ENDURANCE SPECIALTY HOLDINGS LTD. UNDERWRITING AGREEMENT May 24, 2011
Exhibit 1.1
Execution Version
$230,000,000
7.50% Non-Cumulative Preferred Shares, Series B
May 24, 2011
May 24, 2011
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Fargo Securities, LLC,
as representatives of the several Underwriters
Incorporated
Xxxxx Fargo Securities, LLC,
as representatives of the several Underwriters
c/o
|
Merrill Lynch, Pierce, Xxxxxx & Xxxxx | |
Incorporated Xxx Xxxxxx Xxxx, |
||
Xxx Xxxx, Xxx Xxxx 00000 | ||
c/x
|
Xxxxx Fargo Securities, LLC | |
000 X. Xxxxxxx Xxxxxx | ||
Xxxxxxxxx, XX 00000 |
Ladies and Gentlemen:
Endurance Specialty Holdings Ltd., an exempted company incorporated in Bermuda (the
“Company”), confirms its agreement with Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
(“Xxxxxxx Xxxxx”) and Xxxxx Fargo Securities, LLC (“Xxxxx Fargo”) and each of the other
Underwriters named in Schedule 1 hereto (collectively, the “Underwriters,” which term shall also
include any underwriter substituted as hereinafter provided in Section 10), for whom Xxxxxxx Xxxxx
and Xxxxx Fargo are acting as representatives (in such capacity, the “Representatives”), with
respect to the issue and sale by the Company, and (i) the purchase by the Underwriters, acting
severally and not jointly, of the respective numbers of the 8,000,000 7.50% Non-Cumulative
Preferred Shares, Series B, par value $1.00 per share, $25.00 liquidation preference per share, of
the Company (the “Preferred Shares”) set forth in Schedule 1 hereto under the caption “Number of
Initial Securities” and (ii) the purchase by the Underwriters, acting severally and not jointly, of
the respective numbers of the 1,200,000 Preferred Shares set forth in Schedule 1 hereto under the
caption “Number of Option Securities” to cover overallotments, pursuant to the option granted by
the Company to the Underwriters described in Section 2(ii). The aforesaid 8,000,000 Preferred
Shares (the “Initial Securities”) to be purchased by the Underwriters and the 1,200,000 Preferred
Shares subject to the option described in Section 2(ii) (the “Option Securities”) are hereinafter
called, collectively, the “Securities.”
As part of the offering contemplated by this Agreement, the Underwriters agreed to reserve out
of the Securities to be purchased by them under this Agreement, up to 24,000 Preferred Shares, for
sale to certain of the Company’s directors, officers, relatives of directors or officers or trusts
for the benefit of any of the foregoing (collectively, the “Participants”), as set forth in the
preliminary prospectus (as defined below) under the heading “Underwriting —Reserved Series B
Preferred Shares” (the “Directed Share Program”). The Securities to be
sold by the Underwriters pursuant to the Directed Share Program (the “Directed Shares”) will
be sold by the Underwriters pursuant to this Agreement at the initial public offering price set
forth in Schedule 3 hereto. Any Directed Shares not so purchased by the Participants will be
offered by the Underwriters to the general public as set forth in the preliminary prospectus.
The Company has filed with the Securities and Exchange Commission (the “Commission”) a
registration statement, including a prospectus on Form S-3ASR (File No. 333-156147), relating to
the registration of certain securities described therein, including the Securities, under the
Securities Act of 1933, as amended (the “Securities Act”), and the offering thereof from time to
time in accordance with Rule 415 of the rules and regulations of the Commission under the
Securities Act (the “Rules and Regulations”) and the Company has filed such post-effective
amendments thereto as may be required prior to the execution of this Agreement. The registration
statement as amended to the date of this Agreement is hereinafter referred to as the “Registration
Statement” (for purposes of this definition, information contained in a form of prospectus or
prospectus supplement that is deemed retroactively to be a part of the Registration Statement
pursuant to Rule 430B of the Rules and Regulations shall be considered to be included in the
Registration Statement as of the time specified in Rule 430B), and the related prospectus effective
December 15, 2008 in the form first used to confirm sales of Securities (or in the form first made
available to the Underwriters by the Company to meet requests of purchasers pursuant to Rule 173 of
the Rules and Regulations) is hereinafter referred to as the “Base Prospectus.” The Base
Prospectus, as supplemented by the prospectus supplement specifically relating to the Securities in
the form first used to confirm sales of the Securities (or in the form first made available to the
Underwriters by the Company to meet requests of purchasers pursuant to Rule 173) is hereinafter
referred to as the “Prospectus,” and the term “preliminary prospectus” means the Base Prospectus,
as supplemented by the Preliminary Prospectus Supplement dated May 24, 2011. For purposes of this
definition, information contained in a form of prospectus (including a prospectus supplement) that
is deemed retroactively to be a part of the Registration Statement pursuant to Rule 430B shall be
considered to be included in the Prospectus as of the actual time that form of prospectus
(including a prospectus supplement) is filed with the Commission pursuant to Rule 424(b) of the
Rules and Regulations.
For purposes of this Agreement, “free writing prospectus” has the meaning set forth in Rule
405 of the Rules and Regulations and “Time of Sale Prospectus” means the preliminary prospectus,
together with the free writing prospectuses, if any, substantially in the form of the term sheet
included in Schedule 2 hereto, as of the Applicable Time of Sale (as defined herein). As used
herein, the terms “Registration Statement,” “preliminary prospectus,” “Time of Sale Prospectus” and
“Prospectus” shall include the documents, if any, incorporated by reference therein. The terms
“supplement” and “amendment” and “amend” as used in this Agreement with respect to the Registration
Statement, the Base Prospectus, the Time of Sale Prospectus, the preliminary prospectus or any free
writing prospectus shall include all documents subsequently filed by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that
are incorporated by reference therein. As used herein, “Applicable Time of Sale” shall mean 4:32
p.m., on May 24, 2011, New York City time.
2
1. Representations and Warranties of the Company. The Company represents and warrants to, and
agrees with, each of the Underwriters that (i) as of the date hereof, (ii) as of the Applicable
Time of Sale, and (iii) as of the Closing Date (as defined herein):
(i) Effectiveness of the Registration Statement. The Registration Statement has
become effective; no stop order suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or threatened by the Commission;
(ii) Compliance with Registration Requirements. (a) The Registration Statement, when
it became effective, did not contain and, as amended or supplemented, if applicable, does not and
will not contain any 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, (b) the
Registration Statement and the Prospectus comply and, as amended or supplemented, if applicable, do
and will comply in all material respects with the Securities Act and the Rules and Regulations, (c)
the Time of Sale Prospectus does not contain, at the Applicable Time of Sale, and at the Closing
Date, as it may be then amended or supplemented, will not contain any 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, and (d) the Prospectus does
not contain and, as amended or supplemented, if applicable, will not contain any 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, except that the
representations and warranties set forth in this paragraph do not apply to statements or omissions
in the Registration Statement, the Time of Sale Prospectus or the Prospectus based upon information
relating to the Underwriters furnished to the Company in writing by the Underwriters expressly for
use therein as specified in Section 8(i)(c);
(iii) Incorporated Documents. The documents filed with the Commission by the Company
and incorporated by reference in the Time of Sale Prospectus or the Prospectus when they were filed
with the Commission, complied as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission thereunder; none of such documents as
of its time of filing contained an untrue statement of a material fact or omitted 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 any further documents so filed
and incorporated by reference in the Time of Sale Prospectus or the Prospectus, when such documents
are filed with the Commission, will conform in all material respects to the requirements of the
Exchange Act and the rules and regulations of the Commission thereunder and will not contain an
untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under which they were
made, not misleading;
(iv) Free Writing Prospectuses. The Company is a well known seasoned issuer (as
defined in Rule 405) and is not an “ineligible issuer” pursuant to Rules 164, 405 and 433 of the
Rules and Regulations. Any free writing prospectus that the Company is required to file pursuant
to Rule 433(d) has been, or will be, filed with the Commission in accordance with the requirements
of the Securities Act and the Rules and Regulations. Each free writing prospectus
3
that the Company has filed, or is required to file, pursuant to Rule 433(d) or that was
prepared by or on behalf of or used or referred to by the Company complies or will comply in all
material respects with the requirements of the Securities Act and the applicable Rules and
Regulations. Each free writing prospectus that the Company has filed will not, as of its issue
date and through the Closing Date for such Securities, include any information that conflicts with
the information contained in the Registration Statement and the Prospectus. Except for the free
writing prospectuses, if any, substantially in the form of the term sheet included in Schedule 2
hereto, and electronic road shows, if any, furnished to the Underwriters before first use, the
Company has not prepared, used or referred to, and will not, without the prior consent of the
Underwriters, prepare, use or refer to, any free writing prospectus;
(v) Independent Accountants. The accountants who certified the financial statements
and supporting schedules incorporated by reference in the Time of Sale Prospectus and the
Prospectus, and audited the Company’s internal control over financial reporting and management’s
assessment thereof, are an independent registered public accounting firm as required by the
Securities Act and the Rules and Regulations;
(vi) Financial Statements. The consolidated financial statements of the Company
incorporated by reference in the Time of Sale Prospectus and the Prospectus present fairly, in all
material respects, the financial position of the Company and its consolidated subsidiaries at the
dates indicated and the statement of operations, shareholders’ equity and cash flows of the Company
and its consolidated subsidiaries for the periods specified; except as otherwise disclosed in the
Time of Sale Prospectus or the Prospectus, said balance sheet, statement of income and financial
statements have been prepared in conformity with United States generally accepted accounting
principles (“U.S. GAAP”) applied on a consistent basis throughout the periods involved. The
supporting schedules incorporated by reference in the Time of Sale Prospectus and the Prospectus
present fairly, in all material respects, in accordance with U.S. GAAP, the information required to
be stated therein. The selected financial data and the summary financial information incorporated
by reference in the Time of Sale Prospectus and the Prospectus present fairly, in all material
respects, the information shown therein and have been compiled on a basis consistent with that of
the audited financial statements incorporated by reference in the Time of Sale Prospectus and the
Prospectus;
(vii) No Material Adverse Change in Business. Since the respective dates as of which
information is given in the Time of Sale Prospectus or the Prospectus, except as otherwise stated
therein, (A) there has been no material adverse change in the condition, financial or otherwise, or
in the earnings, business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of business (a
“Material Adverse Effect”), and (B) there have been no transactions entered into by the Company or
any of its subsidiaries, other than those in the ordinary course of business, which are material
with respect to the Company and its subsidiaries considered as one enterprise;
(viii) Good Standing of the Company. The Company has been duly incorporated and is
validly existing as an exempted company in good standing under the laws of Bermuda and has the
necessary corporate power and authority to own, lease and operate its properties and to conduct its
business as described in the Time of Sale Prospectus and the Prospectus and to enter into and
perform its obligations under this Agreement; and the Company
4
is duly qualified as a foreign company or corporation to transact business and is in good
standing in each other jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except where the failure so to
qualify or to be in good standing would not result in a Material Adverse Effect;
(ix) Good Standing of Subsidiaries. Each of Endurance Specialty Insurance Ltd.
(“Endurance Insurance”), Endurance Reinsurance Corporation of America and Endurance U.S. Holdings
Corp. (each, a “Designated Subsidiary” and collectively, the “Designated Subsidiaries”) has been
duly incorporated or organized and is validly existing as a company or corporation in good standing
under the laws of the jurisdiction of its incorporation or organization and has the necessary
corporate power to own, lease and operate its properties and to conduct its business as described
in the Time of Sale Prospectus and the Prospectus and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would not result in a Material
Adverse Effect; except as otherwise disclosed in the Time of Sale Prospectus or the Prospectus, all
of the issued and outstanding share capital or capital stock of each subsidiary of the Company has
been duly authorized and validly issued, is fully paid and non-assessable and is owned by the
Company, directly or through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity; none of the outstanding shares of share capital or
capital stock of any Designated Subsidiary was issued in violation of the preemptive or similar
rights of any securityholder of such Designated Subsidiary. Except for American Agri-Business
Insurance Company, ARMtech, Inc., ARMtech Holdings, Inc., ARMtech Insurance Services, Inc.,
Endurance American Insurance Company, Endurance American Specialty Insurance Company, Endurance
Elite Assurance Company Ltd., Endurance Risk Solutions Assurance Co., Endurance Services Limited,
Endurance Specialty Insurance Brokerage Corp. of New York, Endurance Specialty Insurance Marketing
Corp. of California, Endurance Specialty Insurance Marketing Corp. of Illinois, Endurance Specialty
Insurance Marketing Corp. of Massachusetts, Endurance U.S. Healthcare Insurance Services Company,
Endurance U.S. Specialty Services Corporation, Endurance Worldwide Holdings Limited, Endurance
Worldwide Insurance Limited, ENH Managers, Inc. and ENH Risk and Insurance Services Corporation,
each of which are immaterial and are not “significant subsidiaries” of the Company as such term is
defined in Rule 1-02 of Regulation S-X of the Rules and Regulations, the Designated Subsidiaries
are the only subsidiaries of the Company;
(x) Capitalization. Based solely on the Certified Register of Shareholders of the
Company: (A) all of the currently issued and outstanding shares of share capital of the Company
has been duly authorized and validly issued and are fully paid and non-assessable (which term when
used herein shall mean that no further sums are required to be paid by the holders thereof in
connection with the issue of such shares) (collectively, the “Outstanding Shares”); and (B) none of
the Outstanding Shares were issued in violation of the preemptive or other similar rights of any
member of the Company or the Designated Subsidiaries;
(xi) Description of the Securities. The Preferred Shares conform in all material
respects to the description thereof contained in the Time of Sale Prospectus.
5
(xii) Accuracy of Statements in Prospectus. The statements in Time of Sale Prospectus
and the Prospectus under the caption “Description of the Series B Preferred Shares” insofar as such
statements constitute a summary of the legal matters, documents or proceedings referred to therein,
fairly present and summarize, in all material respects, the matters referred to therein.
(xiii) Authorization and Execution of Underwriting Agreement. This Agreement has been
duly authorized, executed and delivered by the Company;
(xiv) Authorization of the Securities. The Securities to be purchased by the
Underwriters from the Company have been duly authorized for issuance and sale to the Underwriters
pursuant to this Agreement and, when issued and delivered by the Company pursuant to this Agreement
against payment of the consideration set forth herein, will be validly issued and fully paid and
non-assessable; and the issuance of the Securities is not subject to the preemptive or other
similar rights of any securityholder of the Company. No holder of Securities will be subject to
personal liability by reason of being such a holder;
(xv) Absence of Defaults and Conflicts. Neither the Company nor any of its Designated
Subsidiaries is in violation of its charter, memorandum of association, bye-laws, by-laws or
similar incorporation or organizational documents or in violation or default in the performance or
observance of any obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Company or any of its Designated 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
subsidiary is subject (collectively, the “Agreements and Instruments”) except for such defaults
under the material Agreements and Instruments that would not result in a Material Adverse Effect;
the issue and sale by the Company of the Securities, if and when issued, the execution and delivery
of this Agreement and the compliance by the Company with this Agreement, and the consummation of
the transactions contemplated herein and compliance by the Company with its obligations under this
Agreement do not and will not, whether with or without the giving of notice or passage of time or
both, 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
Designated Subsidiary pursuant to, the Agreements and Instruments (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would not result in a Material Adverse
Effect), nor will such action result in any violation of the provisions of the charter, memorandum
of association, bye-laws, by-laws or similar organizational documents of the Company or any
Designated Subsidiary or any applicable law, statute, rule, regulation, judgment, order, writ or
decree of any government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any Designated Subsidiary or any of their assets, properties or
operations (except for such violations that would not result in a Material Adverse Effect);
(xvi) Financial Assistance. On the date hereof and upon the issuance of the
Securities, the Company is and will be in compliance with Section 39 and/or entitled to one or more
of the exclusions therefrom set forth in Section 39A of the Companies Xxx 0000 of Bermuda (the
“Companies Act”);
6
(xvii) Absence of Proceedings. There is no action, suit, proceeding, inquiry or
investigation before or brought by any court or governmental agency or body, domestic or foreign,
now pending, or, to the knowledge of the Company, threatened against the Company or any subsidiary
or the properties or assets thereof, which is required to be disclosed in the Time of Sale
Prospectus or the Prospectus (other than as disclosed therein), or which would reasonably be
expected to result in a Material Adverse Effect, or which would reasonably be expected to
materially and adversely affect the consummation of the transactions contemplated in this Agreement
or the performance by the Company of its obligations hereunder; the aggregate of all pending legal
or governmental proceedings to which the Company or any subsidiary is a party or of which any of
their respective property or assets is the subject which are not described in the Time of Sale
Prospectus or the Prospectus, including ordinary routine litigation incidental to the business,
would not reasonably be expected to result in a Material Adverse Effect; and
(xviii) Absence of Further Requirements. No filing with, or authorization, approval,
consent, license, order, registration, exemption, qualification or decree of, any court or
governmental authority or agency or any sub-division thereof is necessary or required for the
performance by the Company of its obligations hereunder, in connection with the execution, delivery
and performance of this Agreement or the consummation of the transactions contemplated hereby,
except (i) such as have been already obtained or as may be required under state securities or blue
sky laws and (ii) such as have been obtained from the Bermuda Monetary Authority; and (iii) the
Prospectus shall be filed with the Registrar of Companies prior to or as soon as reasonably
practicable after publication.
(xix) Licenses and Authorizations. Each of the Company and its Designated Subsidiaries
possesses all consents, authorizations, approvals, orders, licenses, certificates, or permits
issued by any regulatory agencies or bodies (each, an “Authorization”) which are necessary to
conduct the business now conducted by it as described in the Time of Sale Prospectus and the
Prospectus, except where the failure to possess such Authorizations, individually or in the
aggregate, would not have a Material Adverse Effect; all of such Authorizations are valid and in
full force and effect, except where the invalidity of such Authorizations or the failure to be in
full force and effect, individually or in the aggregate, would not have a Material Adverse Effect.
There is no pending, or to the Company’s knowledge, threatened action, suit, proceeding or
investigation against or involving the Company and its Designated Subsidiaries that individually or
in the aggregate would reasonably be expected to lead to the revocation, modification, termination,
suspension or any other material impairment of the rights of the holder of any such Authorization
which revocation, modification, termination, suspension or other material impairment would have a
Material Adverse Effect. Except as otherwise described in or contemplated by the Time of Sale
Prospectus and the Prospectus, no insurance regulatory authority has issued to the Company or any
Designated Subsidiary any order impairing, restricting or prohibiting (A) the payment of dividends
by the Company or any of its Designated Subsidiaries, or (B) the making of a distribution on any
Designated Subsidiary’s capital stock;
(xx) Compliance with Applicable Laws. Neither the Company nor any of its Designated
Subsidiaries is in violation or default of any statute, law, rule, regulation, judgment, order or
decree of any court, regulatory body, administrative agency or other governmental body having
jurisdiction over the Company or any such Designated Subsidiary or any of its properties,
7
as applicable, except for such violations or defaults which, individually or in the aggregate,
would not have a Material Adverse Effect;
(xxi) Internal Controls. The Designated Subsidiaries maintain 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 U.S. GAAP and to
maintain asset accountability; (iii) access to assets is permitted only in accordance with
management’s general, or specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company maintains a system of internal control over financial
reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act). As of the date
hereof, to the knowledge of the Company, the Company’s internal control over financial reporting is
effective and the Company is not aware of any material weakness in its internal control over
financial reporting, it being understood that the management of the Company has not conducted an
evaluation of the effectiveness of the Company’s internal control over financial reporting for any
period after December 31, 2010;
(xxii) Disclosure Controls and Procedures. The Company maintains disclosure controls
and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act); such disclosure
controls and procedures were effective as of the three months ended March 31, 2011. As of the date
hereof, to the knowledge of the Company, such disclosure controls and procedures are effective, it
being understood that the management of the Company has not conducted an evaluation the
effectiveness of the Company’s disclosure controls and procedures for any period after March 31,
2011; there is and has been no failure on the part of the Company and any of the Company’s
directors or officers, in their capacities as such, to comply with any provision of the
Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations promulgated in connection therewith (the
“Xxxxxxxx-Xxxxx Act”), including Section 402 related to loans and Sections 302 and 906 related to
certifications.
(xxiii) Investment Company Act. The Company is not, and solely after giving effect to
the offering and sale of the Securities, assuming the Securities were issued as of the date hereof,
and the other transactions contemplated by the Prospectus, will not be an “investment company,” as
such term is defined in the Investment Company Act;
(xxiv) Stamp Duty, Excise Tax, Etc. None of the Underwriters or any subsequent
purchasers of the Securities (other than purchasers resident in Bermuda for Bermuda exchange
control purposes) is subject to any stamp duty, transfer, excise or similar tax imposed in Bermuda
in connection with the offering, sale or purchase of the Securities, assuming the Securities were
issued as of the date hereof to the Underwriters or to any subsequent purchasers;
(xxv) Currency Exchange Control. There are no currency exchange control laws or
withholding taxes, in each case of Bermuda, that would be applicable to the payment of dividends on
the Securities by the Company (other than as may apply to residents of Bermuda for Bermuda exchange
control purposes), assuming the Securities were issued as of the date hereof;
8
(xxvi) No Ratings Downgrade. Except as disclosed in the Time of Sale Prospectus, the
Company has no knowledge of any threatened or pending downgrading of any of its or its
subsidiaries’ financial strength rating by Standard & Poor’s Ratings Services, a Standard & Poor’s
Financial Services LLC business, Xxxxx’x Investors Service Inc. and A.M. Best Company Inc., the
only “nationally recognized statistical rating organizations,” as such term is defined in Section
3(a)(62) under the Exchange Act which currently has publicly released a rating of the financial
strength of the Company or any of its subsidiaries.
(xxvii) No Unlawful Contributions or Other Payments. None of the Company, any of its
subsidiaries or, to the knowledge of the Company, any director, officer, agent, employee or
affiliate of the Company or any of its subsidiaries is aware of or has taken any action, directly
or indirectly, that would result in a violation by such persons of the Foreign Corrupt Practices
Act of 1977, as amended, and the rules and regulations thereunder (the “FCPA”), including, without
limitation, making use of the mails or any means or instrumentality of interstate commerce
corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of
any money, or other property, gift, promise to give, or authorization of the giving of anything of
value to any “foreign official” (as such term is defined in the FCPA) or any foreign political
party or official thereof or any candidate for foreign political office, in contravention of the
FCPA, and the Company and its subsidiaries have conducted their businesses in compliance with the
FCPA and have instituted and maintain policies and procedures designed to ensure, and which are
reasonably expected to continue to ensure, continued compliance therewith.
(xxviii) No Conflict with Money Laundering Laws. To the knowledge of the Company, the
operations of the Company and its subsidiaries are and have been conducted at all times in
compliance in all material respects with applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines issued, administered or enforced by any
governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding
by or before any court or governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the
knowledge of the Company, threatened.
(xxix) No Conflict with OFAC Laws. Neither the Company nor any of its subsidiaries
nor, to the knowledge of the Company, any director, officer, agent, employee or affiliate of the
Company or any of its subsidiaries is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not
directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise make
available such proceeds, to any subsidiary, joint venture partner or other person or entity, for
the purpose of financing the activities of any person currently subject to any U.S. sanctions
administered by OFAC.
(i) The Initial Securities. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company agrees to
9
sell to each Underwriter, severally and not jointly, and each Underwriter, severally and not
jointly, agrees to purchase from the Company, at the price per Preferred Share set forth in
Schedule 3, the number of Initial Securities set forth in Schedule 1 opposite the name of such
Underwriter, plus any additional number of Initial Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10, bears to the total number of
Initial Securities, 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 Preferred Shares.
(ii) The Option Securities. In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set forth, the Company
hereby grants an option to the Underwriters and the Underwriters hereby exercise such option, in
each case, severally and not jointly, to purchase an additional 1,200,000 Preferred Shares at the
price per Preferred Share set forth in Schedule 3. The option hereby granted and exercised shall
be only for the purpose of covering overallotments made in connection with the offering and
distribution of the Initial Securities. The time and date of payment and delivery for such Option
Securities will be the Closing Date. Each of the Underwriters, severally and not jointly, will
purchase the number of Option Securities set forth in Schedule 1 opposite the name of such
Underwriter, 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 Preferred Shares.
(iii) The Closing Date. The Securities to be purchased by each Underwriter hereunder,
in such authorized denominations and registered in such names as the Representatives may request
upon at least forty-eight hours’ prior notice to the Company, shall be delivered by or on behalf of
the Company to the Representatives through the facilities of The Depository Trust Company (“DTC”),
for the respective accounts of the Underwriters of the Securities to be purchased by them, against
payment by or on behalf of such Underwriters of the purchase price therefor by wire transfer of
immediately available funds to the account specified by the Company at least forty-eight hours in
advance, by the Company causing DTC to credit securities entitlements with respect to the
Securities to the securities account(s) at DTC designated by the Representatives on behalf of the
Underwriters. The time and date of such delivery and payment shall be, with respect to the
Securities, 10:00 a.m., New York time, on June 1, 2011 (unless postponed in accordance with Section
10), or such other time and date as the Underwriters and the Company shall mutually agree (the time
and date of such closing are called the “Closing Date”).
(iv) Public Offering of the Securities. The Representatives hereby advise the Company
that the Underwriters intend to offer for sale to the public, as described in the Time of Sale
Prospectus and the Prospectus, their respective portions of the Securities as soon after the
Applicable Time of Sale as the Representatives, in their sole judgment, have determined is
advisable and practicable.
(v) Payment for the Securities. Payment for the Securities shall be made at the
Closing Date by wire transfer of immediately available funds to the order of the Company. It is
understood that the Representatives have been authorized, for their own account and for the
respective accounts of the several Underwriters, to accept delivery of and receipt for, and make
10
payment of the purchase price for, the Securities that the Underwriters have agreed to
purchase. The Representatives may (but shall not be obligated to) make payment for the Securities
to be purchased by any Underwriter whose funds shall not have been received by the Representatives
by the Closing Date for the account of such Underwriter, but any such payment shall not relieve
such Underwriter from any of its obligations under this Agreement.
3. Conditions to the Underwriters’ Obligations. The obligations of the Underwriters are
subject to the following conditions:
(i) Effectiveness of Registration Statement. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the Securities Act and no proceedings for that
purpose shall have been instituted or be pending or threatened by the Commission, any request on
the part of the Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the Underwriters and the Company shall not have received from
the Commission any notice pursuant to Rule 401(g)(2) of the Rules and Regulations objecting to use
of the automatic shelf registration statement form. The Preliminary Prospectus and the Prospectus
shall have been filed with the Commission in accordance with Rule 424(b) (or any required
post-effective amendment providing such information shall have been filed and declared effective in
accordance with the requirements of Rule 430A of the Rules and Regulations).
(ii) No Objection. If applicable, the Financial Industry Regulatory Authority, Inc.
(“FINRA”) shall not have raised any objection with respect to the fairness and reasonableness of
the underwriting terms and arrangements.
(iii) Absence of Material Adverse Change or Development. (1) As of the Closing Date,
except as disclosed in the Time of Sale Prospectus, there has not been any material adverse change
in, or any adverse development which materially affects, the business, properties, financial
condition or results of operations of the Company and its subsidiaries, considered as a whole, from
the dates as of which information is given in the Time of Sale Prospectus; and (2) except as
disclosed in the Time of Sale Prospectus, since the respective dates as of which information is
given in the Time of Sale Prospectus there shall not have been any change in the capital stock of
the Company (other than issuances of capital stock upon exercise of options and stock appreciation
rights, upon earn outs of performance shares or upon conversions of convertible securities, in each
case which were outstanding on the date of the latest balance sheet included or incorporated by
reference in the Time of Sale Prospectus) or long-term debt of the Company or any of its
subsidiaries, the effect of which in any such case described in clause (1) or (2), is in the
reasonable judgment of the Underwriters so material and adverse as to make it impracticable or
inadvisable to proceed with the offering or the delivery of the Securities on the terms and in the
manner contemplated in the Time of Sale Prospectus.
(iv) No Ratings Agency Change. Subsequent to the execution and delivery of this
Agreement, there shall not have occurred any downgrading, nor shall any notice have been given of
any intended or potential downgrading or of any review for a possible change that does not indicate
the direction of the possible change, in the rating accorded any securities of the
11
Company or any of its subsidiaries by any “nationally recognized statistical rating
organization” as such term is defined for purposes of Section 3(a)(62) under the Exchange Act.
(v) Company Officer’s Certificates. The Underwriters shall have received a
certificate of the Chief Executive Officer or an Executive Vice President of the Company and of the
chief financial or chief accounting officer of the Company, dated as the Closing Date, to the
effect that (i) there has been no such material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the ordinary course of
business, (ii) the Company has not received from the Commission any notice pursuant to Rule
401(g)(2) objecting to use of the automatic shelf registration statement form, (iii) the
representations and warranties in Section 1 are true and correct with the same force and effect as
though expressly made at and as of the Closing Date, and (iv) the Company has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the
Closing Date.
(vi) Opinion of Counsel for Company. The Underwriters shall have received on the
Closing Date, a written opinion and negative assurance letter from Skadden, Arps, Slate, Xxxxxxx &
Xxxx LLP, special New York counsel and transaction counsel for the Company, dated the Closing Date,
covering the matters referred to in Exhibit A.
(vii) Opinion of General Counsel for the Company. The Underwriters shall have
received on the Closing Date, a written opinion from Xxxx X. Del Col, General Counsel of the
Company, dated the Closing Date, covering the matters referred to in Exhibit B.
(viii) Opinion of Bermuda Counsel to the Company. The Underwriters shall have
received on the Closing Date a written opinion of Xxxxxxx, special Bermuda counsel to the Company,
dated the Closing Date, substantially in the form of Exhibit C.
(ix) Opinion of Counsel to the Underwriters. The Underwriters shall have received on
the Closing Date a written opinion and negative assurance letter of Xxxxx & XxXxxxx LLP, counsel
for the Underwriters dated the Closing Date, in form satisfactory to the Underwriters.
(x) Accountant’s Comfort Letter and Bring-Down Comfort Letter. The Underwriters shall
have received, on each of the date of this Agreement and on the Closing Date, letters dated the
respective dates of delivery thereof, in form and substance satisfactory to the Underwriters, from
Ernst & Young Ltd., independent public accountants, containing statements and information of the
type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the
financial statements and certain financial information contained in the Time of Sale Prospectus and
the Prospectus; provided that the letter delivered on the Closing Date shall use a “cut-off date”
not earlier than the date hereof.
4. Covenants of the Company. In further consideration of the agreements of the Underwriters
herein contained, the Company covenants with the Underwriters as follows:
(i) Compliance with Securities Regulations and Commission Requests. The Company,
subject to Section 3(i), will comply with the requirements of Rule 430B, and will
12
promptly notify the Representatives, and confirm the notice in writing, of (i) the
effectiveness during the Prospectus Delivery Period (as defined below) of any post-effective
amendment to the Registration Statement or the filing of any supplement or amendment to the
Preliminary Prospectus or the Prospectus, (ii) the receipt of any comments from the Commission
during the Prospectus Delivery Period, (iii) any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Preliminary Prospectus or the
Prospectus or for additional information, and (iv) 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 Securities for offering or sale in any jurisdiction, or of the initiation or threatening of
any proceedings for any of such purposes. The Company will promptly effect the filings necessary
pursuant to Rule 424 and will take such steps as it deems necessary to ascertain promptly whether
the Preliminary Prospectus and the Prospectus transmitted for filing under Rule 424 was received
for filing by the Commission and, in the event that it was not, it will promptly file such
document. The Company will use its reasonable best efforts to prevent the issuance of any stop
order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible
moment.
(ii) Filing of Amendments. During such period beginning on the date of this Agreement
and ending on the later of the Closing Date or such date as, in the opinion of counsel for the
Underwriters, the Prospectus is no longer required by law to be delivered in connection with sales
of the Securities by an Underwriter or dealer, including in circumstances where such requirement
may be satisfied pursuant to Rule 172 of the Rules and Regulations (the “Prospectus Delivery
Period”), the Company will give the Representatives notice of its intention to file or prepare any
amendment to the Registration Statement (including any filing under Rule 462(b) of the Rules and
Regulations), or any amendment, supplement or revision to the Time of Sale Prospectus or the
Prospectus, whether pursuant to the Securities Act, the Exchange Act or otherwise, will furnish the
Representatives with copies of any such documents a reasonable amount of time prior to such
proposed filing or use, as the case may be, and will not file or use any such document to which the
Representatives or counsel for the Underwriters shall reasonably object.
(iii) Delivery of Registration Statements. The Company has furnished or will deliver
to the Representatives and counsel for the Underwriters, without charge, signed copies of the
Registration Statement as originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein and documents incorporated or deemed to be
incorporated by reference therein) and signed copies of all consents and certificates of experts,
and will also deliver to the Representatives, without charge, a conformed copy of the Registration
Statement as originally filed and of each amendment thereto (without exhibits) for each of the
Underwriters. The Registration Statement and each amendment thereto furnished to the Underwriters
will be identical to any electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S—T.
(iv) Delivery of Prospectuses. The Company will deliver to each Underwriter, without
charge, as many copies of the Preliminary Prospectus as such Underwriter may reasonably request,
and the Company hereby consents to the use of such copies for purposes permitted by the Securities
Act. The Company will furnish to each Underwriter, without charge,
13
during the Prospectus Delivery Period, such number of copies of the Prospectus as such
Underwriter may reasonably request. The Preliminary Prospectus and the Prospectus and any
amendments or supplements thereto furnished to the Underwriters will be identical to any
electronically transmitted copies thereof filed with the Commission pursuant to XXXXX, except to
the extent permitted by Regulation S—T.
(v) Continued Compliance with Securities Laws. The Company will comply with the
Securities Act and the Exchange Act so as to permit the completion of the distribution of the
Securities as contemplated in this Agreement and in the Registration Statement, the Time of Sale
Prospectus and the Prospectus. If at any time during the Prospectus Delivery Period, any event
shall occur or condition shall exist as a result of which it is necessary, in the opinion of
counsel for the Underwriters or for the Company, to amend the Registration Statement in order that
the Registration Statement will not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the statements therein not
misleading or to amend or supplement the Time of Sale Prospectus or the Prospectus in order that
the Time of Sale Prospectus or the Prospectus, as the case may be, will not include an untrue
statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the Initial Sale Time or at the
time it is delivered or conveyed to a purchaser, not misleading, or if it shall be necessary, in
the opinion of either such counsel, at any such time to amend the Registration Statement or amend
or supplement the Time of Sale Prospectus or the Prospectus in order to comply with the
requirements of any law, the Company will notify the Representatives of any such event, development
or condition and promptly prepare and file with the Commission, subject to Section 3(i), such
amendment or supplement as may be necessary to correct such statement or omission or to make the
Registration Statement, the Time of Sale Prospectus or the Prospectus comply with such law, and the
Company will furnish to the Underwriters, without charge, such number of copies of such amendment
or supplement as the Underwriters may reasonably request.
(vi) Blue Sky Compliance. The Company shall cooperate with the Representatives and
counsel for the Underwriters to qualify or register the Securities for sale under (or obtain
exemptions from the application of) the state securities or blue sky laws of those jurisdictions
designated by the Representatives, shall comply with such laws and shall continue such
qualifications, registrations and exemptions in effect so long as required for the distribution of
the Securities. The Company shall not be required to qualify to transact business or to take any
action that would subject it to general service of process in any such jurisdiction where it is not
presently qualified or where it would be subject to taxation as a foreign business. The Company
will advise the Representatives promptly of the suspension of the qualification or registration of
(or any such exemption relating to) the Securities for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event
of the issuance of any order suspending such qualification, registration or exemption, the Company
shall use its best efforts to obtain the withdrawal thereof at the earliest possible moment.
(vii) Listing. The Company will use its reasonable best efforts to effect and maintain
the listing of the Securities on the New York Stock Exchange (the “NYSE”).
14
(viii) Use of Proceeds. The Company shall apply the net proceeds from the sale of the
Securities sold by it in the manner described under the caption “Use of Proceeds” in the
Preliminary Prospectus and the Prospectus.
(ix) Depositary. The Company will cooperate with the Underwriters and use its best
efforts to permit the Securities to be eligible for clearance and settlement through the facilities
of DTC.
(x) Periodic Reporting Obligations. During the Prospectus Delivery Period, the
Company shall file, on a timely basis, with the Commission and the NYSE all reports and documents
required to be filed under the Exchange Act.
(xi) Agreement Not to Offer or Sell Additional Securities. During a period of 60 days
from the date of the Prospectus, the Company will not, without the prior written consent of the
Representatives, (i) directly or indirectly, 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 any Preferred Shares or any securities
convertible into or exercisable or exchangeable for Preferred Shares or file any registration
statement under the Securities Act with respect to any of the foregoing or (ii) enter into any swap
or any other agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Preferred Shares, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by delivery of Preferred Shares
or such other securities, in cash or otherwise. The foregoing sentence shall not apply to (A) the
Securities to be sold hereunder, (B) any Preferred Shares issued by the Company upon the exercise
of an option or warrant or the conversion of a security outstanding on the date hereof and referred
to in the Registration Statement, the Time of Sale Prospectus and the Prospectus, (C) any Preferred
Shares issued or options to purchase Preferred Shares granted pursuant to existing employee benefit
plans of the Company referred to in the Registration Statement, the Time of Sale Prospectus and the
Prospectus or (D) any Preferred Shares issued pursuant to any non-employee director stock plan or
dividend reinvestment plan referred to in the Registration Statement, the Time of Sale Prospectus
and the Prospectus.
(xii) Final Term Sheet. The Company will prepare a final term sheet containing only a
description of the Securities, substantially in the form approved by the Underwriters and included
in Schedule 2, and will file such term sheet pursuant to Rule 433(d) within the time required by
such rule (such term sheet, the “Final Term Sheet”). Any such Final Term Sheet is an Issuer Free
Writing Prospectus for purposes of this Agreement.
(xiii) Permitted Free Writing Prospectuses. The Company represents that it has not
made, and agrees that, unless it obtains the prior written consent of the Representatives, it will
not make, any offer relating to the Securities that would constitute an Issuer Free Writing
Prospectus or that would otherwise constitute a “free writing prospectus” (as defined in Rule 405)
required to be filed by the Company with the Commission or retained by the Company under Rule 433;
provided that the prior written consent of the Representatives shall be deemed to have been given
in respect of any Issuer Free Writing Prospectuses included in Schedule 4 to this Agreement. Any
such free writing prospectus consented to or deemed to be consented to by the Representatives is
hereinafter referred to as a “Permitted Free Writing Prospectus.” The
15
Company agrees that (i) it has treated and will treat, as the case may be, each Permitted Free
Writing Prospectus as an Issuer Free Writing Prospectus, and (ii) has complied and will comply, as
the case may be, with the requirements of Rules 164 and 433 applicable to any Permitted Free
Writing Prospectus, including in respect of timely filing with the Commission, legending and record
keeping. The Company consents to the use by any Underwriter of a free writing prospectus that (a)
is not an “issuer free writing prospectus” as defined in Rule 433, and (b) contains only (i)
information describing the preliminary terms of the Securities or their offering, (ii) information
permitted by Rule 134 of the Rules and Regulations or (iii) information that describes the final
terms of the Securities or their offering and that is included in the Final Term Sheet of the
Company contemplated in Section 4(xii).
(xiv) Registration Statement Renewal Deadline. If immediately prior to the third
anniversary (the “Renewal Deadline”) of the initial effective date of the Registration Statement,
any of the Securities remain unsold by the Underwriters, the Company will prior to the Renewal
Deadline file, if it has not already done so and is eligible to do so, a new automatic shelf
registration statement relating to the Securities, in a form reasonably satisfactory to the
Representatives. If the Company is no longer eligible to file an automatic shelf registration
statement, the Company will prior to the Renewal Deadline, if it has not already done so, file a
new shelf registration statement relating to the Securities, in a form satisfactory to the
Representatives, and will use its best efforts to cause such registration statement to be declared
effective within 60 days after the Renewal Deadline. The Company will take all other action
necessary or appropriate to permit the public offering and sale of the Securities to continue as
contemplated in the expired registration statement relating to the Securities. References herein
to the Registration Statement shall include such new automatic shelf registration statement or such
new shelf registration statement, as the case may be.
(xv) Notice of Inability to Use Automatic Shelf Registration Statement Form. If at
any time during the Prospectus Delivery Period, the Company receives from the Commission a notice
pursuant to Rule 401(g)(2) or otherwise ceases to be eligible to use the automatic shelf
registration statement form, the Company will (i) promptly notify the Representatives, (ii)
promptly file a new registration statement or post-effective amendment on the proper form relating
to the Securities, in a form satisfactory to the Representatives, (iii) use its best efforts to
cause such registration statement of post-effective amendment to be declared effective and (iv)
promptly notify the Representatives of such effectiveness. The Company will take all other action
necessary or appropriate to permit the public offering and sale of the Securities to continue as
contemplated in the registration statement that was the subject of the Rule 401(g)(2) notice or for
which the Company has otherwise become ineligible. References herein to the Registration Statement
shall include such new registration statement or post-effective amendment, as the case may be.
(xvi) Filing Fees. The Company agrees to pay the required Commission filing fees
relating to the Securities within the time required by and in accordance with Rules 456(b)(1) and
457(r) of the Rules and Regulations.
(xvii) No Manipulation of Price. The Company will not take, directly or indirectly,
any action designed to cause or result in, or that has constituted or might reasonably
16
be expected to constitute, under the Exchange Act or otherwise, the stabilization or
manipulation of the price of any securities of the Company to facilitate the sale or resale of the
Securities.
5. Covenants of the Underwriters. Each of the Underwriters hereby represent and agree that:
(i) It has not made, and will not make any offer relating to the Securities that would
constitute a free writing prospectus, without the prior consent of the Company, which consent shall
not be unreasonably withheld.
(ii) Any free writing prospectus used or referred to by it will not be subject to broad
unrestricted dissemination and will not be required to be filed with the Commission, in accordance
with Rule 433 under the Securities Act, as a result of any action taken or caused to be taken by
the Underwriter, which is not consented to in advance by the Company.
(iii) Any free writing prospectus used or referred to by it, except any “issuer free writing
prospectus” as defined in Rule 433 under the Securities Act, as to which the Underwriter makes no
representation or warranty, complied in all material respects with the Securities Act.
(i) Except as provided in Section 6(ii) and subject to Bermuda law, the Company agrees to pay
all expenses incident to the performance of its obligations under this Agreement, including (a) the
preparation, printing or reproduction of the Registration Statement, the preliminary prospectus,
the Time of Sale Prospectus, the Prospectus and any free writing prospectus (including supplements)
and of each amendment thereto, (b) the preparation, printing and delivery to the Underwriters of
this Agreement and such other documents as may be required in connection with the offering,
purchase, sale, issuance or delivery of the Securities, (c) the fees and disbursements of the
counsel, accountants and other advisors for the Company, (d) any registration or qualification of
the Securities for offer and sale under the securities or Blue Sky laws of the several states (the
“Blue Sky Survey”) (including filing fees and the reasonable fees and expenses of counsel for the
Underwriters relating to such registration and qualification (such fees and disbursements of
counsel not to exceed $10,000)), (e) the printing, printing and delivery of copies of the Time of
Sale Prospectus and the Prospectus, (f) the preparation, printing and delivery of copies of the
Blue Sky Survey and any supplement thereto, (g) the cost of printing certificates representing the
Securities, (h) the fees and expenses of any transfer agent or registrar for the Securities, (i)
the fees and expenses of the Company relating to investor presentations on any “road show”
undertaken in connection with the marketing of the offering of the Securities, including, without
limitation, expenses associated with the production of road show slides and graphics, fees and
expenses of any consultants engaged in connection with the road show presentations with the prior
approval of the Company, travel and lodging expenses of the representatives and officers of the
Company and any such consultants, and a proportional share of the cost of any aircraft chartered in
connection with the road show; provided except as provided in this Section and Sections 7(iii) and
9 hereof, each of the Underwriters will pay all of its own costs and expenses, including the fees
of its counsel, stock transfer taxes on resale of any of the Securities by it, and any advertising
expenses connected with any offers it may make. If
17
this Agreement is terminated by the Underwriters in accordance with the provisions of Sections
7, the Company shall reimburse the Underwriters for all of their out-of-pocket expenses, including
the reasonable fees and disbursements of counsel for the Underwriters.
(ii) The Underwriters agree to reimburse the Company for $430,000 of its expenses incurred in
connection with the offering of the Securities; such reimbursement to occur simultaneously with the
purchase and sale of the Securities at the Closing Date.
(i) Effective Date. This Agreement shall become effective as of the date first above
written and shall remain in force until terminated as provided in this Section 7;
(ii) Termination; General. The Underwriters may terminate this Agreement, by notice
to the Company, at any time at or prior to the Closing Date (a) if there has been, since the time
of execution of this Agreement or since the respective dates as of which information is given in
the Prospectus (exclusive of any supplement thereto), any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of
business, or (b) if there has occurred any material adverse change in the financial markets in the
United States or in the international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a prospective change in
national or international political, financial or economic conditions, in each case the effect of
which is such as to make it, in the judgment of the Underwriters, impracticable or inadvisable to
market the Securities or to enforce contracts for the sale of the Securities, or (c) if trading in
any securities of the Company has been suspended or materially limited by the Commission or the
NYSE, or if trading generally on the American Stock Exchange or the NYSE or in the Nasdaq Global
Market has been suspended or materially limited, or minimum or maximum prices for trading have been
fixed, or maximum ranges for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the FINRA or any other governmental authority, or a material
disruption has occurred in commercial banking or securities settlement or clearance services in the
United States, or (d) if a banking moratorium has been declared by either federal or New York
authorities.
(iii) Liabilities. If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as provided in
Section 6 hereof, and provided further that Sections 1, 8 and 9 shall survive such termination and
remain in full force and effect.
(i) As used herein:
(a) “Indemnified Party” means a person entitled to indemnity under paragraph
(ii) or (i) of this Section 8.
18
(b) “Indemnifying Party” means a person providing indemnity under paragraph
(ii) or (ii) of this Section 8.
(c) “Underwriter Information” means all information contained in the
Prospectus, the Time of Sale Prospectus or any amendment or supplement thereto or
any preliminary prospectus in reliance upon and in conformity with information
concerning the Underwriters furnished in writing by or on behalf of each of the
Underwriters to the Company expressly for use therein; it being understood and
agreed that such information furnished by the Underwriters consists solely of the
following: The information contained in the Prospectus, the Time of Sale Prospectus
or any preliminary prospectus in the second paragraph under the caption
“Underwriting — Commissions and Discounts” and the second paragraph under the
caption “Underwriting — Price Stabilization, Short Positions.”
(d) “Proceeding” means any action, suit or proceeding.
(e) “Company Information” means all information contained or incorporated by
reference in or omitted from the Prospectus, the Time of Sale Prospectus or any
amendment or supplement thereto, any preliminary prospectus other than the
Underwriter Information.
(ii) Indemnification by Company. Subject to Bermuda law, the Company will indemnify
and hold harmless each Underwriter, its directors, officers, employees, members and agents, and
each person who controls any Underwriter within the meaning of either the Securities Act or the
Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which
they or any of them may become subject under the Securities Act, the Exchange Act or other Federal
or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the Company Information or
any other information provided by the Company to any holder or prospective purchaser of the
Securities hereof, or in any amendments thereof or supplements thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of the circumstances under which
they were made, not misleading, and agrees to reimburse each such Indemnified Party for any legal
or other expenses reasonably incurred by them in connection with investigating or defending any
such action or claim as such expenses are incurred; provided, however, that with respect to any
such untrue statement or alleged untrue statement of a material fact contained in the Company
Information or any other information provided by the Company to any holder or prospective purchaser
of the Securities hereof, the indemnity agreement contained in this Section 8 shall not inure to
the benefit of any Underwriter to the extent that the sale to the person asserting any such loss,
claim, damage or liability was an initial resale by such Underwriter and any such loss, claim,
damage or liability of or with respect to such Underwriter results from the fact that both (a) to
the extent required by applicable law, a copy of the Prospectus was not sent or given to such
person at or prior to the written confirmation of the sale of such Securities to such person and
(b) the untrue statement in or omission from such preliminary prospectus was corrected in the
Prospectus unless, in either case,
19
such failure to deliver the Prospectus was a result of non-compliance by the Company with the
provisions of Section 4(iv) hereof.
(iii) Indemnification by the Underwriter. The Underwriters agree to indemnify and
hold harmless the Company, its directors and officers, and each person who controls the Company
within the meaning of either the Securities Act or the Exchange Act, to the same extent as the
foregoing indemnity from the Company, against any losses, claims, damages or liabilities to which
the Company may become subject, under the Securities Act, the Exchange Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material fact contained in the
Underwriter Information, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company for any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending any such action or claim as
such expenses are incurred.
(iv) Actions against Parties; Notification. Promptly after receipt by an Indemnified
Party under paragraphs (ii) and (iii) above of notice of the commencement of any action, such
Indemnified Party shall, if a claim in respect thereof is to be made against the Indemnifying Party
under such subsection, notify the Indemnifying Party in writing of the commencement thereof; but
the omission so to notify the Indemnifying Party shall not relieve it from any liability which it
may have to any Indemnified Party otherwise than under such subsection to the extent it is not
materially prejudiced as a result thereof. An Indemnifying Party may participate at its own
expense in the defense of any such action; provided that counsel to the Indemnifying Party shall
not (except with the consent of the Indemnified Party) also be counsel to the Indemnified Party.
In case any such action shall be brought against any Indemnified Party and it shall notify the
Indemnifying Party of the commencement thereof, the Indemnifying Party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any other Indemnifying
Party similarly notified, to assume the defense thereof, with counsel satisfactory to such
Indemnified Party (who shall not, except with the consent of the indemnified party, be counsel to
the indemnifying party), and, after notice from the Indemnifying Party to such Indemnified Party of
its election so to assume the defense thereof, the Indemnifying Party shall not be liable to such
Indemnified Party under such subsection for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such Indemnified Party, in connection with the
defense thereof other than reasonable costs of investigation. No Indemnifying Party shall, without
the written consent of the Indemnified Party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or claim in respect of
which indemnification or contribution may be sought hereunder (whether or not the Indemnified Party
is an actual or potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the Indemnified Party from all liability arising
out of such action or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any Indemnified Party.
(v) Control Persons. The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls an Underwriter or
20
within the meaning of the Securities Act and the obligations of the Underwriters under this
Section 8 shall extend, upon the same terms and conditions, to each officer and director of the
Company and to each person, if any, who controls the Company within the meaning of the Act.
9. Contribution. If the indemnification provided for in Section 8(ii) and (iii) is
unavailable to or insufficient to hold harmless an Indemnified Party in respect of any reason, the
Company and the Underwriters agree to contribute to the aggregate losses, claims, damages or
liabilities (or actions in respect thereof) referred to in Section 8, then each Indemnifying Party
shall contribute to the amount paid or payable by such Indemnified Party in such proportion as is
appropriate to reflect the relative benefits received by the Underwriters on the one hand and by
the Company on the other from the offering of the Securities. If, however, the allocation provided
by the immediately preceding sentence is not permitted by applicable law or if the Indemnified
Party failed to give the notice required under Section 8 above, then each Indemnifying Party shall
contribute to such amount paid or payable by such Indemnified Party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative fault of the
Underwriters on the one hand and of the Company on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriters on the other hand in connection with the
offering of the Securities shall be deemed to be in the same respective proportions as the net
proceeds from the offering of the Securities (before deducting expenses) received by the Company,
on the one hand, and the total underwriting discounts and commissions received by the Underwriters,
on the other hand, in each case as set forth in the table on the cover of the Prospectus, bear to
the aggregate public offering price of the Securities. The relative fault 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
Underwriters on the one hand and of the Company on the other and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section 9 were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable considerations referred to above
in this Section 9. The amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above in this Section 9
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 this Section 9, the Underwriters shall not be required to contribute any amount in
excess of the amount by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any damages which the
Underwriters have 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 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
10. Default of One or More of the Several Underwriters. If, on the Closing Date any one or
more of the several Underwriters shall fail or refuse to purchase Securities that it or they
21
have agreed to purchase hereunder on such date, and the number of Securities, which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase does not exceed 10%
of the number of the Securities to be purchased on such date, the other Underwriters shall be
obligated, severally, in the proportion to the number of such Securities set forth opposite their
respective names on Schedule 1 bears to the number of such Securities set forth opposite the names
of all such non-defaulting Underwriters, or in such other proportions as may be specified by the
Representatives with the consent of the non-defaulting Underwriters, to purchase such Securities
which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase on such
date. If any one or more of the Underwriters shall fail or refuse to purchase such Securities and
the number of such Securities with respect to which such default occurs exceeds 10% of the number
of Securities to be purchased on the Closing Date, and arrangements satisfactory to the
Representatives and the Company for the purchase of such Securities are not made within 48 hours
after such default, this Agreement shall terminate without liability of any party to any other
party except that the provisions of Sections 4, 6, 8, 9 and 17 shall at all times be effective and
shall survive such termination. In any such case, either the Representatives or the Company shall
have the right to postpone the Closing Date, but in no event for longer than seven days in order
that the required changes, if any, to the Registration Statement, any Issuer Free Writing
Prospectus, the Preliminary Prospectus or the Prospectus or any other documents or arrangements may
be effected.
As used in this Agreement, the term “Underwriters” shall be deemed to include any person
substituted for a defaulting Underwriter under this Section 10. Any action taken under this
Section 10 shall not relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
11. Notices. All statements, requests, notices and agreements hereunder shall be in
writing, and if to:
(i) | If to the Representatives: | |||
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated Xxx Xxxxxx Xxxx Xxx Xxxx, XX 00000 Facsimile: 000-000-0000 Attention: High Grade Transaction Management/Legal |
||||
Xxxxx Fargo Securities, LLC 000 X. Xxxxxxx Xxxxxx Xxxxxxxxx, XX 00000 Fascimile: 000-000-0000 Attention: Transaction Management |
||||
with
copies to: |
||||
Xxxxxxx Xxxxx, Esq. and Xxxxxxxx Nicenko, Esq. Xxxxx & XxXxxxx, LLP |
22
1301 Avenue of the Americas Xxx Xxxx, Xxx Xxxx 00000 |
||||
(ii) | If to the Company: Endurance Specialty Holdings Ltd. Wellesley Xxxxx 00 Xxxxx Xxx Xxxx Xxxxxxxx XX 00, Xxxxxxx Xxxxxxxxx number: 000-000-0000 Attention: General Counsel |
|||
with
a copy to: |
||||
Xxxxx Xxxxxxxxxx, Esq. Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP Xxxx Xxxxx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000-0000 |
12. Successors and Assigns. This Agreement shall be binding upon and inure solely to the
benefit of the parties hereto and their respective successors and assigns, and no other person
shall acquire or have any right under or by virtue of this Agreement. No purchaser of any of the
Securities from the Underwriters shall be deemed a successor or assign solely by reason of such
purchase.
13. Counterparts. This Agreement may be signed 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.
14. Applicable Law; Submission to Jurisdiction; Appointment of Agent for Service. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME. EACH OF THE PARTIES HERETO IRREVOCABLY (i)
AGREES THAT ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST THE COMPANY BROUGHT BY THE UNDERWRITERS OR
BY ANY PERSON WHO CONTROLS AN UNDERWRITER ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY MAY BE INSTITUTED IN ANY UNITED STATES FEDERAL OR STATE COURT IN
THE BOROUGH OF MANHATTAN, THE CITY OF NEW YORK, STATE OF NEW YORK (A “NEW YORK COURT”), (ii)
WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY SUCH PROCEEDING AND (iii) SUBMITS TO THE EXCLUSIVE JURISDICTION
OF SUCH NEW YORK COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING. THE COMPANY EXPRESSLY CONSENTS TO
THE JURISDICTION OF ANY NEW YORK COURT IN RESPECT OF ANY SUCH ACTION,
23
AND WAIVES ANY OTHER REQUIREMENTS OF OR OBJECTIONS TO PERSONAL JURISDICTION WITH RESPECT
THERETO.
The Company hereby irrevocably appoints CT Corporation System in New York City as its agent
for service of process in any suit, action or proceeding described in the preceding paragraph. The
Company agrees that service of process in any such suit, action or proceeding may be made upon it
at the office of its agent. The Company waives, to the fullest extent permitted by law, any other
requirements of or objections to personal jurisdiction with respect thereto. The Company represents
and warrants that its agent has agreed to act as agent for service of process, and agrees to take
any and all action, including the filing of any and all documents and instruments, that may be
necessary to continue such appointment in full force and effect.
15. Headings. The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed a part of this Agreement.
16. No fiduciary duty. The Company acknowledges and agrees that in connection with this
offering, sale of the Securities or any other services the Underwriters may be deemed to be
providing hereunder, notwithstanding any preexisting relationship, advisory or otherwise, between
the parties or any oral representations or assurances previously or subsequently made by the
Underwriters: (i) no fiduciary or agency relationship between the Company and any other person, on
the one hand, and the Underwriters, on the other, exists; (ii) the Underwriters are not acting as
advisor, expert or otherwise, to the Company, including, without limitation, with respect to the
determination of the purchase price, and such relationship between the Company on the one hand, and
the Underwriters, on the other, is entirely and solely commercial, based on arms-length
negotiations; (iii) any duties and obligations that the Underwriters may have to the Company shall
be limited to those duties and obligations specifically stated herein; and (iv) the Underwriters
and their affiliates may have interests that differ from those of the Company. The Company hereby
waives any claims that the Company may have against the Underwriters with respect to any breach of
fiduciary duty in connection with the sale of the Securities.
24
Endurance Specialty Holdings Ltd. |
||||
By: | /s/ Xxxx X. Del Col | |||
Name: | Xxxx X. Del Col | |||
Title: | General Counsel | |||
The foregoing Underwriting Agreement is hereby confirmed and accepted by the Representatives
as of the date first above written.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Fargo Securities, LLC
as Representatives of the several Underwriters
named in Schedule 1.
By: Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Incorporated
Xxxxx Fargo Securities, LLC
as Representatives of the several Underwriters
named in Schedule 1.
By: Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
By:
|
/s/ Xxxxxx X. Xxxxxxx
|
|||
Title: Director | ||||
By:
|
Xxxxx Fargo Securities, LLC | |||
By:
|
/s/ Xxxxxxx Xxxxxx
|
|||
Title: Director |
SCHEDULE 1
Number of Initial | Number of Option | Total Number of | ||||||||||
Underwriters | Securities | Securities | Securities | |||||||||
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated |
3,956,000 | 607,200 | 4,563,200 | |||||||||
Xxxxx Fargo Securities, LLC |
2,724,000 | 394,800 | 3,118,800 | |||||||||
Barclays Capital Inc. |
200,000 | 30,000 | 230,000 | |||||||||
BNY Mellon Capital Markets, LLC |
200,000 | 30,000 | 230,000 | |||||||||
Credit Suisse Securities (USA) LLC |
200,000 | 30,000 | 230,000 | |||||||||
Deutsche Bank Securities Inc. |
120,000 | 18,000 | 138,000 | |||||||||
Xxxxxxx, Xxxxx & Co. |
120,000 | 18,000 | 138,000 | |||||||||
HSBC Securities (USA) Inc. |
120,000 | 18,000 | 138,000 | |||||||||
ING Financial Markets LLC |
120,000 | 18,000 | 138,000 | |||||||||
X.X. Xxxxxx Securities LLC |
120,000 | 18,000 | 138,000 | |||||||||
RBS Securities Inc. |
120,000 | 18,000 | 138,000 | |||||||||
Total |
8,000,000 | 1,200,000 | 9,200,000 | |||||||||
SCHEDULE 2
Final Term Sheet, dated May 24, 2011, substantially in the form attached hereto.
Issuer:
|
Endurance Specialty Holdings Ltd. (“ENH”) | |
Securities:
|
7.50% Non-Cumulative Preferred Shares, Series B | |
Format:
|
SEC Registered | |
Size:
|
$200,000,000; 8,000,000 shares; $25 liquidation preference per share | |
Overallotment
Option:
|
$30,000,000; 1,200,000 shares; $25 liquidation preference per share (overallotment option exercised in full) | |
Trade Date:
|
May 24, 2011 | |
Settlement Date:
|
June 1, 2011 (T + 5) | |
Maturity Date:
|
Perpetual | |
Dividend:
|
7.50% | |
Dividend Payments:
|
Non-Cumulative | |
Payment Dates:
|
Dividends, if declared, will be paid quarterly on March 15, June 15, September 15 and December 15, of each year, commencing on September 15, 2011 | |
Day Count Convention:
|
30/360 | |
Underwriting Discounts and Commissions:
|
$0.7875 per Security for Retail Orders; 5,418,000 shares total; and $0.5000 per Security for Institutional Orders; 3,782,000 shares total | |
Price to Public:
|
$25 | |
Price
to Issuer**:
|
$24.33 | |
Payment Business Days:
|
New York | |
Payment Convention:
|
Following; unadjusted | |
Optional Redemption:
|
The Securities are not redeemable prior to June 1, 2016 (the “Initial Call Date”), except in specified circumstances relating to certain tax or corporate events. On and after the Initial Call Date, the Securities will be redeemable at the issuer’s option, in whole or in part on any Payment Date, at a redemption price equal to the liquidation preference per Security, plus any declared and unpaid dividends. | |
CUSIP; ISIN:
|
X00000000; BMG303973041 | |
Book-Running Managers:
|
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated Xxxxx Fargo Securities, LLC |
|
Co-Managers:
|
Barclays Capital Inc.; BNY Mellon Capital Markets, LLC; Credit Suisse Securities (USA) LLC; Deutsche Bank Securities Inc.; Xxxxxxx, Xxxxx & Co.; HSBC Securities (USA) Inc.; ING Financial Markets LLC; X.X. Xxxxxx Securities LLC; RBS Securities Inc. |
** | The price to issuer is based on an average weighted underwriting discount for retail and institutional orders. |
The issuer
has filed a registration statement (including a prospectus) and a
preliminary prospectus supplement
with the SEC for the offering to which this communication relates. Before you invest, you should
read the prospectus in that registration statement, the preliminary prospectus supplement and other documents
the issuer has filed with the SEC for more complete information about the issuer and this offering.
You should rely on the prospectus, preliminary prospectus supplement and any relevant free writing prospectus
for complete details. You preliminary may get these documents for free by visiting XXXXX on the SEC Web site at
xxx.xxx.xxx. Alternatively, copies of the prospectus and the preliminary prospectus supplement may be obtained
from Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated by calling toll-free at 1-800-294-1322 or
Xxxxx Fargo Securities, LLC by calling toll-free at 0-000-000-0000.
This communication should be read in
conjunction with the preliminary prospectus supplement dated May 24, 2011 and the accompanying
prospectus. The information in this communication supersedes the information in the relevant
preliminary prospectus supplement and the accompanying prospectus to
the extent inconsistent with this information in such preliminary
prospectus supplement and the accompanying prospectus.
SCHEDULE 3
9,200,000 Shares
7.50% Non-Cumulative Preferred Shares, Series B (Par Value $1.00 Per Share)
7.50% Non-Cumulative Preferred Shares, Series B (Par Value $1.00 Per Share)
1. The initial public offering price per share for the Securities, determined as provided in
said Section 2, shall be $25.00.
2. The purchase price per share for the Securities to be paid by the several Underwriters
shall be an amount equal to $24.5000 per share with respect to 3,782,000 Securities (representing
the Securities reserved for institutional orders) plus $24.2125 per share with respect to 5,418,000
Securities (representing Securities reserved for retail orders).
SCHEDULE 4
None