. The Company shall file a registration statement if
all of the shares of Warrant Stock which have been requested to be registered
cannot be sold under Regulation A because of the limited exemption provided
thereby.
(2) At any time after _____________, 2001, and on or before the third
anniversary of such date, the Holder may make one (1) demand for registration
under the Act of any Warrant Stock, provided, however, a demand shall only be
counted as a demand if it leads to a registration that become effective under
the Act. If an offering pursuant to a demand involves an underwritten offering,
the Holder shall be entitled to select legal counsel to represent it and an
investment banker to administer the offering.
(3) In each instance to which subsections (1) or (2) of this Section
(k) apply, the Company shall take any and all action required or necessary to
permit a public offering or sale or other distribution of the Warrants and/or
Warrant Stock (collectively for this subsection (3) referred to as "Warrant
Stock") and shall indemnify and hold harmless each such holder and each
underwriter and each person, if any, who controls such underwriter within the
meaning of the Act, who may purchase from or sell for any such holder any
Warrant Stock, from and against any and all losses, claims, damages, and
liabilities (including, but not limited to, any and all expenses whatsoever
reasonably incurred in investigating, preparing, defending, or settling any
claim) upon substantially the same terms and conditions as are set forth in that
certain Underwriting Agreement dated _________________, 2001, by and between the
Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Markets and relating to a public offering of
a minimum of 22,500,000 shares of Common Stock pursuant to a Registration
Statement on Form SB-2 (registration no. 333-50728).
(4) The Company shall comply with the requirements of subsection (1)
of this Section (k) (including the related requirements of subsection (5) of
this Section (k)) at its own expense, excluding the expenses related to the last
sentence of such subsection (1) and underwriting commissions and transfer taxes,
if any, attributable to the Warrant Stock.
The Company's obligations under said subsections (1), (2), (3), and (4)
shall be conditioned, as to each such public offering, upon a timely receipt by
the Company in writing of:
(A) Information as to the terms of such public offering furnished
by or on behalf of each holder intending to make a public distribution of his or
its Warrants or Warrant Stock; and
-5-
(B) Such other information as the Company may reasonably require
from such holders, or any underwriter for any of them, for inclusion in such
registration statement or Notification or post-effective amendment.
The Company's agreements with respect to the Warrants and/or Warrant
Stock in this Section (k) will continue in effect regardless of the exercise or
surrender of this Warrant.
(5) Any notice or certificates by the Company to the Holder, and by
the Holder to the Company, shall be deemed delivered if in writing and delivered
personally or sent by certified mail: if to the Holder, addressed to it in care
of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Markets, at ____________________________________, or,
if the Holder has designated, by notice in writing to the Company, any other
address, to such other address: and if to the Company, addressed to it, at
________________________________________________________. The Company may change
its address by written notice to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Markets, and ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Capital Markets may change its address by written notice to the Company.
(l) TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933.
--------------------------------------------------
(1) This Warrant or the Warrant Stock or any other security issued or
issuable upon exercise of this Warrant may not be offered or sold except in
conformity with the Act and then only against receipt of an agreement of such
person to whom such offer of sale is made to comply with the provisions of this
Section (m) with respect to any resale or other disposition of such securities.
(2) The Company may cause the following legend to be set forth on each
certificate representing Warrant Stock or any other security issued or issuable
upon exercise of this Warrant not theretofore distributed to the public or sold
to underwriters for distribution to the public pursuant to Section (k) hereof,
unless counsel for the Company is of the opinion as to any such certificate that
such legend is unnecessary:
"The securities represented by this certificate may not be offered for
sale, sold, or otherwise transferred except pursuant to an effective
registration statement made under the Securities Act of 1933, as
amended (the "Act"), or pursuant to an exemption from registration
under the Act the availability of which is to be established to the
satisfaction of the Company."
6
(m) APPLICABLE LAW. This Warrant shall be governed by, and construed in
---------------
accordance with, the laws of the State of Michigan, without regard to its
conflicts of laws principles.
eZ BANCORP, Inc.
By __________________________________
Its ______________________________
7
PURCHASE FORM
Dated ________________, 2001
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing shares of Common Stock subject to such
Warrant of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Markets and hereby makes payment of $ in
payment of the actual exercise price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
--------------------------------------
Name ___________________________________________________________________________
(please typewrite or print in block letters)
Address ________________________________________________________________________
Signature _____________________________________________________________________
Social Security or Employer I.D. No. ___________________________________________
ASSIGNMENT FORM
---------------
FOR VALUE RECEIVED, _____________________________________ hereby sells,
assigns, and transfers unto:
Name ___________________________________________________________________________
(please typewrite or print in block letters)
Address ________________________________________________________________________
the right to purchase Common Stock, represented by this Warrant to the extent of
shares as to which such right is exercisable, and does hereby irrevocably
constitute and appoint ___________________________, attorney, to transfer the
same on the books of the Company with full power of substitution in the
premises.
Signature ________________________________
Dated: ___________________, 2001.