EXECUTION COPY
ZENITH NATIONAL INSURANCE CORP.
3,100,000 Shares
Common Stock
UNDERWRITING AGREEMENT
dated July 27, 0000
XXXX XX XXXXXXX SECURITIES LLC
X.X. XXXXXX SECURITIES INC.
XXXXXX BROTHERS INC.
XXXXXXX & PARTNERS SECURITIES, L.L.C.
XXXXXX, XXXXX XXXXX, INCORPORATED
TABLE OF CONTENTS
PAGE
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SECTION 1. Representations and Warranties of the Company and the Selling Stockholders.................. 2
SECTION 2. Purchase, Sale and Delivery of the Common Shares............................................ 12
SECTION 3. Additional Covenants of the Company and the Selling Stockholders............................ 14
SECTION 4. Payment of Expenses......................................................................... 17
SECTION 5. Conditions of the Obligations of the Underwriters........................................... 18
SECTION 6. Reimbursement of Underwriters' Expenses..................................................... 21
SECTION 7. Effectiveness of this Agreement............................................................. 22
SECTION 8. Indemnification............................................................................. 22
SECTION 9. Contribution................................................................................ 26
SECTION 10. Default of One or More of the Several Underwriters.......................................... 28
SECTION 11. Termination of this Agreement............................................................... 28
SECTION 12. Representations and Indemnities to Survive Delivery......................................... 29
SECTION 13. Notices..................................................................................... 29
SECTION 14. Successors.................................................................................. 31
SECTION 15. Partial Unenforceability.................................................................... 31
SECTION 16. Governing Law Provisions.................................................................... 31
SECTION 17. General Provisions.......................................................................... 31
SCHEDULE A List of Underwriters.............................................................................. A-1
SCHEDULE B List of Selling Stockholders...................................................................... B-1
SCHEDULE C List of Designated Subsidiaries................................................................... C-1
SCHEDULE D List of Persons Subject to Lock-Up................................................................ D-1
EXHIBIT A-1 Opinion of Counsel for the Company............................................................... X-0-0
XXXXXXX X-0 Opinion of In-house Counsel for the Company...................................................... X-0-0
XXXXXXX X-0 Opinion of Counsel for the Selling Stockholders.................................................. B-1-1
EXHIBIT B-2 Opinion of In-house Counsel for the Selling Stockholders......................................... B-2-1
EXHIBIT C Form of Lock-Up Letter............................................................................. C-1-1
UNDERWRITING AGREEMENT
July 27, 0000
XXXX XX XXXXXXX SECURITIES LLC
X.X. XXXXXX SECURITIES INC.
XXXXXX BROTHERS INC.
XXXXXXX & PARTNERS SECURITIES, L.L.C.
XXXXXX, XXXXX XXXXX, INCORPORATED
As Representatives of the several Underwriters
named in Schedule A hereto
c/o BANC OF AMERICA SECURITIES LLC
0 Xxxx 00xx Xxxxxx
Xxx Xxxx , XX 00000
Ladies and Gentlemen:
The stockholders of Zenith National Insurance Corp., a Delaware
corporation (the "Company"), named in Schedule B (collectively, the "Selling
Stockholders") severally propose to sell to the underwriters named in Schedule A
(the "Underwriters") an aggregate of 3,100,000 shares (the "Firm Common Shares")
of Common Stock, par value $1.00 per share (the "Common Stock"), of the Company.
In addition, certain of the Selling Stockholders have severally granted to the
Underwriters an option to purchase up to an additional 400,000 shares (the
"Optional Common Shares") of Common Stock, as provided in Section 2 hereof, each
Selling Stockholder selling up to the amount set forth opposite such Selling
Stockholder's name in Schedule B. The Firm Common Shares and, if and to the
extent such option is exercised, the Optional Common Shares are collectively
referred to herein as the "Common Shares". Banc of America Securities LLC
("BAS"), X.X. Xxxxxx Securities Inc., Xxxxxx Brothers Inc., Xxxxxxx & Partners
Securities, L.L.C. and Xxxxxx, Xxxxx Xxxxx, Incorporated have agreed to act as
representatives of the Underwriters (in such capacity, the "Representatives") in
connection with the offering and sale of the Common Shares.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No.
333-116516), which contains a form of prospectus to be used in connection with
the public offering and sale of the Common Shares. Such registration statement,
as amended, including the financial statements, exhibits and schedules thereto,
in the form in which it was declared effective by the Commission under the
Securities Act of 1933 and the rules and regulations promulgated thereunder
(collectively, the "Securities Act"), including all documents incorporated or
deemed to be incorporated by
reference therein and any information deemed to be a part thereof at the time of
effectiveness pursuant to Rule 430A or Rule 434 under the Securities Act or the
Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder (collectively, the "Exchange Act"), is referred to herein as the
"Registration Statement". Any registration statement filed by the Company
pursuant to Rule 462(b) under the Securities Act is referred to herein as the
"Rule 462(b) Registration Statement", and from and after the date and time of
filing of the Rule 462(b) Registration Statement the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. Such
prospectus, in the form first used by the Underwriters to confirm sales of the
Common Shares, is referred to herein as the "Prospectus"; provided, however,
that if the Company has, with the consent of BAS, elected to rely upon Rule 434
under the Securities Act, the term "Prospectus" shall mean the Company's
prospectus subject to completion (each, a "preliminary prospectus") dated July
21, 2004 (such preliminary prospectus is referred to herein as the "Rule 434
preliminary prospectus"), together with the applicable term sheet (the "Term
Sheet") prepared and filed by the Company with the Commission under Rules 434
and 424(b) under the Securities Act and all references in this Agreement to the
date of the Prospectus shall mean the date of the Term Sheet. All references in
this Agreement to the Registration Statement, the Rule 462(b) Registration
Statement, a preliminary prospectus, the Prospectus or the Term Sheet, or any
amendments or supplements to any of the foregoing, shall include any copy
thereof filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval System ("XXXXX"). All references in this Agreement to
financial statements and schedules and other information which is "contained,"
"included" or "stated" in the Registration Statement or the Prospectus (and all
other references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is or is deemed
to be incorporated by reference in the Registration Statement or the Prospectus,
as the case may be; and all references in this Agreement to amendments or
supplements to the Registration Statement or the Prospectus shall be deemed to
mean and include the filing of any document under the Exchange Act which is or
is deemed to be incorporated by reference in the Registration Statement or the
Prospectus, as the case may be.
The Company and the Selling Stockholders hereby confirm their respective
agreements with the Underwriters as follows:
SECTION 1. Representations and Warranties of the Company and the Selling
Stockholders.
A. Representations and Warranties of the Company. The Company hereby
represents, warrants and covenants to each Underwriter as follows:
(a) Compliance with Registration Requirements. The Registration Statement
and any Rule 462(b) Registration Statement have been declared effective by the
Commission under the Securities Act. The Company has complied with all requests
of the Commission for additional or supplemental information. No stop order
suspending the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement is in effect and no proceedings for such purpose have
been instituted or are pending or, to the best knowledge of the Company, are
contemplated or threatened by the Commission.
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Each preliminary prospectus and the Prospectus when filed complied in all
material respects with the Securities Act and, if filed by electronic
transmission pursuant to XXXXX (except as may be permitted by Regulation S-T
under the Securities Act), was identical to the copy thereof delivered to the
Underwriters for use in connection with the offer and sale of the Common Shares.
Each of the Registration Statement, any Rule 462(b) Registration Statement and
any post-effective amendment thereto, at the time it became effective and at all
subsequent times, complied and will comply in all material respects with the
Securities Act and did 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. The Prospectus
(including any Prospectus wrapper), as amended or supplemented, as of its date
and at all subsequent times, did not and will not contain any untrue statement
of a material fact or omit to state a material fact (except, in the case of a
preliminary prospectus, for pricing and other financial terms intentionally left
blank) necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The representations
and warranties set forth in the two immediately preceding sentences do not apply
to statements in or omissions from the Registration Statement, any Rule 462(b)
Registration Statement, or any post-effective amendment thereto, or the
Prospectus, or any amendments or supplements thereto, made in reliance upon and
in conformity with information relating to any Underwriter furnished to the
Company in writing by the Representatives expressly for use therein.
(b) Offering Materials Furnished to Underwriters. The Company has
delivered to the Representatives one complete manually signed copy of the
Registration Statement and of each consent and certificate of experts filed as a
part thereof, and conformed copies of the Registration Statement (without
exhibits) and preliminary prospectuses and the Prospectus, as amended or
supplemented, in such quantities and at such places as the Representatives have
reasonably requested for each of the Underwriters.
(c) Distribution of Offering Material By the Company. The Company has not
distributed and will not distribute, prior to the later of the Second Closing
Date (as defined below) and the completion of the Underwriters' distribution of
the Common Shares, any offering material in connection with the offering and
sale of the Common Shares other than a preliminary prospectus, the Prospectus
(including any Prospectus wrapper) or the Registration Statement.
(d) The Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by the Company.
(e) No Applicable Registration or Other Similar Rights. Except as
described in the Prospectus or with respect to rights granted pursuant to the
purchase agreement dated as of February 4, 1981 among Reliance Insurance Company
("Reliance"), Zenith National Insurance Corp., Xxxxxx X. Xxxxx, Xxxxxx Xxxxxxxx,
Xxxxxx X. Xxxxxxx, and the parties set forth on Exhibit A thereto and pursuant
to a stock purchase agreement dated June 25, 1999 between Reliance and Fairfax
Financial Holdings Limited ("Fairfax"), there are no persons with registration
or other similar rights to have any equity or debt securities registered for
sale under the Registration Statement or included in the offering contemplated
by this Agreement, other than the Selling Stockholders with respect to the
Common Shares included in the Registration Statement.
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(f) No Material Adverse Change. Except as otherwise disclosed in the
Prospectus, subsequent to the respective dates as of which information is given
in the Prospectus: (i) there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, business, operations or
prospects, whether or not arising from transactions in the ordinary course of
business, of the Company and its subsidiaries, considered as one entity (any
such change is called a "Material Adverse Change"); (ii) the Company and its
subsidiaries, considered as one entity, have not incurred any material liability
or obligation, indirect, direct or contingent, not in the ordinary course of
business nor entered into any material transaction or agreement not in the
ordinary course of business; (iii) except for regular quarterly dividends on the
Common Stock in amounts per share that are consistent with past practice, there
has been no dividend or distribution of any kind declared, paid or made by the
Company on any class of capital stock or repurchase or redemption by the Company
or any of its subsidiaries of any class of capital stock.
(g) Independent Accountants. PricewaterhouseCoopers LLP, who have
expressed their opinion with respect to the financial statements (which term as
used in this Agreement includes the related notes thereto) filed with the
Commission as a part of the Registration Statement and included in the
Prospectus, are independent registered public accountants as required by the
Securities Act and the Exchange Act.
(h) Preparation of the Financial Statements. The financial statements
filed with the Commission as a part of the Registration Statement and included
in the Prospectus present fairly the consolidated financial position of the
Company and its subsidiaries as of and at the dates indicated and the results of
their operations and cash flows for the periods specified. The supporting
schedules, if any, included in the Prospectus present fairly in accordance with
generally accepted accounting principles ("GAAP") the information required to be
stated therein. Such financial statements and supporting schedules have been
prepared in conformity with GAAP applied on a consistent basis throughout the
periods involved, except as may be expressly stated in the related notes
thereto. No other financial statements or supporting schedules are required to
be included in the Registration Statement. The financial data set forth in the
Prospectus under the captions "Summary -- Summary Historical Consolidated
Financial Data," "Capitalization" and "Management's Discussion and Consolidated
Analysis of Financial Condition and Results of Operations" fairly present the
information set forth therein on a basis consistent with that of the audited
financial statements contained in the Registration Statement.
(i) Incorporation and Good Standing of the Company and its Subsidiaries.
Each of the Company and its "significant subsidiaries (as such term is defined
in Rule 1-02(w) of Regulation S-X) and each subsidiary listed on Schedule C
hereto (each a "Designated Subsidiary" and, collectively, the "Designated
Subsidiaries") has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation and has corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Prospectus and,
in the case of the Company, to enter into and perform its obligations under this
Agreement. Each of the Company and each Designated Subsidiary 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 for such
jurisdictions (other than the State of California) where the failure to so
qualify or to be in good standing would not be reasonably expected to result,
individually or in the aggregate, in a Material Adverse Change. All of the
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issued and outstanding capital stock of each subsidiary has been duly authorized
and validly issued, is fully paid and nonassessable and is owned by the Company,
directly or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance or claim. The Company does not own or
control, directly or indirectly, any corporation, association or other entity
other than the subsidiaries listed in Exhibit 21 to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 2003.
(j) Capitalization and Other Capital Stock Matters. The authorized, issued
and outstanding capital stock of the Company is as set forth in the Prospectus
under the caption "Capitalization" (other than for subsequent issuances or
acquisitions, if any, pursuant to employee benefit plans described in the
Prospectus or upon exercise of outstanding options described in the Prospectus).
The Common Stock (including the Common Shares) conforms in all material respects
to the description incorporated by reference in the Prospectus. All of the
issued and outstanding shares of Common Stock (including the shares of Common
Stock owned by Selling Stockholder) have been duly authorized and validly
issued, are fully paid and nonassessable and have been issued in compliance with
federal and state securities laws. None of the outstanding shares of Common
Stock were issued in violation of any preemptive rights, rights of first refusal
or other similar rights to subscribe for or purchase securities of the Company.
There are no authorized or outstanding options, warrants, preemptive rights,
rights of first refusal or other rights to purchase, or equity or debt
securities convertible into or exchangeable or exercisable for, any capital
stock of the Company or any of its subsidiaries other than those accurately
described in the Prospectus. The description of the Company's stock option,
stock bonus and other stock plans or arrangements, and the options or other
rights granted thereunder, incorporated by reference in the Prospectus
accurately and fairly presents the information required to be shown with respect
to such plans, arrangements, options and rights.
(k) Listing. The Common Shares are listed on the New York Stock Exchange.
(l) Non-Contravention of Existing Instruments; No Further Authorizations
or Approvals Required. Neither the Company nor any of its subsidiaries is in
violation of its charter or by-laws or is in default (or, with the giving of
notice or lapse of time, would be in default) ("Default") under any indenture,
mortgage, loan or credit agreement, note, contract, franchise, lease or other
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 (each, an "Existing
Instrument"), except for such Defaults as would not be reasonably expected to
result, individually or in the aggregate, in a Material Adverse Change. The
Company's execution, delivery and performance of this Agreement and consummation
of the transactions contemplated hereby and by the Prospectus (i) have been duly
authorized by all necessary corporate action and will not result in any
violation of the provisions of the charter or by-laws of the Company or any
subsidiary, (ii) will not conflict with or constitute a breach of, or Default or
a Debt Repayment Triggering Event (as defined below) 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, or require the
consent of any other party to, any Existing Instrument and (iii) will not result
in any violation of any law, administrative regulation or administrative or
court decree applicable to the Company or any subsidiary, except, with respect
to each of clauses (i), (ii) and (iii) above, for such violations, conflicts,
breaches, Defaults, liens, charges or encumbrances as would not be reasonably
5
expected to result, individually or in the aggregate, in a Material Adverse
Change. No consent, approval, authorization or other order of, or registration
or filing with, any court or other governmental or regulatory authority or
agency, is required for the Company's execution, delivery and performance of
this Agreement and consummation of the transactions contemplated hereby and by
the Prospectus, except such as have been obtained or made by the Company and are
in full force and effect under the Securities Act, applicable state securities
or blue sky laws and from the National Association of Securities Dealers, Inc.
(the "NASD") and except where the failure to make any such filing or to obtain
any such authorization, approval, consent, license, order, registration
qualification or decree would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Change. As used herein, a "Debt
Repayment Triggering Event" means any event or condition which gives, or with
the giving of notice or lapse of time would give, the holder of any note,
debenture or other evidence of indebtedness (or any person acting on such
holder's behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Company or any of its subsidiaries.
(m) No Material Actions or Proceedings. There are no legal or governmental
actions, suits or proceedings pending or, to the Company's knowledge, threatened
(i) against or affecting the Company or any of its subsidiaries, (ii) which has
as the subject thereof any officer or director of, or property owned or leased
by, the Company or any of its subsidiaries or (iii) relating to environmental or
discrimination matters, where in any such case (A) there is a reasonable
possibility that such action, suit or proceeding might be determined adversely
to the Company or such subsidiary and (B) any such action, suit or proceeding,
if so determined adversely, would, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Change or adversely affect the
consummation of the transactions contemplated by this Agreement. No material
labor dispute with the employees of the Company or any of its subsidiaries
exists or, to the Company's knowledge, is threatened or imminent that may,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Change.
(n) Intellectual Property Rights. The Company and its subsidiaries own or
possess, or can acquire on reasonable terms, sufficient trademarks, trade names,
patent rights, copyrights, domain names, licenses, approvals, trade secrets and
other similar rights (collectively, "Intellectual Property Rights") reasonably
necessary to conduct their businesses as now conducted; and the expected
expiration of any of such Intellectual Property Rights would not, individually
or in the aggregate, reasonably be expected to result in a Material Adverse
Change. Neither the Company nor any of its subsidiaries has received any notice
of infringement or conflict with asserted Intellectual Property Rights of
others, which infringement or conflict, if the subject of an unfavorable
decision, would reasonably be expected to result in a Material Adverse Change.
(o) All Necessary Permits, etc. The Company and each subsidiary possess
such valid and current certificates, authorizations or permits issued by the
appropriate state, federal or foreign regulatory agencies or bodies necessary to
conduct their respective businesses, except where the failure to possess such
certificates, authorizations or permits would not reasonably be expected to
result in a Material Adverse Change, and neither the Company nor any subsidiary
has received any notice of proceedings relating to the revocation or
modification of, or non-compliance with, any such certificate, authorization or
permit which, individually or in the
6
aggregate, if the subject of an unfavorable decision, ruling or finding, could
result in a Material Adverse Change.
(p) Title to Properties. The Company and each of its subsidiaries has good
and marketable title to all the real properties and good title to all the
personal property and owns the other assets reflected as owned in the financial
statements referred to in Section 1(A)(i) above, in each case free and clear of
any security interests, mortgages, liens, encumbrances, equities, claims and
other defects, except such as do not materially and adversely affect the value
of such property and do not materially interfere with the use made or proposed
to be made of such property by the Company or such subsidiary. All of the leases
and subleases material to the business of the Company and its subsidiaries,
considered as one enterprise, and under which the Company or any of its
subsidiaries holds properties described in the Prospectus, are in full force and
effect (assuming compliance therewith by the other parties thereto), and neither
the Company nor any of its subsidiaries has any notice of any material claim of
any sort that has been asserted by anyone adverse to the rights of the Company
or any of its subsidiaries under any of the leases or subleases mentioned above,
or affecting or questioning the rights of such the Company or any subsidiary
thereof to the continued possession of the leased or subleased premises under
any such lease or sublease.
(q) Tax Law Compliance. The Company and its subsidiaries have filed all
necessary federal, state and foreign income and franchise tax returns and have,
to the Company's knowledge, paid all taxes required to be paid by any of them
and, if due and payable, any related or similar assessment, fine or penalty
levied against any of them other than those (i) currently payable without
penalty or interest or (ii) being contested in good faith and for which, in the
case of both clauses (i) and (ii), adequate reserves have been established on
the books and records of the Company and its subsidiaries. The Company has made
adequate charges, accruals and reserves in the applicable financial statements
referred to in Section 1 (A)(i) above in respect of all federal, state and
foreign income and franchise taxes for all periods as to which the tax liability
of the Company or any of its subsidiaries has not been finally determined.
(r) Company Not an "Investment Company". The Company is not an "investment
company" within the meaning of Investment Company Act.
(s) No Price Stabilization or Manipulation. The Company has not taken and
will not take, directly or indirectly, any action designed to or that might be
reasonably expected to cause or result in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Common Shares.
(t) Related Party Transactions. There are no business relationships or
related-party transactions involving the Company or any subsidiary or any other
person required to be described in the Prospectus which have not been described
(or incorporated by reference) as required.
(u) Disclosure Controls and Procedures. The Company has established and
maintains disclosure controls and procedures (as such term is defined in Rule
13a-14 under the Exchange Act), which (i) are designed to ensure that material
information relating to the Company, including its consolidated subsidiaries, is
made known to the Company's principal executive
7
officer and its principal financial officer by others within those entities,
particularly during the periods in which the periodic reports required under the
Exchange Act are being prepared, (ii) have been evaluated for effectiveness as
of a date within 90 days prior to the filing of the Company's most recent annual
or quarterly report filed with the Commission and (iii) are effective in all
material respects to perform the functions for which they were established.
Based on the evaluation of the Company's disclosure controls and procedures
described above, the Company is not aware of (a) any significant deficiency in
the design or operation of internal controls which could adversely affect the
Company's ability to record, process, summarize and report financial data or any
material weaknesses in internal controls or (b) any fraud, whether or not
material, that involves management or other employees who have a significant
role in the Company's internal controls. Since the most recent evaluation of the
Company's disclosure controls and procedures described above, there have been no
significant changes in internal controls or in other factors that could
significantly affect internal controls.
(v) Company's Accounting System. The Company maintains a system of
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (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
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(w) Compliance with Environmental Laws. Except as disclosed in the
Prospectus, neither the Company nor any of its subsidiaries is in violation of
any statute or any rule, regulation, decision or order of any governmental
agency or body or any court, domestic or foreign, relating to the use, disposal
or release of hazardous or toxic substances or relating to the protection or
restoration of the environment or human exposure to hazardous or toxic
substances (collectively, "environmental laws"), owns or operates any real
property contaminated with any substance that is subject to any environmental
laws, is liable for any off-site disposal or contamination pursuant to any
environmental laws, or is subject to any claim relating to any environmental
laws, which violation, contamination, liability or claim would individually or
in the aggregate reasonably be expected to result in a Material Adverse Change;
and the Company is not aware of any pending investigation which would reasonably
be expected to lead to such a claim.
(x) ERISA Compliance. Each of the Company and its subsidiaries has
fulfilled their respective obligations, if any, under the minimum funding
standards of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Employee Retirement Income
Security Act of 1974 ("ERISA") and the regulations and published interpretations
thereunder with respect to each "plan" (as defined in Section 3(3) of ERISA and
such regulations and published interpretations) in which employees of the
Company or any of its subsidiaries are eligible to participate and each such
plan is in compliance in all material respects with the presently applicable
provisions of ERISA and such regulations and published interpretations, other
than such non-fulfillment or non-compliance that would not reasonably be
expected to result in a Material Adverse Change. The Company and its
subsidiaries have not incurred any unpaid liability to the Pension Benefit
Guaranty Corporation (other than for the payment of premiums in the ordinary
course) or to any such plan under Title
8
IV of ERISA, except for such liability as would not be reasonably expected to
result in a Material Adverse Change.
(y) Brokers. Except as otherwise disclosed in the Prospectus, there is no
broker, finder or other party that is entitled to receive from the Company any
brokerage or finder's fee or other fee or commission as a result of any
transactions contemplated by this Agreement.
(z) No Outstanding Loans or Other Indebtedness. There are no outstanding
loans, advances (except normal advances for business expenses in the ordinary
course of business) or guarantees or indebtedness by the Company to or for the
benefit of any of the executive officers or directors of the Company, except as
disclosed in the Prospectus.
(aa) No Material Changes in Insurance Reserving Practices. Except as
disclosed in the Prospectus, the Company and its subsidiaries have made no
material changes in their insurance reserving practices since the most recent
audited financial statements included in the Prospectus.
(bb) Validity of Reinsurance Treaties. All reinsurance treaties and
arrangements to which any subsidiary is a party are in full force and effect
(assuming compliance therewith by the other parties thereto) and no subsidiary
is in violation of or in default in the performance, observance or fulfillment
of, any obligation, agreement, covenant or condition contained therein; no
subsidiary has received any notice from any of the other parties to such
treaties, contracts or agreements that such other party intends not to perform
such treaty and, to the best knowledge of the Company, the Company and the
subsidiaries have no reason to believe that any of the other parties to such
treaties or arrangements will be unable to perform such treaty or arrangement;
except, in each of the above cases, (A) to the extent adequately and properly
reserved for in the consolidated financial statements of the Company included in
the Prospectus and (B) as would not reasonably be expected to result in a
Material Adverse Change.
(cc) Statutory Statements. The statutory financial statements of the
Company's subsidiaries required to file such statutory financial statements and
the statutory balance sheets and income statements included in such statutory
financial statements, most recently filed in each jurisdiction, have been
prepared in all material respects in conformity with required or permitted or
prescribed statutory accounting principles or practices applied on a consistent
basis, except as may otherwise be indicated in the notes thereto, and present
fairly the financial position of such subsidiaries (on a statutory basis) for
the period covered thereby.
(dd) Ratings. The various ratings assigned to the Company's subsidiaries
as of July 23, 2004 have not been lowered or, to the Company's knowledge,
threatened to be lowered by A.M. Best Company, Inc. ("A.M. Best"), Fitch, Inc.
("Fitch"), Standard & Poor's Ratings Services, a division of McGraw Hill, Inc.
("S&P") or Xxxxx'x Investors Service, Inc. ("Moody's"), as applicable, nor, to
the Company's knowledge, have such ratings been placed under surveillance or
review by A.M. Best, S&P, Fitch, or Moody's, as applicable.
(ee) Exchange Act Compliance. The documents incorporated or deemed to be
incorporated by reference in the Prospectus, at the time they were or hereafter
are filed with the Commission, complied and will comply in all material respects
with the requirements of the Exchange Act, and, when read together with the
other information in the Prospectus, at the time
9
the Registration Statement and any amendments thereto become effective and at
the First Closing Date and the Second Closing Date, as the case may be, 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
the light of the circumstances under which they were made, not misleading.
Any certificate signed by or on behalf of the Company and delivered to the
Representatives or to counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby.
The Company acknowledges that the Underwriters and, for purposes of the
opinions to be delivered pursuant to Section 5 hereof, counsel to the Company
and counsel to the Underwriters, will rely upon the accuracy and truthfulness of
the foregoing representations and hereby consents to such reliance.
B. Representations and Warranties of the Selling Stockholder. Each of the
Selling Stockholders, severally and not jointly, as to itself represents,
warrants and covenants to each Underwriter as follows:
(a) The Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by or on behalf of such Selling Stockholder and is a
valid and binding agreement of such Selling Stockholder, enforceable in
accordance with its terms, except as rights to indemnification hereunder may be
limited by applicable law and except as the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles.
(b) Title to Common Shares to be Sold; All Authorizations Obtained. Such
Selling Stockholder has, and on the First Closing Date and the Second Closing
Date (as defined below) will have, good and valid title to all of the Common
Shares which may be sold by such Selling Stockholder pursuant to this Agreement
on such date and the legal right and power, and all authorizations and approvals
required by law and under its charter or by-laws or other organizational
documents to enter into this Agreement, to sell, transfer and deliver all of the
Common Shares which may be sold by such Selling Stockholder pursuant to this
Agreement and to comply with its other obligations hereunder and thereunder.
(c) Delivery of the Common Shares to be Sold. Delivery of the Common
Shares which are sold by such Selling Stockholder pursuant to this Agreement
will pass good and valid title to such Common Shares, free and clear of any
security interest, mortgage, pledge, lien, encumbrance or other claim.
(d) Non-Contravention; No Further Authorizations or Approvals Required.
The execution and delivery by such Selling Stockholder of, and the performance
by such Selling Stockholder of its obligations under, this Agreement will not
contravene or conflict with, result in a breach of, or constitute a Default
under, or require the consent of any other party to, the charter or by-laws or
other organizational documents of such Selling Stockholder or any other
agreement or instrument to which such Selling Stockholder is a party or by which
it is bound or
10
under which it is entitled to any right or benefit, any provision of applicable
law or any judgment, order, decree or regulation applicable to such Selling
Stockholder of any court, regulatory body, administrative agency, governmental
body or arbitrator having jurisdiction over such Selling Stockholder, except for
such violations, conflicts, Defaults or breaches as would not be reasonably
expected to have, individually or in the aggregate, a material adverse effect on
such Selling Stockholder's ability to consummate the transactions contemplated
by this Agreement. No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental authority or
agency, is required for the consummation by such Selling Stockholder of the
transactions contemplated in this Agreement except under the Securities Act,
applicable state securities or blue sky laws and from the NASD and except where
the failure to make any such filing or to obtain any such authorization,
approval, consent, license, order, registration qualification or decree would
not reasonably be expected to have, individually or in the aggregate, a material
adverse effect on such Selling Stockholder's ability to consummate the
transactions contemplated by this Agreement.
(e) No Registration or Other Similar Rights. Such Selling Stockholder does
not have any registration or other similar rights to have any equity or debt
securities registered for sale by the Company under the Registration Statement
or included in the offering contemplated by this Agreement, except for such
rights as are described in the Prospectus and pursuant to a stock purchase
agreement dated June 25, 1999 between Reliance and Fairfax and, in the case of
Clearwater, except for rights pursuant to the stock purchase agreement, dated as
of November 21, 2001, between the Company and Clearwater.
(f) No Further Consents, etc. Except for the consent of such Selling
Stockholder to the respective number of Common Shares to be sold by such Selling
Stockholder pursuant to this Agreement, no consent, approval or waiver is
required under any instrument or agreement to which such Selling Stockholder is
a party or by which it is bound or under which it is entitled to any right or
benefit, in connection with the offering, sale or purchase by the Underwriters
of any of the Common Shares which may be sold by such Selling Stockholder under
this Agreement or the consummation by such Selling Stockholder of any of the
other transactions contemplated hereby.
(g) Disclosure Made by Such Selling Stockholder in the Prospectus. All
information furnished by such Selling Stockholder or on behalf of such Selling
Stockholder by any of its representatives in writing for use in the Registration
Statement and Prospectus is, and on the First Closing Date and the Second
Closing Date will be, true, correct, and complete in all material respects, and
does not, and on the First Closing Date and the Second Closing Date will not,
contain any untrue statement of a material fact or omit to state any material
fact necessary to make such information not misleading. Such Selling Stockholder
confirms as accurate the number of shares of Common Stock set forth opposite
such Selling Stockholder's name in the Prospectus under the caption "Selling
Stockholders" (both prior to and after giving effect to the sale of the Common
Shares).
(h) No Price Stabilization or Manipulation. Such Selling Stockholder has
not taken and will not take, directly or indirectly, any action designed to or
that might be reasonably expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Common Shares.
11
(i) No Additional Information. Such Selling Stockholder is not prompted to
sell shares of Common Stock by any material information concerning the Company
which is not set forth in the Registration Statement and the Prospectus.
Any certificate signed by any Selling Stockholder or by any representative
on behalf of such Selling Stockholder and delivered to the Representatives or to
counsel for the Underwriters shall be deemed to be a representation and warranty
by such Selling Stockholder to each Underwriter as to the matters covered
thereby.
Such Selling Stockholder acknowledges that the Underwriters and, for
purposes of the opinion to be delivered pursuant to Section 5 hereof, counsel to
the Company and counsel to the Underwriters, will rely upon the accuracy and
truthfulness of the foregoing representations and hereby consents to such
reliance.
SECTION 2. Purchase, Sale and Delivery of the Common Shares.
(a) The Firm Common Shares. The Selling Stockholders agree to sell to the
several Underwriters the Firm Common Shares upon the terms set forth herein. On
the basis of the representations, warranties and agreements herein contained,
and upon the terms but subject to the conditions herein set forth, the
Underwriters agree, severally and not jointly, to purchase from the Selling
Stockholders the respective number of Firm Common Shares set forth opposite
their names on Schedule A. The purchase price per Firm Common Share to be paid
by the several Underwriters to the Selling Stockholders shall be $41.1510 per
share.
(b) The First Closing Date. Delivery of certificates for the Firm Common
Shares to be purchased by the Underwriters and payment therefor shall be made at
the offices of BAS, 0 Xxxx 00xx Xxxxxx Xxx Xxxx XX (or such other place as may
be agreed to by the Company, the Selling Stockholders and the Representatives)
at 9:00 a.m. New York time, on July 30, 2004 or such other time and date not
later than 1:30 p. m. New York time, on July 30, 2004 as the Representatives
shall designate by notice to the Company and the Selling Stockholders (the time
and date of such closing are called the "First Closing Date"). The Company and
the Selling Stockholders hereby acknowledge that circumstances under which the
Representatives may provide notice to postpone the First Closing Date as
originally scheduled include, but are in no way limited to, any determination by
the Company, the Selling Stockholders or the Representatives to recirculate to
the public copies of an amended or supplemented Prospectus or a delay as
contemplated by the provisions of Section 10.
(c) The Optional Common Shares; the Second Closing Date. In addition, on
the basis of the representations, warranties and agreements herein contained,
and upon the terms but subject to the conditions herein set forth, Clearwater
Insurance Company ("Clearwater") and United States Fire Insurance Company
(collectively with Clearwater, the "Option Selling Stockholders") each hereby
grants, severally and not jointly, an option to the several Underwriters to
purchase from it up to an aggregate of 200,000 Optional Common Shares
(collectively, 400,000 Optional Common Shares) at the purchase price per share
to be paid by the Underwriters for the Firm Common Shares. The option granted
hereunder is for use by the Underwriters solely in covering any over-allotments
in connection with the sale and distribution of the Firm Common Shares. The
option granted hereunder may be exercised at any time (but not more than once)
upon notice
12
by the Representatives to the Option Selling Stockholders (with a copy to the
Company), which notice may be given at any time within 30 days from the date of
this Agreement. Such notice shall set forth (i) the aggregate number of Optional
Common Shares as to which the Underwriters are exercising the option, (ii) the
names and denominations in which the certificates for the Optional Common Shares
are to be registered and (iii) the time, date and place at which such
certificates will be delivered (which time and date may be simultaneous with,
but not earlier than, the First Closing Date; and in such case the term "First
Closing Date" shall refer to the time and date of delivery of certificates for
the Firm Common Shares and the Optional Common Shares). Such time and date of
delivery, if subsequent to the First Closing Date, is called the "Second Closing
Date" and shall be determined by the Representatives and shall not be earlier
than three nor later than five full business days after delivery of such notice
of exercise. If any Optional Common Shares are to be purchased, (a) each
Underwriter agrees, severally and not jointly, to purchase the number of
Optional Common Shares (subject to such adjustments to eliminate fractional
shares as the Representatives may determine) that bears the same proportion to
the total number of Optional Common Shares to be purchased as the number of Firm
Common Shares set forth on Schedule A opposite the name of such Underwriter
bears to the total number of Firm Common Shares and (b) each Option Selling
Stockholder agrees, severally and not jointly, to sell the number of Optional
Common Shares (subject to such adjustments to eliminate fractional shares as the
Representatives may determine) that bears the same proportion to the total
number of Optional Common Shares to be sold as the number of Optional Common
Shares set forth in Schedule B opposite the name of such Selling Stockholder
bears to the total number of Optional Common Shares. The Representatives may
cancel the option at any time prior to its expiration by giving written notice
of such cancellation to the Selling Stockholders (with a copy to the Company).
(d) Offering of the Common Shares. The Representatives hereby advise the
Company and the Selling Stockholders that the Underwriters intend to offer for
sale to the public in the United States, as described in the Prospectus, and
privately in Canada their respective portions of the Common Shares as soon after
this Agreement has been executed and the Registration Statement has been
declared effective as the Representatives, in their sole judgment, has
determined is advisable and practicable.
(e) Payment for the Common Shares. Payment for the Common Shares to be
sold by the Selling Stockholders shall be made at the First Closing Date (and,
if applicable, at the Second Closing Date) by wire transfer of immediately
available funds to the order of the Selling Stockholders.
It is understood that the Representatives have been authorized, for their
own account and the accounts of the several Underwriters, to accept delivery of
and receipt for, and make payment of the purchase price for, the Firm Common
Shares and any Optional Common Shares the Underwriters have agreed to purchase.
BAS, individually and not as the Representative of the Underwriters, may (but
shall not be obligated to) make payment for any Common Shares to be purchased by
any Underwriter whose funds shall not have been received by the Representatives
by the First Closing Date or the Second Closing Date, as the case may be, for
the account of such Underwriter, but any such payment shall not relieve such
Underwriter from any of its obligations under this Agreement.
13
Each Selling Stockholder hereby agrees that it will pay all stock transfer
taxes, stamp duties and other similar taxes, if any, payable upon the sale or
delivery of the Common Shares to be sold by such Selling Stockholder to the
several Underwriters, or otherwise in connection with the performance of such
Selling Stockholder's obligations hereunder.
(f) Delivery of the Common Shares. The Selling Stockholders shall deliver,
or cause to be delivered, to the Representatives for the accounts of the several
Underwriters certificates for the Firm Common Shares to be sold by the Selling
Stockholders at the First Closing Date, against the irrevocable release of a
wire transfer of immediately available funds for the amount of the purchase
price therefor. The Option Selling Stockholders shall also deliver, or cause to
be delivered, to the Representatives for the accounts of the several
Underwriters, certificates for the Optional Common Shares the Underwriters have
agreed to purchase from the Selling Stockholders at the First Closing Date or
the Second Closing Date, as the case may be, against the irrevocable release of
a wire transfer of immediately available funds for the amount of the purchase
price therefor. The certificates for the Common Shares shall be in definitive
form and registered in such names and denominations as the Representatives shall
have requested at least two full business days prior to the First Closing Date
(or the Second Closing Date, as the case may be) and shall be made available for
inspection on the business day preceding the First Closing Date (or the Second
Closing Date, as the case may be) at a location in New York City as the
Representatives may designate. Time shall be of the essence, and delivery at the
time and place specified in this Agreement is a further condition to the
obligations of the Underwriters.
(g) Delivery of Prospectus to the Underwriters. Not later than 12:00 p.m.
on the second business day following the date the Common Shares are first
released by the Underwriters for sale to the public, the Company shall deliver
or cause to be delivered, copies of the Prospectus in such quantities and at
such places as the Representatives shall request.
SECTION 3. Additional Covenants of the Company and the Selling
Stockholders.
A. Covenants of the Company. The Company further covenants and agrees with
each Underwriter as follows:
(a) Representatives' Review of Proposed Amendments and Supplements. During
such period beginning on the date hereof and ending on the later of the First
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 by an Underwriter or dealer (the "Prospectus Delivery Period"), prior to
amending or supplementing the Registration Statement (including any registration
statement filed under Rule 462(b) under the Securities Act) or the Prospectus
(including any amendment or supplement through incorporation by reference of any
report filed under the Exchange Act), the Company shall consult with the
Representatives before filing, and provide the Representatives the opportunity
to review and comment on, each such proposed amendment or supplement.
(b) Securities Act Compliance. After the date of this Agreement, the
Company shall promptly advise the Representatives and, if requested by the
Representatives, confirm such advice in writing (i) of the receipt of any
comments of, or requests for additional or supplemental information from, the
Commission, (ii) of the time and date of any filing of any post-effective
14
amendment to the Registration Statement or any amendment or supplement to any
preliminary prospectus or the Prospectus, (iii) of the time and date that any
post-effective amendment to the Registration Statement becomes effective and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereto or of any order preventing or suspending the use of any preliminary
prospectus or the Prospectus, or of any proceedings to remove, suspend or
terminate from listing or quotation the Common Stock from any securities
exchange upon which it is listed for trading or included or designated for
quotation, or of the threatening or initiation of any proceedings for any of
such purposes. If the Commission shall enter any such stop order at any time,
the Company will use its reasonable best efforts to obtain the lifting of such
order at the earliest possible moment. Additionally, the Company agrees that it
shall comply with the provisions of Rules 424(b), 430A and 434, as applicable,
under the Securities Act and will use its reasonable efforts to confirm that any
filings made by the Company under such Rule 424(b) were received in a timely
manner by the Commission.
(c) Amendments and Supplements to the Prospectus and Other Securities Act
Matters. If, during the Prospectus Delivery Period, any event shall occur or
condition exist as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading,
or if in the opinion of the Representatives or counsel for the Underwriters it
is otherwise necessary to amend or supplement the Prospectus to comply with law,
the Company agrees to promptly prepare (subject to Section 3 (A)(a) hereof),
file with the Commission and furnish to the Underwriters and to dealers, without
charge, amendments or supplements to the Prospectus so that the statements in
the Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be misleading or
so that the Prospectus, as amended or supplemented, will comply with law.
(d) Copies of any Amendments and Supplements to the Prospectus. The
Company agrees to furnish the Representatives, without charge, during the
Prospectus Delivery Period, as many copies of the Prospectus and any amendments
and supplements thereto as the Representatives may reasonably request.
(e) Blue Sky Compliance. The Company shall cooperate with the
Representatives and counsel for the Underwriters to qualify or register the
Common Shares for sale under (or obtain exemptions from the application of) the
state securities or blue sky laws of those U.S. 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 Common Shares. The Company shall not be required to
qualify as a foreign corporation 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 corporation. The
Company will advise the Representatives promptly of the suspension of the
qualification or registration of (or any such exemption relating to) the Common
Shares for offering, sale or trading in any U.S. 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 reasonable best efforts to obtain the withdrawal
thereof at the earliest possible moment.
15
(f) Transfer Agent. The Company shall engage and maintain, at its expense,
a registrar and transfer agent for the Common Stock.
(g) Earnings Statement. As soon as practicable, the Company will make
generally available to its security holders and to the Representatives an
earnings statement (which need not be audited) covering the twelve-month period
ending June 30, 2005 that satisfies the provisions of Section 11(a) of the
Securities Act.
(h) Periodic Reporting Obligations. During the Prospectus Delivery Period,
the Company shall file, on a timely basis, with the Commission and the New York
Stock Exchange all reports and documents required to be filed under the Exchange
Act. Additionally, the Company shall report the use of proceeds from the
issuance of the Common Shares as may be required under Rule 463 under the
Securities Act.
(i) Company to Provide Interim Financial Statements. Prior to the Closing
Date, the Company will furnish the Underwriters, as soon as they have been
prepared by or are available to the Company, a copy of any unaudited interim
financial statements of the Company for any period subsequent to the period
covered by the most recent financial statements appearing in the Registration
Statement and the Prospectus.
(j) Agreement Not to Offer or Sell Additional Securities. During the
period commencing on the date hereof and ending on the 90th day following the
date hereof, the Company will not, without the prior written consent of BAS,
directly or indirectly, sell, offer, contract or grant any option to sell,
pledge, transfer or establish an open "put equivalent position" within the
meaning of Rule 16a-1(h) under the Exchange Act, or otherwise dispose of or
transfer, or announce the offering of, or file any registration statement under
the Securities Act in respect of, any shares of Common Stock, options or
warrants to acquire shares of the Common Stock or securities exchangeable or
exercisable for or convertible into shares of Common Stock (other than as
contemplated by this Agreement with respect to the Common Shares); provided,
however, that the Company may issue shares of its Common Stock or options to
purchase its Common Stock, or Common Stock upon exercise of options, pursuant to
any stock option, stock bonus or other stock plan or arrangement described in
the Prospectus.
(k) Future Reports to the Representatives. During the period of two years
hereafter the Company will furnish to the Representatives at 0 Xxxx 00xx Xxxxxx,
Xxx Xxxx, XX 00000 Attention: Xxxxxx X. Xxxxxxxx: (i) as soon as practicable
after the end of each fiscal year, copies of the Annual Report of the Company
containing the balance sheet of the Company as of the close of such fiscal year
and statements of income, stockholders' equity and cash flows for the year then
ended and the opinion thereon of the Company's independent public or certified
public accountants; (ii) as soon as practicable after the filing thereof, copies
of each proxy statement, Annual Report on Form 10-K, Quarterly Report on Form
10-Q, Current Report on Form 8-K or other report filed by the Company with the
Commission pursuant to the Exchange Act (other than any specific sections of
such reports that are the subject of a pending request for confidential
treatment or for which the Commission has agreed to afford confidential
treatment); and (iii) as soon as available, copies of any report or
communication of the Company mailed generally to holders of its capital stock;
provided, however, that the Company shall not be required to provide the
Representatives with any such information, reports or similar forms that
16
have been filed or furnished with the Commission by an electronic transmission
pursuant to the Electronic Data Gathering Analysis and Retrieval System (XXXXX)
or an equivalent electronic database authorized by the Commission.
(l) Exchange Act Compliance. During the Prospectus Delivery Period, the
Company will file all documents required to be filed with the Commission
pursuant to Section 13, 14 or 15 of the Exchange Act in the manner and within
the time periods required by the Exchange Act.
(m) 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 be expected to constitute, the stabilization or manipulation
of the price of any securities of the Company.
B. Covenants of the Selling Stockholders. Each Selling Stockholder further
covenants and agrees with each Underwriter:
(a) Agreement Not to Offer or Sell Additional Securities. Such Selling
Stockholder will not, without the prior written consent of BAS, directly or
indirectly, sell, offer, contract or grant any option to sell (including without
limitation any short sale), pledge, transfer, establish an open "put equivalent
position" within the meaning of Rule 16a-1(h) under the Exchange Act, or
otherwise dispose of any shares of Common Stock (other than by selling shares of
Common Stock in the offering contemplated by the Registration Statement),
options or warrants to acquire shares of Common Stock, or securities
exchangeable or exercisable for or convertible into shares of Common Stock
currently or hereafter owned either of record or beneficially (as defined in
Rule 13d-3 under Securities Exchange Act of 1934, as amended) by the
undersigned, or publicly announce the undersigned's intention to do any of the
foregoing, for a period commencing on the date hereof and continuing through the
close of trading on the date 180 days after the date hereof.
(b) Delivery of Forms W-8 and W-9. To deliver to the Representatives prior
to the First Closing Date a properly completed and executed United States
Treasury Department Form W-8 (if the Selling Stockholder is a non-United States
person) or Form W-9 (if the Selling Stockholder is a United States Person).
BAS, on behalf of the several Underwriters, may, in its sole discretion,
waive in writing the performance by the Company or any Selling Stockholder of
any one or more of the foregoing covenants or extend the time for their
performance, as applicable. Notwithstanding the foregoing, BAS, for the benefit
of each of the other Underwriters, agrees not to consent to any action proposed
to be taken by the Company, any Selling Stockholder or any other holder of the
Company's securities that would otherwise be prohibited by, or to waive
compliance by the Company, any Selling Stockholder or any such other security
holder with the provisions of, Section 3A(k) or 3B(a) above or any lock-up
agreement delivered pursuant to Section 6(k) below without giving each of the
other Underwriters at least 17 days prior notice (or such shorter notice as BAS
may deem acceptable, if at all, to permit compliance with applicable provisions
of NYSE Rule 472(f) restricting publication and distribution of research and
public appearances by research analysts before and after the expiration, waiver
or termination of a lock-up agreement).
SECTION 4. Payment of Expenses. The Selling Stockholders, severally and
not jointly, agree to pay their pro rata share of all costs, fees and expenses
incurred in connection with the
17
performance of the obligations of the Company and such Selling Stockholder
hereunder and in connection with the transactions contemplated hereby (whether
or not consummated), including without limitation (i) all reasonable expenses
incident to the delivery of the Common Shares, (ii) all reasonable fees and
expenses of the registrar and transfer agent of the Common Stock, (iii) all
necessary transfer and other stamp taxes in connection with the sale of the
Common Shares to the Underwriters, (iv) all reasonable fees and expenses of the
Company's counsel, independent public or certified public accountants and other
advisors, (v) all reasonable costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the Registration
Statement (including financial statements, exhibits, schedules, consents and
certificates of experts), each preliminary prospectus and the Prospectus, and
all amendments and supplements thereto, and this Agreement, (vi) all filing
fees, reasonable attorneys' fees and expenses incurred by the Company or the
Underwriters in connection with qualifying or registering (or obtaining
exemptions from the qualification or registration of) all or any part of the
Common Shares for offer and sale under the state securities or blue sky laws, as
applicable, (vii) the filing fees incident to, and the reasonable fees and
expenses of counsel for the Underwriters in connection with, the NASD's review
and approval of the Underwriters' participation in the offering and distribution
of the Common Shares and (viii) all other fees, costs and expenses referred to
in Item 14 of Part II of the Registration Statement. Except as provided in this
Section 4, Section 6, Section 8 and Section 9 hereof, the Underwriters shall pay
their own expenses, including the fees and disbursements of their counsel.
Notwithstanding the foregoing, the Underwriters have agreed to reimburse the
Selling Stockholders on or before the First Closing Date for their pro rata
actual out-of-pocket expenses incurred in connection with the offering, in an
amount not to exceed $400,000.
Each Selling Stockholder further agrees with each Underwriter to pay
(directly or by reimbursement) all reasonable fees and expenses incident to the
performance of such Selling Stockholder's obligations under this Agreement which
are not otherwise specifically provided for herein, including but not limited to
(i) reasonable fees and expenses of counsel and other advisors for such Selling
Stockholders and (ii) expenses and taxes incident to the sale and delivery of
the Common Shares to be sold by such Selling Stockholder to the Underwriters
hereunder.
This Section 4 shall not affect or modify any separate, valid agreement
relating to the allocation of payment of expenses between the Company, on the
one hand, and the Selling Stockholders, or any of their affiliates, on the other
hand.
SECTION 5. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Common
Shares as provided herein on the First Closing Date and, with respect to the
Optional Common Shares, the Second Closing Date, shall be subject to the
accuracy of the representations and warranties on the part of the Company and
the Selling Stockholders set forth in Sections 1(A) and 1(B) hereof as of the
date hereof and as of the First Closing Date as though then made and, with
respect to the Optional Common Shares, as of the Second Closing Date as though
then made, to the timely performance by the Company and the Option Selling
Stockholders of their respective covenants and other obligations hereunder, and
to each of the following additional conditions:
18
(a) Accountants' Comfort Letter. On the date hereof, the Representatives
shall have received from PricewaterhouseCoopers LLP, independent registered
public accountants for the Company, a letter dated the date hereof addressed to
the Underwriters, in form and substance reasonably satisfactory to the
Representatives, containing statements and information of the type ordinarily
included in accountant's "comfort letters" to underwriters, delivered according
to Statement of Auditing Standards No. 72 (or any successor bulletin), with
respect to the audited and unaudited financial statements and certain financial
information contained in the Registration Statement and the Prospectus (and the
Representatives shall have received an additional four conformed copies of such
accountants' letter for each of the several Underwriters).
(b) Compliance with Registration Requirements; No Stop Order; No Objection
from NASD. For the period from and after effectiveness of this Agreement and
prior to the First Closing Date and, with respect to the Optional Common Shares,
the Second Closing Date:
(i) the Company shall have filed the Prospectus with the
Commission (including the information required by Rule 430A under
the Securities Act) in the manner and within the time period
required by Rule 424(b) under the Securities Act; or the Company
shall have filed a post-effective amendment to the Registration
Statement containing the information required by such Rule 430A, and
such post-effective amendment shall have become effective; or, if
the Company elected to rely upon Rule 434 under the Securities Act
and obtained the Representatives' consent thereto, the Company shall
have filed a Term Sheet with the Commission in the manner and within
the time period required by such Rule 424(b);
(ii) no stop order suspending the effectiveness of the
Registration Statement, any Rule 462(b) Registration Statement, or
any post-effective amendment to the Registration Statement, shall be
in effect and no proceedings for such purpose shall have been
instituted or threatened by the Commission; and
(iii) the NASD shall have raised no objection to the
fairness and reasonableness of the underwriting terms and
arrangements.
(c) No Material Adverse Change. For the period from and after the date of
this Agreement and prior to the First Closing Date and, with respect to the
Optional Common Shares, the Second Closing Date, in the judgment of the
Representatives there shall not have occurred any Material Adverse Change.
(d) Opinion of Counsel for the Company. On each of the First Closing Date
and the Second Closing Date the Representatives shall have received the
favorable opinion, dated as of such Closing Date, of (i) Skadden, Arps, Slate,
Xxxxxxx & Xxxx, LLP, counsel for the Company, together with signed copies of
such letter for the Representatives substantially to the effect set forth in
Exhibit A-1 hereto and (ii) of Xxxx X. Xxxxxxx, Esq., Senior Vice President and
Secretary of the Company, together with signed copies of such letter for the
Representatives substantially to the effect set forth in Exhibit A-2.
19
(e) Opinion of Counsel for the Underwriters. On each of the First Closing
Date and the Second Closing Date the Representatives shall have received the
favorable opinion of LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P., counsel for the
Underwriters, dated as of such Closing Date, in form and substance reasonably
satisfactory to the Representatives (and the Representatives shall have received
an additional four conformed copies of such counsel's legal opinion for each of
the several Underwriters). In giving such opinion such counsel may rely, as to
all matters governed by the laws of jurisdictions other than the law of the
State of New York, the federal law of the United States and the General
Corporation Law of the State of Delaware, upon the opinions of counsel
satisfactory to the Representatives. Such counsel may also state that, insofar
as such opinion involves factual matters, they have relied, to the extent they
deem proper, upon certificates of officers of the Company and its subsidiaries
and certificates of public officials.
(f) Officers' Certificate. On each of the First Closing Date and the
Second Closing Date the Representatives shall have received a written
certificate executed by the Chairman of the Board, Chief Executive Officer or
President of the Company and the Chief Financial Officer or Chief Accounting
Officer of the Company, dated as of such Closing Date, to the effect set forth
in subsections (b)(ii) and (c)(ii) of this Section 5, and further to the effect
that:
(i) for the period from and after the date of this
Agreement and prior to such Closing Date, there has not occurred any
Material Adverse Change;
(ii) the representations, warranties and covenants of
the Company set forth in Section 1(A) of this Agreement are true and
correct with the same force and effect as though expressly made on
and as of such Closing Date; and
(iii) the Company has complied with all the agreements
hereunder and satisfied all the conditions on its part to be
performed or satisfied hereunder at or prior to such Closing Date.
(g) Bring-down Comfort Letter. On each of the First Closing Date and the
Second Closing Date the Representatives shall have received from
PricewaterhouseCoopers LLP, independent registered public accountants for the
Company, a letter dated such date, in form and substance satisfactory to the
Representatives, to the effect that they reaffirm the statements made in the
letter furnished by them pursuant to subsection (a) of this Section 5, except
that the specified date referred to therein for the carrying out of procedures
shall be no more than three business days prior to the First Closing Date or
Second Closing Date, as the case may be (and the Representatives shall have
received an additional four conformed copies of such accountants' letter for
each of the several Underwriters).
(h) Opinion of Counsel for the Selling Stockholders. On each of the First
Closing Date (with respect to the Selling Stockholders) and the Second Closing
Date (with respect to the Option Selling Stockholders) the Representatives shall
have received the favorable opinion, dated as of such Closing Date, of (i)
Shearman & Sterling LLP, counsel for the Selling Stockholders, together with
signed copies of such letter for each of the several underwriters substantially
to the effect set forth in Exhibit B-1 hereto and (ii) internal counsel for each
of the Selling Stockholders, together with signed copies of each such letter for
each of the several underwriters substantially to the effect set forth in
Exhibit B-2.
20
(i) Selling Stockholders' Certificate. On each of the First Closing Date
and, in the case of the Option Selling Stockholders, the Second Closing Date the
Representatives shall receive a written certificate executed by each Selling
Stockholder or each Option Selling Stockholder, as applicable, dated as of such
Closing Date, to the effect that:
(i) the representations, warranties and covenants of
such Selling Stockholder set forth in Section 1(B) of this Agreement
are true and correct with the same force and effect as though
expressly made by such Selling Stockholder on and as of such Closing
Date; and
(ii) such Selling Stockholder has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to such Closing Date.
(j) Lock-Up Agreement from Certain Securityholders of the Company Other
Than Selling Stockholders. On or prior to the date hereof, the Company shall
have furnished to the Representatives an agreement in the form of Exhibit C
hereto from those persons listed on Schedule D hereto, and such agreement shall
be in full force and effect on each of the First Closing Date and the Second
Closing Date.
(k) Additional Documents. On or before each of the First Closing Date and
the Second Closing Date, the Representatives and counsel for the Underwriters
shall have received such information, documents and opinions as they may
reasonably require for the purposes of enabling them to pass upon the issuance
and sale of the Common Shares as contemplated herein, or in order to evidence
the accuracy of any of the representations and warranties, or the satisfaction
of any of the conditions or agreements, herein contained.
If any condition specified in this Section 5 is not satisfied when and as
required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company and the Selling Stockholders at any
time on or prior to the First Closing Date and, with respect to the Optional
Common Shares, at any time prior to the Second Closing Date, which termination
shall be without liability on the part of any party to any other party, except
that Section 4, Section 6, Section 8 and Section 9 shall at all times be
effective and shall survive such termination.
SECTION 6. Reimbursement of Underwriters' Expenses. If this Agreement is
terminated by the Representatives pursuant to Section 5, Section 7, Section 10
or Section 11(v), or if the sale to the Underwriters of the Common Shares on the
First Closing Date is not consummated because of any refusal, inability or
failure on the part of the Company or the Selling Stockholders to perform any
agreement herein or to comply with any provision hereof, the Selling
Stockholders agree, severally and not jointly, to reimburse the Representatives
and the other Underwriters (or such Underwriters as have terminated this
Agreement with respect to themselves), severally, upon demand for all
out-of-pocket expenses that shall have been reasonably incurred by the
Representatives and the Underwriters in connection with the proposed purchase
and the offering and sale of such Selling Stockholder's Common Shares, including
but not limited to reasonable fees and disbursements of counsel, printing
expenses, travel expenses, postage, facsimile and telephone charges.
21
SECTION 7. Effectiveness of this Agreement. This Agreement shall not
become effective until the later of (i) the execution of this Agreement by the
parties hereto and (ii) notification by the Commission to the Company and the
Representatives of the effectiveness of the Registration Statement under the
Securities Act.
Prior to such effectiveness, this Agreement may be terminated by any party
by notice to each of the other parties hereto, and any such termination shall be
without liability on the part of (a) the Company or the Selling Stockholders to
any Underwriter, except that the Selling Stockholders shall be obligated to
reimburse the expenses of the Representatives and the Underwriters pursuant to
Sections 4 and 6 hereof, (b) any Underwriter to the Company or the Selling
Stockholders, or (c) of any party hereto to any other party except that the
provisions of Section 8 and Section 9 shall at all times be effective and shall
survive such termination.
SECTION 8. Indemnification.
(a) Indemnification of the Underwriters by the Company. The Company agrees
to indemnify and hold harmless each Underwriter, its officers and employees, and
each person, if any, who controls any Underwriter within the meaning of the
Securities Act and the Exchange Act against any loss, claim, damage, liability
or expense, as incurred, to which such Underwriter or such controlling person
may become subject, under the Securities Act, the Exchange Act or other federal
or state statutory law or regulation, or the laws or regulations of foreign
jurisdictions where Common Shares have been offered, or at common law or
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of the Company), insofar as such loss, claim,
damage, liability or expense (or actions in respect thereof as contemplated
below) arises out of or is based (i) upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, or any
amendment thereto, including any information deemed to be a part thereof
pursuant to Rule 430A or Rule 434 under the Securities Act, or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading; (ii) upon any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) or any prospectus wrapper material distributed in Canada, or the
omission or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; (iii) in whole or in part upon any inaccuracy in the
representations and warranties of the Company contained herein; or (iv) in whole
or in part upon any failure of the Company to perform its obligations hereunder
or under law; or (v) any act or failure to act or any alleged act or failure to
act by any Underwriter in connection with, or relating in any manner to, the
Common Stock or the offering contemplated hereby, and which is included as part
of or referred to in any loss, claim, damage, liability or action arising out of
or based upon any matter covered by clause (i) or (ii) above, provided that the
Company shall not be liable under this clause (v) to the extent that a court of
competent jurisdiction shall have determined by a final judgment that such loss,
claim, damage, liability or action resulted directly from any such acts or
failures to act undertaken or omitted to be taken by such Underwriter through
its bad faith or willful misconduct; and to reimburse each Underwriter and each
such controlling person for any and all expenses (including the fees and
disbursements of counsel chosen by BAS) as such expenses are reasonably incurred
by such Underwriter or such controlling person in connection with investigating,
defending, settling, compromising or paying
22
any such loss, claim, damage, liability, expense or action; provided, however,
that the foregoing indemnity agreement shall not apply to any loss, claim,
damage, liability or expense to the extent, but only to the extent, arising out
of or based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Company by the Representatives expressly for use in
the Registration Statement, any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto); and provided, further, that with respect to
any preliminary prospectus, the foregoing indemnity agreement shall not inure to
the benefit of any Underwriter from whom the person asserting any loss, claim,
damage, liability or expense purchased Common Shares, or any person controlling
such Underwriter, if copies of the Prospectus were timely delivered to the
Underwriter pursuant to Section 2 and a copy of the Prospectus (as then amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Common Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage, liability or expense. The indemnity agreement
set forth in this Section 8(a) shall be in addition to any liabilities that the
Company may otherwise have.
(b) Indemnification of the Underwriters by the Selling Stockholders. Each
of the Selling Stockholders, severally and not jointly, agrees to indemnify and
hold harmless each Underwriter, its officers and employees, and each person, if
any, who controls any Underwriter within the meaning of the Securities Act and
the Exchange Act against any loss, claim, damage, liability or expense, as
incurred, to which such Underwriter or such controlling person may become
subject, under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, or the laws or regulations of foreign jurisdictions
where Common Shares have been offered, or at common law or otherwise (including
in settlement of any litigation, if such settlement is effected with the written
consent of the Selling Stockholders), insofar as such loss, claim, damage,
liability or expense (or actions in respect thereof as contemplated below)
arises out of or is based (i) upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, or any
amendment thereto, including any information deemed to be a part thereof
pursuant to Rule 430A or Rule 434 under the Securities Act, or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading; (ii) upon any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) or any prospectus wrapper material distributed in Canada, or the
omission or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; (iii) in whole or in part upon any inaccuracy in the
representations and warranties of such Selling Stockholder contained herein; or
(iv) in whole or in part upon any failure of such Selling Stockholder to perform
its respective obligations hereunder or under law; or (v) any act or failure to
act or any alleged act or failure to act by any Underwriter in connection with,
or relating in any manner to, the Common Stock or the offering contemplated
hereby, and which is included as part of or referred to in any loss, claim,
damage, liability or action arising out of or based upon any matter covered by
clause (i) or (ii) above, provided that such Selling Stockholder shall not be
liable under this clause (v) to the extent that a court of competent
jurisdiction shall have determined by a final judgment that such loss, claim,
damage, liability or action resulted directly from any such acts or failures to
act undertaken or omitted to be taken by such Underwriter
23
through its bad faith or willful misconduct; and to reimburse each Underwriter
and each such controlling person for any and all expenses (including the
reasonable fees and disbursements of counsel chosen by BAS) as such expenses are
reasonably incurred by such Underwriter or such controlling person in connection
with investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the
foregoing indemnity agreement shall not apply to any loss, claim, damage,
liability or expense to the extent, but only to the extent, arising out of or
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Company or any Selling Stockholder by the
Representatives expressly for use in the Registration Statement, any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto); and
provided, further, that with respect to clauses (i), (ii) and (v) above, each
Selling Stockholder shall be liable only to the extent arising out of or based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with written information
furnished to the Company by such Selling Stockholder expressly for use in the
Registration Statement, any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto); and provided, further, that with respect to
any preliminary prospectus, the foregoing indemnity agreement shall not inure to
the benefit of any Underwriter from whom the person asserting any loss, claim,
damage, liability or expense purchased Common Shares, or any person controlling
such Underwriter, if copies of the Prospectus were timely delivered to the
Underwriter pursuant to Section 2 and a copy of the Prospectus (as then amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Common Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage, liability or expense; and provided, further,
that the liability of each Selling Stockholder under the foregoing indemnity
agreement shall be limited to an amount equal to the initial public offering
price of the Common Shares sold by such Selling Stockholder, less the
underwriting discount, as set forth on the front cover page of the Prospectus.
The Underwriters hereby acknowledge that the only information that the Selling
Stockholders have furnished to the Company expressly for use in the Registration
Statement, any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto) are the statements relating to such Selling Stockholder set
forth in the table in the first paragraph under the caption "Selling
Stockholders" in the Prospectus; and such Selling Stockholder confirms that such
statements are correct. The indemnity agreement set forth in this Section 8(b)
shall be in addition to any liabilities that the Selling Stockholders may
otherwise have.
(c) Indemnification of the Company, its Directors and Officers and the
Selling Stockholders. Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who signed the Registration Statement, the Selling Stockholders, each
of its directors and officers and each person, if any, who controls the Company
or any Selling Stockholder within the meaning of the Securities Act or the
Exchange Act, against any loss, claim, damage, liability or expense, as
incurred, to which the Company, or any such director, officer, Selling
Stockholder or controlling person may become subject, under the Securities Act,
the Exchange Act, or other federal or state statutory law or regulation, or the
laws or regulations of foreign jurisdictions where Common Shares have been
offered, or at common law or otherwise (including in settlement of any
litigation, if such
24
settlement is effected with the written consent of such Underwriter), insofar as
such loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or arises out of or is 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, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement, any preliminary
prospectus, the Prospectus (or any amendment or supplement thereto), in reliance
upon and in conformity with written information furnished to the Company or the
Selling Stockholders by the Representatives expressly for use therein; and to
reimburse the Company, or any such director, officer, Selling Stockholder or
controlling person for any legal and other expense reasonably incurred by the
Company, or any such director, officer, Selling Stockholder or controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action. The indemnity
agreement set forth in this Section 8(c) shall be in addition to any liabilities
that each Underwriter may otherwise have.
(d) Notifications and Other Indemnification Procedures. Promptly after
receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party for contribution or otherwise than under
the indemnity agreement contained in this Section 8 or to the extent it is not
prejudiced as a proximate result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of such indemnifying
party's election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel (together with local counsel), approved by the
indemnifying party (BAS in the case of Section 8(c) and Section 9),
25
representing the indemnified parties who are parties to such action) or (ii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action, in each of which cases the
reasonable fees and expenses of counsel shall be at the expense of the
indemnifying party.
(e) Settlements. The indemnifying party under this Section 8 shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by Section
8(d) hereof, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. Notwithstanding the immediately preceding sentence, if
at any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, an
indemnifying party shall not be liable for any settlement of the nature
contemplated by Sections 8(a) or (b) effected without its consent if such
indemnifying party (i) reimburses such indemnified party in accordance with such
request to the extent it determines in good faith such request to be reasonable
and (ii) provides written notice to the indemnified party substantiating in
reasonable detail the unpaid balance as unreasonable, in each case prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise or consent
to the entry of judgment in any pending or threatened action, suit or proceeding
in respect of which any indemnified party is or could reasonably be expected to
be a party and indemnity was or could reasonably be expected to have been sought
hereunder by such indemnified party, unless such settlement, compromise or
consent includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such action, suit or
proceeding.
SECTION 9. Contribution. If the indemnification provided for in Section 8
is for any reason held to be unavailable to or otherwise insufficient to hold
harmless an indemnified party in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount paid or payable by such indemnified party, as
incurred, as a result of any losses, claims, damages, liabilities or expenses
referred to therein (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Stockholders, on the
one hand, and the Underwriters, on the other hand, from the offering of the
Common Shares pursuant to this Agreement or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Selling Stockholders,
on the one hand, and the Underwriters, on the other hand, in connection with the
statements or omissions or inaccuracies in the representations and warranties
herein 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 and the Selling Stockholders, on the one hand, and the
26
Underwriters, on the other hand, in connection with the offering of the Common
Shares pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Common Shares
pursuant to this Agreement (before deducting expenses) received by the Company
and the Selling Stockholders, and the total underwriting discount received by
the Underwriters, in each case as set forth on the front cover page of the
Prospectus (or, if Rule 434 under the Securities Act is used, the corresponding
location on the Term Sheet) bear to the aggregate initial public offering price
of the Common Shares as set forth on such cover. The relative fault of the
Company and the Selling Stockholders, on the one hand, and the Underwriters, on
the other hand, shall be determined by reference to, among other things, whether
any such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact or any such inaccurate or alleged
inaccurate representation or warranty relates to information supplied by the
Company or the Selling Stockholders, on the one hand, or the Underwriters, on
the other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 8(d), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim. The provisions set forth in Section 8(d) with
respect to notice of commencement of any action shall apply if a claim for
contribution is to be made under this Section 9; provided, however, that no
additional notice shall be required with respect to any action for which notice
has been given under Section 8(d) for purposes of indemnification.
The Company, the Selling Stockholders and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 9 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in this Section 9.
Notwithstanding the provisions of this Section 9, (i) no Underwriter shall
be required to contribute any amount in excess of the underwriting commissions
received by such Underwriter in connection with the Common Shares underwritten
by it and distributed to the public and (ii) no Selling Stockholder shall be
required to contribute any amount in excess of an amount equal to the public
offering price of the Common Shares sold by such Selling Stockholder, less the
underwriting discount, as set forth on the front cover page of the Prospectus.
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. The Underwriters'
obligations to contribute pursuant to this Section 9 are several, and not joint,
in proportion to their respective underwriting commitments as set forth opposite
their names in Schedule A. For purposes of this Section 9, each officer and
employee of an Underwriter and each person, if any, who controls an Underwriter
within the meaning of the Securities Act and the Exchange Act shall have the
same rights to contribution as such Underwriter, and each director of the
Company, each officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company within the meaning of the
Securities Act and the Exchange Act shall have the same rights to contribution
as the Company.
27
SECTION 10. Default of One or More of the Several Underwriters. If, on the
First Closing Date or the Second Closing Date, as the case may be, any one or
more of the several Underwriters shall fail or refuse to purchase Common Shares
that it or they have agreed to purchase hereunder on such date, and the
aggregate number of Common Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase does not exceed 10% of the
aggregate number of the Common Shares to be purchased on such date, the other
Underwriters shall be obligated, severally, in the proportions that the number
of Firm Common Shares set forth opposite their respective names on Schedule A
bears to the aggregate number of Firm Common Shares 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 the Common Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date. If, on the
First Closing Date or the Second Closing Date, as the case may be, any one or
more of the Underwriters shall fail or refuse to purchase Common Shares and the
aggregate number of Common Shares with respect to which such default occurs
exceeds 10% of the aggregate number of Common Shares to be purchased on such
date, and arrangements satisfactory to the Representatives and the Company for
the purchase of such Common Shares are not made within 48 hours after such
default, this Agreement shall terminate without liability of any non-defaulting
Underwriter, any Selling Stockholder or the Company to any other party to this
Agreement except that the provisions of Section 4, Section 6, Section 8 and
Section 9 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 First Closing Date or the Second Closing Date, as the case may be,
but in no event for longer than seven days in order that the required changes,
if any, to the Registration Statement and the Prospectus or any other documents
or arrangements may be effected.
As used in this Agreement, the term "Underwriter" 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.
SECTION 11. Termination of this Agreement. Prior to the First Closing Date
this Agreement may be terminated by the Representatives by notice given to the
Company and the Selling Stockholders if at any time (i) trading or quotation in
any of the Company's securities shall have been suspended or limited by the
Commission or by the NYSE; (ii) trading in securities generally on either the
Nasdaq Stock Market or the New York Stock Exchange shall have been suspended or
limited, or minimum or maximum prices shall have been generally established on
any of such stock exchanges by the Commission or the NASD; (iii) a general
banking moratorium shall have been declared by any of federal, New York ,
Delaware or California authorities; (iv) there shall have occurred any outbreak
or escalation of national or international hostilities or any crisis or
calamity, or any substantial change in the United States or international
financial markets, or any substantial change or development involving a
prospective substantial change in United States' or international political,
financial or economic conditions, as in the judgment of the Representatives is
material and adverse and makes it impracticable to market the Common Shares in
the manner and on the terms described in the Prospectus or to enforce contracts
for the sale of securities; (v) in the judgment of the Representatives there
shall have occurred any Material Adverse Change; or (vi) the Company shall have
sustained a loss by strike, fire, flood, earthquake, accident or other calamity
of such character as in the judgment of
28
the Representatives may interfere materially with the conduct of the business
and operations of the Company regardless of whether or not such loss shall have
been insured. Any termination pursuant to this Section 11 shall be without
liability on the part of (a) the Company or the Selling Stockholders to any
Underwriter, except that the Selling Stockholders shall be obligated to
reimburse the expenses of the Representatives and the Underwriters pursuant to
Sections 4 and 6 hereof, (b) any Underwriter to the Company or the Selling
Stockholders, or (c) of any party hereto to any other party except that the
provisions of Section 8 and Section 9 shall at all times be effective and shall
survive such termination.
SECTION 12. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers , of the Selling Stockholders and of
the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or the Company or any of its or their partners,
officers or directors or any controlling person, or the Selling Stockholders, as
the case may be, and will survive delivery of and payment for the Common Shares
sold hereunder and any termination of this Agreement.
SECTION 13. Notices. All communications hereunder shall be in writing and
shall be mailed, hand delivered or telecopied and confirmed to the parties
hereto as follows:
If to the Representatives:
Banc of America Securities LLC
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx
with a copy to:
Banc of America Securities LLC
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Legal Department
and:
LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxx X. Xxx
If to the Company:
29
Zenith National Insurance Corp.
00000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Chief Financial Officer
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx and Xxxxxxxx X. Xxxxxxxx
If to the Selling Stockholders:
TIG Insurance Company
0000 Xxxxx X'Xxxxxx Xxxxxxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxx
and
Clearwater Insurance Company
000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
and
United States Fire Insurance Company
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Facsimile: (000)-000-0000
Attention: Xxxxx Xxx Xxxx, Esq.
and
The North River Insurance Company
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Facsimile: (000)-000-0000
Attention: Xxxxx Xxx Xxxx, Esq.
with a copy to:
00
Xxxxxxxx & Xxxxxxxx XXX
Xxxxxxxx Xxxxx Xxxx
Xxxxx 0000, X.X. Xxx 000
Xxxxxxx, Xxxxxx X0X 0X0
Facsimile: (000) 000-0000
Attention: Xxxxxxxxxxx X. Xxxxxxxx
Any party hereto may change the address for receipt of communications by
giving written notice to the others.
SECTION 14. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto, including any substitute Underwriters pursuant
to Section 10 hereof, and to the benefit of the employees, officers and
directors and controlling persons referred to in Section 8 and Section 9, and in
each case their respective successors, and no other person will have any right
or obligation hereunder. The term "successors" shall not include any purchaser
of the Common Shares as such from any of the Underwriters merely by reason of
such purchase.
SECTION 15. Partial Unenforceability. The invalidity or unenforceability
of any Section, paragraph or provision of this Agreement shall not affect the
validity or enforceability of any other Section, paragraph or provision hereof.
If any Section, paragraph or provision of this Agreement is for any reason
determined to be invalid or unenforceable, there shall be deemed to be made such
minor changes (and only such minor changes) as are necessary to make it valid
and enforceable.
SECTION 16. Governing Law Provisions. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
SECTION 17. General Provisions. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
among the parties hereto with respect to the subject matter hereof. This
Agreement may be executed in two or more counterparts, each one of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement may not be amended or modified
unless in writing by all of the parties hereto, and no condition herein (express
or implied) may be waived unless waived in writing by each party whom the
condition is meant to benefit. The Table of Contents and the Section headings
herein are for the convenience of the parties only and shall not affect the
construction or interpretation of this Agreement.
Each of the parties hereto acknowledges that it is a sophisticated
business person who was adequately represented by counsel during negotiations
regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions. Each of the parties
hereto further acknowledges that the provisions of Sections 8 and 9 hereto
fairly allocate the risks in light of the ability of the parties to investigate
the Company, its affairs and its business in order to assure that adequate
disclosure has been made in the Registration Statement, any
31
preliminary prospectus and the Prospectus (and any amendments and supplements
thereto), as required by the Securities Act and the Exchange Act.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, the Selling Stockholders and the
several Underwriters set forth in or made pursuant to this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
any Underwriter, the officers or employees of any Underwriter, any person
controlling any Underwriter, the Company, the officers or employees of the
Company, or any person controlling the Company, the Selling Stockholders or any
person controlling any Selling Stockholder, (ii) acceptance of the Shares and
payment for them hereunder and (iii) termination of this Agreement.
Except as otherwise provided, this Agreement has been and is made solely
for the benefit of and shall be binding upon the Company, the Selling
Stockholders, the Underwriters, the Underwriters' officers and employees, any
controlling persons referred to herein, the Company's directors and the
Company's officers who sign the Registration Statement and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Shares from any of the several Underwriters merely because of such
purchase.
32
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
ZENITH NATIONAL INSURANCE CORP.
By: /s/ Xxxxxxx X. Xxx
----------------------------------
Name: Xxxxxxx X. Xxx
Title: President
TIG INSURANCE COMPANY
By: /s/ R. Xxxxx Xxxxxxx
----------------------------------
Name: R. Xxxxx Xxxxxxx
Title: President
CLEARWATER INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President,
General Counsel and
Corporate Secretary
UNITED STATES FIRE INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
& Controller
THE NORTH RIVER INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
& Controller
The foregoing Underwriting Agreement is hereby confirmed and accepted by
the Representatives in San Francisco, California as of the date first above
written.
33
BANC OF AMERICA SECURITIES LLC
X.X. XXXXXX SECURITIES INC.
XXXXXX BROTHERS INC.
XXXXXXX & PARTNERS SECURITIES, L.L.C.
XXXXXX, XXXXX XXXXX, INCORPORATED
Acting as Representatives of the
several Underwriters named in the
attached Schedule A.
By: BANC OF AMERICA SECURITIES LLC
By: /s/ Xxxxxx Xxxxxxxx
-----------------------------
Name: Xxxxxx Xxxxxxxx
Title: Managing Director
34
SCHEDULE A
NUMBER OF FIRM
COMMON SHARES TO
UNDERWRITERS BE PURCHASED
------------ ----------------
Banc of America Securities LLC. .............................................................. 1,798,000
X.X. Xxxxxx Securities, Inc. ................................................................. 465,000
Xxxxxx Brothers Inc. ......................................................................... 465,000
Xxxxxxx & Partners Securities, L.L.C. ........................................................ 217,000
Xxxxxx, Xxxxx Xxxxx, Incorporated............................................................. 155,000
Total................................................................................ 3,100,000
A-1
SCHEDULE B
NUMBER OF FIRM MAXIMUM NUMBER OF
COMMON SHARES TO OPTIONAL COMMON
SELLING STOCKHOLDER BE SOLD SHARES TO BE SOLD
------------------- ---------------- -----------------
TIG Insurance Company
0000 Xxxxx X'Xxxxxx Xxxxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxx............................................ 2,966,449 -
Clearwater Insurance Company
000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx........................................ 66,776 200,000
United States Fire Insurance Company
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx Xxx Xxxx, Esq. .................................. 46,775 200,000
The North River Insurance Company
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx Xxx Xxxx, Esq. .................................. 20,000 -
Total.......................................................... 3,100,000 400,000
B-1
SCHEDULE C
LIST OF DESIGNATED SUBSIDIARIES
Zenith Star Insurance Company (a Texas corporation)
C-1
SCHEDULE D
List of Persons subject to Lock-up
Xxxxxxx X. Xxx
Xxxx X. Xxxxxx
Xxxxxx X. Xxxxx
Xxxxxxx X. Xxxx
Xxxx X. Xxxxxxx
Fairfax Financial Holdings Limited (with respect to the stock held by its
subsidiaries) Odyssey Re Holdings Corp.
D-1
EXHIBIT A-1
Opinion of outside counsel for the Company to be delivered pursuant to
Section 5(d)(i) of the Underwriting Agreement.
References to the Prospectus in this Exhibit A-1 include any supplements
thereto at the Closing Date.
Subject to customary limitations, qualifications, exceptions and
assumptions:
1. The Company is validly existing in good standing under the laws of
the State of Delaware.
2. The Company has the corporate power and corporate authority to
execute and deliver the Underwriting Agreement and consummate the transactions
contemplated thereby.
3. The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
4 The statements in Item 15 of the Registration Statement, insofar as
such statements purport to summarize certain provisions of the Certificate of
Incorporation or Bylaws or the laws referred to therein, fairly summarize such
provisions or laws in all material respects.
5. No Governmental Approval, which has not been obtained or taken and
is not in full force and effect, is required to authorize, or is required for,
the execution or delivery of the Underwriting Agreement by the Company or the
consummation by the Company of the transactions contemplated thereby.
6 The execution and delivery by the Company of the Underwriting
Agreement and the consummation by the Company of the transactions contemplated
thereby will not (i) conflict with the Certificate of Incorporation or By-laws,
(ii) constitute a violation of, or a breach or default under, the terms of any
Applicable Contract; provided, that with respect to the contracts listed as
items 9 and 10 on Schedule A, we express no opinion as to any registration
rights of stockholders of the Company or (iii) violate or conflict with, or
result in any contravention of, any Applicable Law or any Applicable Order. We
do not express any opinion, however, as to whether the execution, delivery or
performance by the Company of the Underwriting Agreement will constitute a
violation of, or a default under, any covenant, restriction or provision with
respect to financial ratios or tests or any aspect of the financial condition or
results of operations of the Company or any of its subsidiaries.
7. The Company is not an "investment company," as such term is defined
in the Investment Company Act of 1940, as amended.
8. Under current United States federal income tax law, although the
discussion set forth in the Prospectus under the caption "United States Federal
Income Tax Consequences to Non-U.S. Holders" does not purport to summarize all
possible United States federal income tax consequences of the purchase,
ownership, or disposition of the Securities, such discussion constitutes, in all
material respects, a fair and accurate summary of the United States federal
A-1-1
income tax consequences that are anticipated to be material to Non-U.S. Holders
(as defined in the Prospectus) who purchase the Securities pursuant to the
Prospectus. [NOTE: OPINION REGARDING TAX SECTION WILL BE DELIVERED IN A SEPARATE
SASMF OPINION.]
In addition, set forth in a separate letter and subject to customary
limitations, qualifications, exceptions, and assumptions:
We have been orally advised by the commission that the Registration
Statement, was declared effective under the Securities Act at 2:30 PM EST, on
July 23, 2004 and we have been orally advised by the Commission that: (i) no
stop order suspending the effectiveness of the Registration Statement has been
issues [and (ii) no proceedings for that purpose have been instituted or are
pending or threatened by the Commission.]
In addition, we have participated in conferences with officers and other
representatives of the Company, representatives of the independent registered
public accountants for the Company and with representatives of the Underwriters
at which the contents of the Registration Statement and the Prospectus and
related matters were discussed. We do not pass upon, or assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained or incorporated by reference in the Registration Statement or the
Prospectus and have made no independent check or verification thereof (except to
the limited extent referred to in paragraphs 4 and 8 above).
On the basis of the foregoing, (i) the Registration Statement, at the time
it became effective, the Prospectus, as of its date, and the Incorporated
Documents, as of their respective dates, appeared on their face to be
appropriately responsive in all material respects to the requirements of the
Securities Act, the Exchange Act and the Rules and Regulations, as applicable
(except that in each case we do not express any view as to the financial
statements, schedules and other financial information included or incorporated
by reference therein or excluded therefrom or the exhibits to the Registration
Statement), (ii) all required filings of the Prospectus pursuant to Rule 424(b)
under the Securities Act have been made in the manner and within the time period
required by such Rule 424(b) and (iii) no facts have come to our attention that
have caused us to believe that the Registration Statement, at the time it became
effective, contained an 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 or that the Prospectus, as of its date and as
of the date hereof, contained or contains an untrue statement of a material fact
or omitted or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading (except that in each case we do not express any view as to the
financial statements, schedules and other financial information included or
incorporated by reference therein or excluded therefrom or the exhibits to the
Registration Statement).
A-1-2
EXHIBIT A-2
Opinion of outside counsel for the Company to be delivered pursuant to
Section 5(d)(i) of the Underwriting Agreement.
References to the Prospectus in this Exhibit A-2 include any supplements
thereto at the Closing Date.
Subject to the customary limitations, qualifications, exceptions and
assumptions:
1. The Company and each Designated Subsidiary has the corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus.
2. The Company is duly qualified as a foreign corporation to transact
business and is in good standing in the State of California.
3. Zenith Insurance Company is validly existing and in good legal
standing under the laws of the State of California. Zenith Insurance Company is
(i) licensed to issue policies and transact the business of insurance in the
State of California, (ii) authorized to transact the business of insurance in
the State of Florida, (iii) authorized to engage in the insurance business in
the State of North Carolina, and (iv) is authorized to transact the business of
insurance in the State of Texas.
4. ZNAT Insurance Company is validly existing and in good legal
standing under the laws of the State of California. ZNAT Insurance Company is
(i) licensed to issue policies and transact the business of insurance in the
State of California, and (ii) is authorized to transact the business of
insurance in the State of Texas.
5. Zenith Star Insurance Company is validly existing and in good legal
standing under the laws of the State of Texas. Zenith Star Insurance Company is
authorized to transact the business of insurance in the State of Texas.
6. All of the issued and outstanding shares of capital stock of the
Designated Subsidiaries were duly authorized and validly issued and are fully
paid and nonassessable. To my knowledge, the Company is the record owner of all
of the outstanding shares of the Designated Subsidiaries, either directly, or
indirectly through a wholly-owned subsidiary of the Company, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or equity.
7 The authorized, issued and outstanding capital stock of the Company
(including the Common Stock) conforms as to legal matters to the descriptions
thereof contained or incorporated by reference in the Prospectus. The form of
certificate used to evidence the Common Stock complies in all material respects
with applicable requirements of the Certificate of Incorporation and By-laws,
and the General Corporation Law of the State of Delaware. The shares of capital
stock of the Company shown by the Company's stock record books as being issued
and outstanding as of the date set forth in the Prospectus have been duly
authorized and
A-2-1
validly issued and are fully paid and non-assessable, and free and clear of any
preemptive rights or any similar rights arising under the General Corporation
Law of the State of Delaware, the Certificate of Incorporation or the By-laws.
8. The statements in the Prospectus under the captions "Management's
Discussion and Analysis of Consolidated Financial Condition and Results of
Operations -- Liquidity and Capital Resources," "Business -- Regulation," and
"Business -- Legal Proceedings," insofar as such statements constitute summaries
of certain legal proceedings or legal conclusions, or purport to summarize
certain provisions of law or the documents referred to therein, fairly summarize
such provisions in all material respects.
9. To my knowledge, there are no contracts, agreements or
understandings between the Company and any person granting such person the right
to have any securities registered pursuant to the Registration Statement, except
(i) as set forth in the agreements listed on Schedule A hereto or (ii) as
disclosed in the Prospectus.
10. To my knowledge, neither the Company nor any of the Designated
Subsidiaries is in violation of its certificate or articles of incorporation, as
applicable, or by-laws and no default by the Company or any of the Designated
Subsidiaries exists in the due performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other agreement or instrument that is described
or referred to in the Prospectus or incorporated by reference therein, except in
the case of any such violation or default that would not reasonably be expected
to result in a Material Adverse Change (as defined in the Underwriting
Agreement).
11.There are no legal or governmental proceedings pending or, to my
knowledge, threatened, to which the Company is a party or to which any property
of the Company is subject that are required to be disclosed in the Registration
Statement pursuant to Item 103 of Regulation S-K that are not disclosed therein.
12. To my knowledge, except as otherwise disclosed in the Prospectus,
(i) the Company and the Designated Subsidiaries that are engaged in the business
of insurance or reinsurance (each an "Insurance Subsidiary") possess such
insurance licenses, certificates, and permits from governmental authorities and
insurance regulatory agencies (the "Insurance Licenses") as are necessary to
conduct their respective businesses as described in the Prospectus; (ii) the
Company and the Insurance Subsidiaries are in compliance with the terms and
conditions of all of the Insurance Licenses, except where the failure to so
comply would not reasonably be expected to have a Material Adverse Change; (iii)
the Insurance Licenses of the Insurance Subsidiaries are valid and in full force
and effect, except where the invalidity of such Insurance Licenses or the
failure of such Insurance Licenses to be in full force and effect would not
reasonably be expected to result in a Material Adverse Effect; and (iv) there
are no pending proceedings relating to revocation, suspension or modification of
any such Insurance Licenses that would reasonably be expected to have a Material
Adverse Effect.
X-0-0
XXXXXXX X-0
The opinion of such counsel pursuant to Section 5(h)(i) shall be rendered
to the Representatives at the request of the Company and shall so state therein.
References to the Prospectus in this Exhibit B-1 include any supplements thereto
at the Closing Date.
(i) TIG Insurance Company has the corporate power to execute,
deliver and perform the Underwriting Agreement and has taken all corporate
action necessary to authorize the execution, delivery and performance of
the Underwriting Agreement.
(ii) The Underwriting Agreement has been duly executed and delivered
by TIG Insurance Company and is the legal valid and binding obligation of
each of the Selling Stockholders, enforceable against each of the Selling
Stockholders in accordance with its terms.
(iii) The execution and delivery by TIG Insurance Company of the
Underwriting Agreement do not, and the performance by TIG Insurance
Company of its obligations thereunder will not, result in a violation of
TIG Insurance Company's articles of incorporation or bylaws.
(iv) No authorization, approval or other action by, and no notice to
or filing with, any United States federal or New York governmental
authority or regulatory body is required for the due execution, delivery
or performance by each of the Selling Stockholders of the Underwriting
Agreement, except as have been obtained and are in full force and effect
under the Securities Act or as may be required under the securities or
blue sky laws of any jurisdiction in the United States in connection with
the offer and sale of the Shares.
(v) Upon the delivery by or on behalf of the Selling Stockholders to
The Depositary Trust Company ("DTC") or its agent of the Common Shares
(the "Shares"), registered in the name of Cede & Co. ("Cede"), as nominee
for DTC, and the crediting by DTC of the Shares to the securities accounts
of the several Underwriters with DTC, DTC will be a protected purchaser
(as such term is defined in Section 8-303 of the Uniform Commercial Code
as in effect in the State of New York (the "NYUCC")) of the Shares and
will acquire its interest in such Shares (including, without limitation,
all rights that each Selling Stockholder had or has the power to transfer
in such Shares) free of any adverse claim (as such term is defined in
Section 8-102 of the NYUCC). Upon the payment of the purchase price for
the Shares and the crediting by DTC of the Shares to the securities
accounts of the several Underwriters with DTC, each of the Underwriters
will acquire a valid security entitlement (within the meaning of Section
8-501 of the NYUCC) in respect of the Shares to be purchased by it, and no
action (whether framed in conversion, replevin, constructive trust,
equitable lien, or other theory) based on an adverse claim (as such term
is defined in Section 8-102 of the NYUCC) to such Shares may be asserted
against the Underwriters.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the General
Corporation Law of the State of
B-1-1
Delaware, the General Corporation Law of the State of New York or the
federal law of the United States, to the extent they deem proper and
specified in such opinion, upon the opinion (which shall be dated the
First Closing Date or the Second Closing Date, as the case may be, shall
be satisfactory in form and substance to the Underwriters, shall expressly
state that the Underwriters may rely on such opinion as if it were
addressed to them and shall be furnished to the Representatives) of other
counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the Underwriters; provided, however, that such
counsel shall further state that they believe that they and the
Underwriters are justified in relying upon such opinion of other counsel,
and (B) as to matters of fact, to the extent they deem proper, on
certificates of such Selling Stockholder and public officials.
In addition, in rendering the opinion in clause (v) above, such
counsel may assume that (i) each Underwriter is a participant in DTC, and
that as such, each Underwriter maintains a customer account with DTC in
the name of such Underwriter, and such customer account is the subject of
an agreement between DTC and such Underwriter providing, among other
things, that: (A) financial assets (as defined in Section 8-102(a)(9) of
the NYUCC) (including financial assets consisting of security entitlements
with respect to the Shares sold to such Underwriter) may be credited to
such customer account; (B) DTC undertakes to treat such Underwriter as
entitled to exercise the rights that comprise the financial assets so
credited from time to time to such customer account in accordance with
Article 8, Part 5 of the NYUCC; and (C) such agreement is governed by the
law of the State of New York (such that DTC's "securities intermediary's
jurisdiction," as defined in Section 8-110(e) of the NYUCC, is New York),
(ii) the Shares are certificated securities in registered form and not
held in any securities account or through any securities intermediary,
(iii) Cede is acting as DTC's nominee and is not a securities
intermediary; and (iv) neither DTC nor the Underwriters or their
representatives, nominees or agents has notice of any adverse claim
(within the meaning of Section 8-105 of the NYUCC) with respect to the
Shares or any security entitlement therein.
B-1-2
EXHIBIT B-2
The opinion of such internal counsel pursuant to Section 5(h)(ii) shall be
rendered to the Representatives at the request of the Company and shall so state
therein. References to the Prospectus in this Exhibit B-2 include any
supplements thereto at the Closing Date.
(i) The Underwriting Agreement has been duly executed and delivered by
such Selling Stockholder.
(ii) The execution and delivery by such Selling Stockholder of, and the
performance by such Selling Stockholder of its obligations under, the
Underwriting Agreement will not contravene or conflict with, result in a breach
of, or constitute a default under, the charter or by-laws, partnership
agreement, trust agreement or other organizational documents, as the case may
be, of such Selling Stockholder, or, to the best of such counsel's knowledge,
violate or contravene any provision of applicable law or regulation, or violate,
result in a breach of or constitute a default under the terms of any other
agreement or instrument to which such Selling Stockholder is a party or by which
it is bound, or any judgment, order or decree applicable to such Selling
Stockholder of any court, regulatory body, administrative agency, governmental
body or arbitrator having jurisdiction over such Selling Stockholder, except for
such violations, contraventions, breaches or defaults as would not, individually
or in the aggregate, have a material adverse effect upon the Selling
Stockholder's ability to consummate the transactions contemplated by the
Underwriting Agreement.
(iii) Such Selling Stockholder has the legal right and power, and all
authorizations and approvals required under its charter and by-laws or other
organizational documents, as the case may be, to enter into the Underwriting
Agreement, to sell, transfer and deliver all of the Common Shares which may sold
by such Selling Stockholder under the Underwriting Agreement and to comply with
its other obligations under the Underwriting Agreement.
(iv) To the best of such counsel's knowledge, no consent, approval,
authorization or other order of, or registration or filing with, any court or
governmental authority or agency, is required for the consummation by such
Selling Stockholder of the transactions contemplated in the Underwriting
Agreement, except as required under the Securities Act, applicable state
securities or blue sky laws, and from the NASD.
In rendering such opinion, such internal counsel may rely as to matters
involving the application of laws of the State of New York or the federal law of
the United States, to the extent they deem proper and specified in such opinion,
upon the opinion of Shearman & Sterling LLP.
B-2-1
EXHIBIT C
[Date]
Banc of America Securities LLC
X.X. Xxxxxx Securities Inc.
Xxxxxx Brothers Inc.
Xxxxxxx & Partners Securities, L.L.C.
Xxxxxx, Xxxxx Xxxxx, Incorporated
As Representatives of the Several Underwriters
c/o Banc of America Securities LLC
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX ,00000
Re: Zenith National Insurance Corp. (the "Company")
Ladies and Gentlemen:
The undersigned is an owner of record or beneficially of certain
shares of Common Stock of the Company ("Common Stock") or securities convertible
into or exchangeable or exercisable for Common Stock. Certain stockholders of
the Company propose to carry out a public secondary offering of Common Stock
(the "Offering") for which you will act as the representatives of the
underwriters. The undersigned recognizes that the Offering will be of benefit to
the Company. The undersigned acknowledges that you and the other underwriters
are relying on the representations and agreements of the undersigned contained
in this letter in carrying out the Offering and in entering into underwriting
arrangements with the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees
that the undersigned will not, (and will cause any spouse or immediate family
member of the spouse or the undersigned living in the undersigned's household
not to), without the prior written consent of Banc of America Securities LLC,
directly or indirectly, sell, offer, contract or grant any option to sell
(including without limitation any short sale), pledge, transfer, establish an
open "put equivalent position" within the meaning of Rule 16a-1(h) under the
Securities Exchange Act of 1934, as amended, or otherwise dispose of any shares
of Common Stock, options or warrants to acquire shares of Common Stock, or
securities exchangeable or exercisable for or convertible into shares of Common
Stock currently or hereafter owned either of record or beneficially (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) by the
undersigned (or such spouse or family member), or publicly announce an intention
to do any of the foregoing, for a period commencing on the date hereof and
continuing through the close of trading on the date 90 days after the date
hereof. The
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undersigned also agrees and consents to the entry of stop transfer instructions
with the Company's transfer agent and registrar against the transfer of shares
of Common Stock or securities convertible into or exchangeable or exercisable
for Common Stock held by the undersigned except in compliance with the foregoing
restrictions.
Notwithstanding the foregoing, the undersigned may (i) exercise
options or warrants to acquire shares of Common Stock or (ii) transfer the
Common Stock (w) to the Company to pay withholding taxes, or satisfy the
exercise price, applicable to the exercise of options, (x) as a bona fide gift
or gifts, provided that the donee or donees thereof agree to be bound by the
restrictions set forth herein, (y) to any trust or partnership for the direct or
indirect benefit of the undersigned or the immediate family of the undersigned,
provided that the trustee of the trust or the general partner of the partnership
agrees to be bound by the restrictions set forth herein, and provided further
that any such transfer shall not involve a disposition for value or (z) with the
prior written consent of Banc of America Securities LLC on behalf of the
underwriters. For purposes of this letter agreement, "immediate family" shall
mean any relationship by blood, marriage or adoption, not more remote than first
cousin.
With respect to the Offering only, the undersigned waives any
registration rights relating to registration under the Securities Act of any
Common Stock owned either of record or beneficially by the undersigned,
including any rights to receive notice of the Offering.
This agreement is irrevocable and will be binding on the undersigned
and the respective successors, heirs, personal representatives, and assigns of
the undersigned.
Signature: ___________________________
Printed Name: ________________________
(and indicate capacity of person
signing if signing as custodian,
trustee, or on behalf of an entity)
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