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EXHIBIT 1.1
HCC INSURANCE HOLDINGS, INC.,
BANC OF AMERICA SECURITIES LLC
and
XXXXXXX XXXXX XXXXXX INC.
Underwriting Agreement
dated as of August 20, 2001
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Underwriting Agreement
August 20, 0000
Xxxx xx Xxxxxxx Securities LLC
Xxxxxxx Xxxxx Barney Inc.
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
and
Xxxxxxx Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
HCC Insurance Holdings, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to the several underwriters named in Schedule A (the
"Underwriters") $150,000,000 principal amount of its 2.00% Convertible Notes Due
2021 (the "Firm Securities") to be issued pursuant to an indenture dated as of
August 23, 2001 (the "Indenture") between the Company and First Union National
Bank, as Trustee (the "Trustee"). In addition, the Company has granted to the
Underwriters an option to purchase up to an additional $22,500,000 principal
amount of its 2.00% Convertible Notes Due 2021 (the "Optional Securities") as
provided in Section 2. The Firm Securities and, if and to the extent such option
is exercised, the Optional Securities, are collectively called the "Securities".
Banc of America Securities LLC ("BAS") and Xxxxxxx Xxxxx Barney Inc. have agreed
to act as representatives of the several Underwriters (in such capacity, the
"Representatives") in connection with the offering and sale of the Securities.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission"), in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (collectively, the "Securities Act") a registration statement on Form
S-3 (File No. 333-58350) and registration statement on Form S-3 (File. No.
333-46432), including a prospectus, relating to the Securities, common stock and
certain other securities (the "Basic Prospectus"). Such registration statements,
as amended, including the financial statements, exhibits and schedules thereto,
in the form in which they were declared effective by the Commission under 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 under the Securities
Act or the Securities Exchange Act of 1934 and the rules and regulations
promulgated thereunder (collectively, the "Exchange Act"), are collectively
called the "Registration Statement". The Company has filed with, or transmitted
for filing to, or shall promptly hereafter file with or
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transmit for filing to, the Commission, a prospectus supplement (the "Prospectus
Supplement") specifically relating to the Securities, and the common stock of
the Company into which the Securities will be convertible (the "Underlying
Securities") pursuant to Rule 424 under the Securities Act. The term
"Prospectus" means the Basic Prospectus together with the Prospectus Supplement.
The term "preliminary prospectus" means a preliminary prospectus supplement
specifically relating to the Securities, together with the Basic Prospectus. As
used herein, the terms "Basic Prospectus", "Prospectus" and "preliminary
prospectus" shall include in each case the documents, if any, incorporated by
reference therein. Any registration statement filed by the Company pursuant to
Rule 462(b) under the Securities Act is called 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. All references in this Agreement to the
Registration Statement, the Rule 462(b) Registration Statement, a preliminary
prospectus, or the Prospectus, 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, the Rule 462(b) Registration Statement, a preliminary prospectus, or
the Prospectus, or any amendments or supplements to any of the foregoing (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, the Rule
462(b) Registration Statement, a preliminary prospectus, or the Prospectus, or
any amendments or supplements to any of the foregoing, as the case may be. All
references in this Agreement to amendments or supplements to the Registration
Statement, the Rule 462(b) Registration Statement, a preliminary prospectus, 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, the Rule 462(b) Registration Statement, a
preliminary prospectus, or the Prospectus, of the foregoing, as the case may be.
1. Representations and Warranties of the Company. The Company hereby
represents, warrants and covenants to each Underwriter as follows:
(a) 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 to the Commission's satisfaction 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.
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
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copy thereof delivered to the Underwriters for use in connection with the offer
and sale of the Securities. 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, 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 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 (A) 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 or (B) to that part of the Registration Statement that
constitutes the Statement of Eligibility (form T-1) under the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act") of the Trustee. There are no
contracts or other documents required to be described in the Prospectus or to be
filed as exhibits to the Registration Statement which have not been described or
filed as required.
(b) The Company has delivered to each of the Representatives a 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) 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 distribution of the Securities, any offering material in connection with the
offering and sale of the Securities other than a preliminary prospectus, the
Prospectus or the Registration Statement.
(d) 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 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 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.
(e) This Agreement has been duly authorized, executed and delivered by,
and is a valid and binding agreement of, the Company.
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(f) The Indenture, and each supplement or amendment thereto, if any,
has been duly qualified under the Trust Indenture Act and has been duly
authorized, executed and delivered by the Company and is a valid and binding
agreement of the Company, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally and general principles of equity.
(g) The Securities have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and delivered
to and paid for by the Underwriters in accordance with the terms of this
Agreement, will be entitled to the benefits of the Indenture, and will be valid
and binding obligations of the Company, enforceable in accordance with their
terms, subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity.
(h) 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.
(i) 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, or any development that could reasonably be
expected to result in a 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;
and (iii) there has been no dividend or distribution of any kind declared, paid
or made by the Company or, except for dividends paid to the Company or other
subsidiaries, any of its subsidiaries on any class of capital stock or
repurchase or redemption by the Company or any of its subsidiaries of any class
of capital stock.
(j) 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) and supporting schedules filed with the
Commission as a part of the Registration Statement and included in the
Prospectus, are independent public or certified public accountants as required
by the Securities Act and the Exchange Act.
(k) The financial statements filed with the Commission as a part of the
Registration Statement and included or incorporated by reference 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
included or incorporated by reference in the Registration Statement present
fairly the information required to be stated therein. Such financial statements
and supporting schedules have been prepared in conformity with generally
accepted accounting principles as
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applied in the United States 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 summary financial and operating
data set forth in the Prospectus under the captions "Summary Financial Data",
"Selected Financial Data" and "Capitalization" fairly present the information
set forth therein on a basis consistent with that of the audited financial
statements contained in the Registration Statement. The Company's ratios of
earnings to fixed charges set forth in the Prospectus under the caption "Ratio
of Earnings to Fixed Charges" and in Exhibit 12.1 to the Registration Statement
have been calculated in compliance with Item 503(d) of Regulation S-K under the
Securities Act.
(l) Each of the Company and its subsidiaries has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized 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
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 where the failure to so
qualify or to be in good standing would not, individually or in the aggregate,
result in a Material Adverse Change. All of the issued and outstanding capital
stock of each subsidiary of the Company has been duly authorized and validly
issued, is fully paid and nonassessable and, except to the extent the capital
stock of each of USF Insurance Company, National Insurance Underwriters, Inc.
and Universal Loss Management, Inc. is the subject of currently pending sale
transactions pursuant to the agreements listed on Schedule B (collectively, the
"Pending Transactions"), 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, 2000.
(m) 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, if any, pursuant to employee benefit plans described
in the Prospectus or upon exercise of outstanding options described in the
Prospectus). The common stock of the Company (the "Common Stock") conforms in
all material respects to the description thereof contained in the Prospectus.
All of the issued and outstanding shares of Common Stock 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
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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, set forth in
the Prospectus accurately and fairly presents the information required to be
shown with respect to such plans, arrangements, options and rights.
(n) The Underlying Securities issuable upon conversion of the
Securities have been duly and validly authorized and reserved and, when issued
upon conversion of the Securities, will be validly issued, fully paid and
non-assessable, and the issuance of the Underlying Securities will not be
subject to any preemptive or similar rights. The Common Stock (including the
Underlying Securities) is registered pursuant to Section 12(g) of the Exchange
Act , the Common Stock is listed on the New York Stock Exchange (the "NYSE"),
the Underlying Securities have been approved for listing on the NYSE subject
only to official notice of issuance thereof, and the Company has taken no action
designed to, or likely to have the effect of, terminating the registration of
the capital stock under the Exchange Act or delisting the Common Stock from the
NYSE, nor has the Company received any notification that the Commission or the
NYSE is contemplating terminating such registration or listing.
(o) 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 (including, without limitation, the Company's Revolving Credit
Facility, dated as of June 6, 2001 among the Company, as borrower, Xxxxx Fargo
Bank Texas, National Association, as administrative agent, lead arranger and
lender, First Union National Bank, as syndication agent and lender, Bank of
America, N.A., as documentation agent and lender, The Bank of New York, as
senior managing agent and lender, Citicorp UA, as lender, and Southwest Bank of
Texas, N. A., as lender), 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, individually or in the aggregate, result
in a Material Adverse Change. The Company's execution, delivery and performance
of this Agreement, the Indenture and the Securities and consummation of the
transactions contemplated hereby and by the Prospectus Supplement (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
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, except for such conflicts, breaches, Defaults, liens,
charges or encumbrances as would not, individually or in the aggregate, result
in a Material Adverse Change 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. 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 Supplement,
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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.
(p) There are no legal or governmental actions, suits or proceedings
pending or, to the best of 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 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 best of the Company's knowledge, is
threatened or imminent.
(q) The Company and its subsidiaries own or possess sufficient
trademarks, trade names, patent rights, copyrights, 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 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 result in a Material Adverse Change.
(r) Each of the Company and each of its subsidiaries owns or leases all
such properties as are necessary to the conduct of its operations as presently
conducted. The Company (except to the extent the capital stock of each of USF
Insurance Company, National Insurance Underwriters, Inc. and Universal Loss
Management, Inc. is the subject of the Pending Transactions) and each of its
subsidiaries has good and marketable title to all the properties and assets
reflected as owned in the financial statements referred to in Section 1(k) above
(or elsewhere in the Prospectus), 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. The real property, improvements,
equipment and personal property held under lease by the Company or any
subsidiary are held under valid and enforceable leases, with such exceptions as
are not material and do not materially interfere with the use made or proposed
to be made of such real property, improvements, equipment or personal property
by the Company or such subsidiary.
(s) The Company and its subsidiaries have filed all necessary federal,
state and foreign income and franchise tax returns (or have properly requested
extensions thereof) and have paid all taxes required to be paid by any of them
other than taxes that are being contested by the Company in good faith and, if
due and payable, any related or similar assessment, fine or penalty levied
against any of them. The Company has made adequate charges, accruals and
reserves in
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the applicable financial statements referred to in Section 1(k) 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.
(t) The Company has been advised of the rules and requirements under
the Investment Company Act of 1940, as amended (the "Investment Company Act").
The Company is not, and after receipt of payment for the Securities will not be,
an "investment company" within the meaning of Investment Company Act and will
conduct its business in a manner so that it will not become subject to the
Investment Company Act.
(u) Each of the Company and its subsidiaries are insured by recognized,
financially sound and reputable institutions with policies in such amounts and
with such deductibles and covering such risks as are generally deemed adequate
and customary for their businesses including, but not limited to, policies
covering real and personal property owned or leased by the Company and its
subsidiaries against theft, damage, destruction, acts of vandalism and
earthquakes. The Company has no reason to believe that it or any subsidiary will
not be able (i) to renew its existing insurance coverage as and when such
policies expire or (ii) to obtain comparable coverage from similar institutions
as may be necessary or appropriate to conduct its business as now conducted and
at a cost that would not result in a Material Adverse Change. Neither of the
Company nor any subsidiary has been denied any insurance coverage which it has
sought or for which it has applied.
(v) 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 the Common Stock or
any other security of the Company to facilitate the sale or resale of the
Securities.
(w) 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 as required.
(x) Neither the Company nor any of its subsidiaries nor, to the best of
the Company's knowledge, any employee or agent of the Company or any subsidiary,
has made any contribution or other payment to any official of, or candidate for,
any federal, state or foreign office in violation of any law or of the character
required to be disclosed in the Prospectus.
(y) 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 as applied in the
United States 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.
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(z) The Company is not required to be licensed as an insurance company
in any state. Houston Casualty Company ("HCC"), U.S. Specialty Insurance Company
("USSIC"), HCC Life Insurance Company ("HCCLIC"), Avemco Insurance Company
("AIC"), National Insurance Underwriters, USF Insurance Company, HCC Reinsurance
Company Ltd. and Centris Insurance Company (collectively, the "Insurance
Subsidiaries") are the only subsidiaries of the Company which are insurance
companies. Each of HCC and USSIC is duly licensed as an insurer under the
insurance laws and regulations of Texas. Each of HCCLIC and AIC is duly licensed
as an insurer under the insurance laws and regulations of Indiana and Maryland,
respectively. HCC operates a branch office in London, England which is subject
to regulation by regulatory authorities in the United Kingdom. Since January 1,
1996, the Company and each of its Insurance Subsidiaries have filed all material
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file with any state or
foreign insurance commission, agency or authority. As of their respective dates,
such reports, registrations and statements complied in all material respects
with all of the laws, statutes, rules and regulations of each such jurisdiction,
including, without limitation, those rules and regulations promulgated by the
applicable insurance commission, agency or authority in any such state.
(aa) No loss experience has occurred since December 31, 1999 which
would require or make it necessary or appropriate for the Company to change,
alter, modify or amend the Company's methodology or assumptions relating to
losses.
(bb) The Company has delivered to the Underwriters (i) for the years
1996 through 2000, copies of the statutory Annual Statements and (ii) for the
period June 1, 1996 through June 30, 2001, copies of the statutory Quarterly
Statements (collectively, the "Statutory Statements") of each of HCC and USSIC
filed with the Texas Department of Insurance, and of HCCLIC and AIC filed with
the Indiana Department of Insurance and the Maryland Insurance Administration,
respectively. The statutory financial statements contained in each Statutory
Statement fairly present the statutory financial condition of each of the
respective corporations at the date of each such statement, and the statutory
results of operations and other data contained therein for each of the periods
then ended, have been prepared in accordance with the prescribed or permitted
statutory insurance accounting requirements and practices, and in accordance
with accounting practices prescribed or permitted by the National Association of
Insurance Commissioners, and have been applied on a consistent basis except as
expressly set forth or disclosed in the notes, exhibits or schedules thereto.
The exhibits and schedules included in each Statutory Statement fairly present
the data purported to be shown thereby.
(cc) Except as set forth in the Prospectus, all reinsurance treaties,
contracts, agreements and arrangements to which the Company or any of the
Insurance Subsidiaries is a party and as to which any of them reported
recoverables, premiums due or other amounts in its most recent Statutory
Statement are in full force and effect and none of the Company or any of its
Insurance Subsidiaries is in violation of, or in default in the performance,
observance or fulfillment of, any
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material obligation, agreement, covenant or condition contained therein, which
violation or default would, singly or in the aggregate, result in a Material
Adverse Change.
(dd) Each of the Insurance Subsidiaries holds all licenses,
certificates and permits from insurance departments and other governmental
authorities ("Insurance Licenses") necessary to conduct its business as
presently conducted, except where the failure to hold any such Insurance
Licenses would not result in a Material Adverse Change. Each of the Insurance
Subsidiaries has fulfilled and performed all material obligations necessary to
maintain its Insurance Licenses, and no event or events have occurred which
would result in the impairment, modification, termination or revocation of such
Insurance Licenses, except where such impairment, modification, termination or
revocation would not result in a Material Adverse Change. The Company and each
subsidiary other than the Insurance Subsidiaries 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, and neither the Company nor any such 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, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, could result in a Material Adverse Change.
(ee) Neither A.M. Best Company, Inc. nor Standard & Poor's Corporation
has taken any action to, or to the Company's knowledge, threatened to: (i)
downgrade the ratings of any of the Insurance Subsidiaries or (ii) publicly
announce or otherwise indicate to the Company that its ratings of the Insurance
Subsidiaries are under review.
(ff) The Company and its subsidiaries and any "employee benefit plan"
(as defined under the Employee Retirement Income Security Act of 1974, as
amended, and the regulations and published interpretations thereunder
(collectively, "ERISA")) established or maintained by the Company, its
subsidiaries or their "ERISA Affiliates" (as defined below) are in compliance in
all material respects with ERISA. "ERISA Affiliate" means, with respect to the
Company or a subsidiary, any member of any group of organizations described in
Sections 414(b),(c),(m) or (o) of the Internal Revenue Code of 1986, as amended,
and the regulations and published interpretations thereunder (the "Code") of
which the Company or such subsidiary is a member. No "reportable event" (as
defined under ERISA) has occurred or is reasonably expected to occur with
respect to any "employee benefit plan" established or maintained by the Company,
its subsidiaries or any of their ERISA Affiliates. No "employee benefit plan"
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates, if such "employee benefit plan" were terminated, would have any
"amount of unfunded benefit liabilities" (as defined under ERISA). Neither the
Company, its subsidiaries nor any of their ERISA Affiliates has incurred or
reasonably expects to incur any liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "employee benefit plan" or
(ii) Sections 412, 4971, 4975 or 4980B of the Code. Each "employee benefit plan"
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates that is intended to be qualified under
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Section 401(a) of the Code is so qualified and nothing has occurred, whether by
action or failure to act, which would cause the loss of such qualification.
(gg) The Company has complied with all provisions of Section 517.075
Florida Statutes (Chapter 92-198, Laws of Florida) relating to doing business
with the Government of Cuba or with any person or affiliate located in Cuba.
Any certificate signed by an officer 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
set forth therein.
2. Purchase, Sale and Delivery of the Securities.
(a) The Company agrees to sell to the several Underwriters the Firm
Securities upon the terms herein set forth. 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 Company the respective number of Firm Securities
set forth opposite their names on Schedule A at 97.855% of their principal
amount plus accrued interest, if any, from August 23, 2001 to the date of
payment and delivery.
(b) Delivery of the Firm Securities to be purchased by the Underwriters
and payment therefor shall be made at the offices of Banc of America Securities
LLC ("BAS"), 0 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000 (or such other place as may
be agreed to by the Company and the Representatives) at 9:00 a.m. New York time,
on August 23, 2001, or such other time and date not later than 10:30 a.m. New
York time, on September 6, 2001, as the Representatives shall designate by
notice to the Company (the time and date of such closing are called the "First
Closing Date"). The Company hereby acknowledges 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 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) 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, the Company hereby grants an option to the several
Underwriters to purchase, severally and not jointly, up to an aggregate of
$22,500,000 in principal amount of Optional Securities from the Company at
97.855% of their principal amount plus accrued interest, if any, from August 23,
2001 to the date of payment and delivery. 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 Securities. The option granted
hereunder may be exercised at any time (but not more than once) upon notice by
BAS 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 principal
amount of Optional Securities as to which the Underwriters are exercising the
option, (ii) the names and denominations in which the Optional Securities are to
be registered and (iii) the time, date and
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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 the Firm Securities and the Optional Securities). Such time and date of
delivery, if subsequent to the First Closing Date, is called the "Second Closing
Date" and shall be determined by BAS and shall not be earlier than three nor
later than five full business days after delivery of such notice of exercise. If
any Optional Securities are to be purchased, each Underwriter agrees, severally
and not jointly, to purchase the number of Optional Securities that bears the
same proportion to the total number of Optional Securities to be purchased as
the number of Firm Securities set forth on Schedule A opposite the name of such
Underwriter bears to the total number of Firm Securities. BAS may cancel the
option at any time prior to its expiration by giving written notice of such
cancellation to the Company.
(d) The Representatives hereby advise the Company that the Underwriters
intend to offer for sale to the public, as described in the Prospectus, their
respective portions of the Securities as soon after this Agreement has been
executed and the Registration Statement has been declared effective as the
Representatives, in their sole judgment, have determined is advisable and
practicable.
(e) Payment for the Securities 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 Company.
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 Securities and any Optional Securities the Underwriters have agreed to
purchase. BAS or Xxxxxxx Xxxxx Xxxxxx Inc., individually and not as the
Representatives of the Underwriters, may (but shall not be obligated to) make
payment for any Securities 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.
(f) The Company shall deliver, or cause to be delivered, to the
Representatives for the accounts of the several Underwriters the Firm Securities
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
Company shall also deliver, or cause to be delivered to the Representatives for
the accounts of the several Underwriters, certificates for the Optional
Securities the Underwriters have agreed to purchase 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 Securities shall be 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), with any transfer taxes payable in connection with the
transfer of the Securities to the Underwriters duly paid, and shall be made
available for inspection on the business day
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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) Not later than 12:00 p.m. on the second business day following the
date the Securities 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.
3. Additional Covenants of the Company. The Company further covenants
and agrees with each Underwriter as follows:
(a) 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 furnish to the Representatives for review a copy of each such
proposed amendment or supplement, and the Company shall not file any such
proposed amendment or supplement to which the Representatives reasonably object.
(b) After the date of this Agreement, the Company shall promptly advise
the Representatives 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 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
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) 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
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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) hereof), file with the Commission and furnish at its
own expense to the Underwriters and to dealers, 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) 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 (including any documents incorporated or
deemed incorporated by reference therein) as the Representatives may request.
(e) The Company shall cooperate with the Representatives and counsel
for the Underwriters to qualify or register the Securities for sale under (or
obtain exemptions from the application of) the state securities or blue sky laws
or Canadian provincial Securities laws of those jurisdictions designated by the
Representatives, shall comply with such laws and shall continue such
qualifications, registrations and exemptions in effect so long as required for
the distribution of the Securities. The Company shall not be required to qualify
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 Securities for
offering, sale or trading in any jurisdiction or any initiation or threat of any
proceeding for any such purpose, and in the event of the issuance of any order
suspending such qualification, registration or exemption, the Company shall use
its best efforts to obtain the withdrawal thereof at the earliest possible
moment.
(f) The Company shall apply the net proceeds from the sale of the
Securities sold by it in the manner described under the caption "Use of
Proceeds" in the Prospectus.
(g) 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 September 30, 2002
that satisfies the provisions of Section 11(a) of the Securities Act.
(h) During the Prospectus Delivery Period the Company shall file, on a
timely basis, with the Commission and the NYSE all reports and documents
required to be filed under the Exchange Act. Additionally, the Company shall
report the use of proceeds from the issuance of the Securities as may be
required under Rule 463 under the Securities Act.
(i) During the period of 45 days following the date of the Prospectus
Supplement, the Company will not, without the prior written consent of BAS
(which consent may be withheld at
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the sole discretion 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
Securities); provided, however, that the Company may (i) issue and sell shares
of Common Stock pursuant to any employee stock option plan, stock ownership plan
or dividend reinvestment plan of the Company in effect on the date hereof, (ii)
issue shares of Common Stock issuable upon the conversion of securities or the
exercise of warrants or options outstanding on the date hereof, and (iii) grant
options to purchase shares of the Company's common stock pursuant to the
Company's stock option plans existing on the date hereof and described in the
Prospectus.
(l) During the period of five years hereafter the Company will furnish
to the Representatives (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, the
NASD or any securities exchange; and (iii) as soon as available, copies of any
report or communication of the Company mailed generally to holders of its
capital stock.
(m) 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.
(n) The Company will use its best efforts to maintain the listing of
the shares of Common Stock issuable upon conversion of the Securities, on the
NYSE.
(o) The Company will reserve and keep available at all times, free of
preemptive or other similar rights, shares of Common Stock for the purpose of
enabling the Company to satisfy any obligation to issue such shares upon
conversion of the Securities.
4. Payment of Expenses. The Company agrees to pay all costs, fees and
expenses incurred in connection with the performance of its obligations
hereunder and in connection with the transactions contemplated hereby, including
without limitation (i) all expenses incident to the preparation, issuance,
execution and delivery of the Securities (including all printing and engraving
costs), (ii) all fees and expenses of the registrar and transfer agent of the
Securities and any depositary, (iii) all necessary issue, transfer and other
stamp taxes in connection with the issuance and sale of the Securities to the
Underwriters, (iv) all fees and expenses of the Company's counsel, independent
public or certified public accountants and other advisors, (v) all
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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, 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 Securities for offer and sale under the
state securities or blue sky laws or the provincial securities laws of Canada,
and, if requested by the Underwriters, preparing and printing a "Blue Sky
Survey" or memorandum, and any supplements thereto, advising the Underwriters of
such qualifications, registrations and exemptions, (vii) any filing fees
incident to, and any reasonable fees and expenses of counsel for the
Underwriters in connection with, the review and approval by the National
Association of Securities Dealers, Inc. (the "NASD") of the Underwriters'
participation in the offering and distribution of the Securities, (viii) all
costs and expenses incurred by dealers and brokers (including the
Representatives), commercial banks, trust companies and nominees for their
customary mailing and handling expenses incurred in forwarding the Registration
Statement and the Prospectus to their customers, (ix) any fees charged by the
rating agencies for the rating of the Securities, (x) all costs and expenses
incident to listing the Underlying Securities on the NYSE, (xi) the fees and
expenses of the trustees under the Indenture, and the fees, disbursements and
other charges of counsel for such trustees in connection with the Indenture,
(xii) any expenses incurred by the Company in connection with a "road show"
presentation to potential investors, (xiii) all document production charges and
expenses of counsel to the Underwriters incurred in connection with the
preparation of the Indenture, and (xiv) all other fees, costs and expenses
referred to in Item 14 in 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.
5. Conditions of the Obligations of the Underwriters. The obligations
of the several Underwriters to purchase and pay for the Securities as provided
herein on the First Closing Date and, with respect to the Optional Securities,
the Second Closing Date, shall be subject to the accuracy of the representations
and warranties on the part of the Company set forth in Section 1 hereof as of
the date hereof and as of the First Closing Date as though then made and, with
respect to the Optional Securities, as of the Second Closing Date as though then
made, to the timely performance by the Company of its covenants and other
obligations hereunder, and to each of the following additional conditions:
(a) On the date hereof, the Representatives shall have received from
PricewaterhouseCoopers LLP, independent public or certified public accountants
for the Company, a letter dated the date hereof addressed to the Underwriters,
in form and substance 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
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and the Prospectus (and the Representatives shall have received an additional
conformed copy of such accountants' letter for each of the several
Underwriters).
(b) For the period from and after effectiveness of this Agreement and
prior to the First Closing Date and, with respect to the Optional Securities,
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;
(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) For the period from and after the date of this Agreement and prior
to the First Closing Date and, with respect to the Optional Securities, the
Second Closing Date:
(i) in the judgment of the Representatives, there shall not
have occurred any Material Adverse Change; and
(ii) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading or
of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any securities
of the Company or any of its subsidiaries by any "nationally recognized
statistical rating organization" as such term is defined for purposes
of Rule 436(g)(2) under the Securities Act.
(d) On each of the First Closing Date and the Second Closing Date the
Representatives shall have received the favorable opinion of Xxxxxx and Xxxxx,
LLP, counsel for the Company, dated as of such Closing Date, the form of which
is attached as Exhibit A (and the Representatives shall have received an
additional conformed copy of such counsel's legal opinion for each of the
several Underwriters).
(e) On the First Closing Date, the Representatives shall have received
an opinion of Xxxxx Xxxx & Xxxxxxxx, counsel to the Underwriters, dated as of
such Closing Date, with respect to the validity of the Indenture, the Firm
Securities, the Underlying Securities, the Registration Statement, the
Prospectus and other related matters as the Representatives may reasonably
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request, and such counsel shall have received such papers and information as
they may reasonably request to enable them to pass upon such matters (and the
Representatives shall have received an additional conformed copy of such
counsel's legal opinion for each of the several Underwriters).
(f) On each of the First Closing Date and the Second Closing Date, the
Representatives shall have received the favorable opinion of the General Counsel
of the Company, dated as of such Closing date, the form of which is attached as
Exhibit B (and the Representatives shall have received an additional conformed
copy of such counsel's legal opinion for each of the several Underwriters).
(g) On 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 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.
(h) On the First Closing Date and the Second Closing Date, the
Representatives shall have received from PricewaterhouseCoopers, LLP,
independent public or certified 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
conformed copy of such accountants' letter for each of the several
Underwriters).
(i) On the date hereof, the Company shall have furnished to the
Representatives an agreement in the form of Exhibit C hereto from each of its
directors and executive officers and such agreements shall be in full force and
effect on each of the First Closing Date and the Second Closing Date.
(j) 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,
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documents and opinions as they may reasonably require for the purposes of
enabling them to pass upon the issuance and sale of the Securities 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 at any time on or prior to the First
Closing Date and, with respect to the Optional Securities, 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.
6. Reimbursement of Underwriters' Expenses. If this Agreement is
terminated by the Representatives pursuant to Section 5, Section 7, Section 10
or Section 11, or if the sale to the Underwriters of the Firm Securities on the
First Closing Date is not consummated because of any refusal, inability or
failure on the part of the Company to perform any agreement herein or to comply
with any provision hereof, the Company agrees 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 the Securities, including but not limited to fees
and disbursements of counsel, printing expenses, travel expenses, postage,
facsimile and telephone charges.
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 to any Underwriter,
except that the Company shall be obligated to reimburse the expenses of the
Representatives and the other Underwriters pursuant to Sections 4 and 6 hereof,
(b) of any Underwriter to the Company, 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.
8. Indemnification.
(a) 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,
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under the Securities Act, the Exchange Act or other federal or state statutory
law or regulation, 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 part of the Registration Statement pursuant to Rule 430A of 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; or (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 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; or (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) upon 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 Securities 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 such
Underwriter's 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 and Xxxxxxx Xxxxx Xxxxxx Inc.) 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 by the Representatives expressly
for use in the Registration Statement, any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto). The indemnity agreement set
forth in this Section 8(a) shall be in addition to any liabilities that the
Company my otherwise have.
(b) Each Underwriter agrees to indemnify and hold harmless the Company,
each of its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company 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 or controlling person may become subject, under the Securities Act, the
Exchange Act, or other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of such Underwriter), insofar as
such loss, claim, damage, liability or expense (or actions
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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 or the Prospectus (or any amendment or
supplement thereto), in reliance upon and in conformity with written information
furnished to the Company by the Underwriters expressly for use therein; and to
reimburse the Company or any such director, officer or controlling person for
any legal and other expense reasonably incurred by the Company or any such
director, officer 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(b) shall be in addition to any liabilities that each Underwriter may otherwise
have.
(c) 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 and Xxxxxxx Xxxxx Barney Inc.
in the case
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of Section 8(b) and Section 9), 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 fees and expenses of counsel shall be at the expense of the
indemnifying party.
(d) 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(c) 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. 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 have been a party and indemnity was
or could 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.
9. Contribution.
(a) 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, on the one hand, and the Underwriters, on the
other hand, from the offering of the Securities 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, 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, on the one hand,
and the Underwriters, on the other hand, in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total
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underwriting discount received by the Underwriters, in each case as set forth in
the table on the cover of the Prospectus, bear to the aggregate public offering
price of the Securities as set forth on such cover. The relative fault of the
Company, 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, 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.
(b) 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(c), 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(c) 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(c) for purposes of indemnification.
(c) The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 9 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 9.
(d) Notwithstanding the provisions of this Section 9, no Underwriter
shall be required to contribute any amount in excess of the underwriting
commissions received by such Underwriter in connection with the Securities
underwritten by it and distributed to the public. 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.
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 Securities
that it or they have agreed to purchase hereunder on such date, and the
aggregate principal amount of Securities which such defaulting Underwriter or
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Underwriters agreed but failed or refused to purchase does not exceed 10% of the
aggregate principal amount of the Securities to be purchased on such date, the
other Underwriters shall be obligated, severally, in the proportions that the
number of Firm Securities set forth opposite their respective names on Schedule
A bears to the aggregate number of Firm Securities set forth opposite the names
of all such non-defaulting Underwriters, or in such other proportions as may be
specified by the Representatives with the consent of the non-defaulting
Underwriters, to purchase the Securities 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 Securities and the
aggregate principal amount of Securities with respect to which such default
occurs exceeds 10% of the aggregate number of Securities to be purchased on such
date, and arrangements satisfactory to the Representatives and the Company for
the purchase of such Securities are not made within 48 hours after such default,
this Agreement shall terminate without liability of any party to any other party
except that the provisions of 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.
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 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, or trading in securities generally on either the Nasdaq Stock Market or
the NYSE 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; (ii) a general banking moratorium shall have been
declared by any of federal, New York, Delaware or California authorities; (iii)
there shall have occurred any outbreak or escalation of national or
international hostilities or any crisis or calamity, or any 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 Securities in the manner and on the terms described in the Prospectus or to
enforce contracts for the sale of securities; (iv) in the judgment of the
Representatives there shall have occurred any Material Adverse Change; or (v)
the Company shall have sustained a loss by strike, fire, flood, earthquake,
accident or other calamity of such character as in the judgment of 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
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pursuant to this Section 12 shall be without liability on the part of (a) the
Company to any Underwriter, except that the Company shall be obligated to
reimburse the expenses of the Representatives and the other Underwriters
pursuant to Sections 4 and 6 hereof, (b) any Underwriter to the Company, 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.
12. Representations and Indemnities to Survive Delivery. The respective
indemnities, agreements, representations, warranties and other statements of the
Company, of its officers 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, as
the case may be, and will survive delivery of and payment for the Securities
sold hereunder and any termination of this Agreement.
13. Notices. All communications hereunder shall be in writing and shall
be mailed, hand delivered or telecopied and confirmed to the parties as provided
in the Underwriting Agreement. Any party hereto may change the address for
receipt of communications by giving written notice 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: Xxxx Xxxxxxxxx
and to:
Xxxxxxx Xxxxx Barney Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: 000-000-0000
Attention: General Counsel
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: 000-000-0000
Attention: Xxxxxxxx X. Xxxxxx, Xx.
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If to the Company:
HCC Insurance Holdings, Inc.
00000 Xxxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000-0000
Facsimile: 000-000-0000
Attention: General Counsel
with a copy to:
Xxxxxx and Xxxxx, LLP
0000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxxx X. Xxxxxx
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
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 Securities as such from any of the Underwriters merely by reason of such
purchase.
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.
16. (a) 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.
(b) Any legal suit, action or proceeding arising out of or based upon
this Agreement or the transactions contemplated hereby ("Related
Proceedings") may be instituted in the federal courts of the United States
of America located in the City and County of New York or
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28
the courts of the State of New York in each case located in the City and
County of New York (collectively, the "Specified Courts"), and each party
irrevocably submits to the jurisdiction of such courts in any such suit,
action or proceeding. Service of any process, summons, notice or document by
mail to such party's address set forth above shall be effective service of
process for any suit, action or other proceeding brought in any such court.
The parties irrevocably and unconditionally waive any objection to the
laying of venue of any suit, action or other proceeding in the Specified
Courts and irrevocably and unconditionally waive and agree not to plead or
claim in any such court that any such suit, action or other proceeding
brought in any such court has been brought in an inconvenient forum.
(c) Waiver of Immunity. With respect to any Related Proceeding, each
party irrevocably waives, to the fullest extent permitted by applicable law,
all immunity (whether on the basis of sovereignty or otherwise) from
jurisdiction, service of process, attachment (both before and after
judgment) and execution to which it might otherwise be entitled in the
Specified Courts, and with respect to the enforcement of a judgment of any
such court (a "Related Judgment"), each party waives any such immunity in
the Specified Courts or any other court of competent jurisdiction, and will
not raise or claim or cause to be pleaded any such immunity at or in respect
of any such Related Proceeding or Related Judgment, including, without
limitation, any immunity pursuant to the United States Foreign Sovereign
Immunities Act of 1976, as amended.
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 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 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 preliminary
prospectus and the Prospectus (and any amendments and supplements thereto), as
required by the Securities Act and the Exchange Act.
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29
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,
HCC INSURANCE HOLDINGS, INC.
By
---------------------------------------
Name:
Title:
The foregoing Underwriting Agreement is hereby confirmed and accepted
by the Representatives in New York, New York as of the date first above written.
BANC OF AMERICA SECURITIES LLC
XXXXXXX XXXXX XXXXXX INC.
Acting as Representatives of the
several Underwriters named
in the attached Schedule A
By BANC OF AMERICA SECURITIES LLC
By:
-------------------------------
Name:
Title:
By XXXXXXX XXXXX BARNEY INC.
By:
-------------------------------
Name:
Title:
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SCHEDULE A
PRINCIPAL AMOUNT
OF SECURITIES TO
UNDERWRITER BE PURCHASED
----------- ------------------
Banc of America Securities LLC.......................... 69,900,000
Xxxxxxx Xxxxx Xxxxxx Inc................................ 69,900,000
First Union Securities, Inc............................. 10,200,000
------------
$150,000,000
============
Sch A-1
31
SCHEDULE B
1. Stock Purchase Agreement dated as of June 27, 2001 by and between AJK
Holdings, Inc. and U.S. Holdings, Inc.
2. Letter of Intent dated as of June 25, 2001 to Board of Directors, HCC
Insurance Holdings, Inc., 00000 Xxxxxxxxx Xxxxxxx, Xxxxxxx, Xxxxx 00000 from
International Credit & Mercantile, Inc., accepted and agreed to by HCC Insurance
Holdings, Inc. on June 28, 2001.
3. Letter of Intent dated as of July 24, 2001 to Xxxxx Xxxxxxxx, HCC Insurance
Holdings, Inc., 00000 Xxxxxxxxx Xxxxxxx, Xxxxxxx, Xxxxx 00000, from Xxxxxxx
Xxxxxx Consulting plc, accepted and agreed to by HCC Insurance Holdings, Inc. on
July 26, 2001.
Sch B-1
32
EXHIBIT A
Opinion of counsel for the Company to be delivered pursuant to Section
5(d) of the
Underwriting Agreement.
1. Each of the Company and its subsidiaries that are "significant
subsidiaries" as defined by Rule 1-02 of Regulation S-X (each, a "Subsidiary"
and collectively, the "Subsidiaries") (i) has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized, and (ii) has full corporate
power and authority to own or lease, as the case may be, and to operate its
properties and conduct its business as described in the Prospectus, and the
Company is duly qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction specified in the Management
Certificate attached hereto as Annex A.
2. All of the outstanding shares of capital stock of each Subsidiary
have been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Prospectus and except
to the extent the capital stock of each of USF Insurance Company, National
Insurance Underwriters, Inc. and Universal Loss Management, Inc. is the subject
of the Pending Transactions, all outstanding shares of capital stock of the
Subsidiaries are owned by the Company either directly or through wholly owned
subsidiaries free and clear of any perfected security interest and, to the
knowledge of such counsel, after due inquiry, any other security interest,
claim, lien or encumbrance.
3. The Indenture has been duly qualified under the Trust Indenture Act
and has been duly authorized, executed and delivered by the Company and is a
valid and binding agreement of the Company, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity.
4. The Securities have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and delivered
to and paid for by the Underwriters in accordance with the terms of this
Agreement, will be entitled to the benefits of the Indenture and will be valid
and binding obligations of the Company, enforceable in accordance with their
terms, subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity. The Securities
conform in all material respects to the descriptions thereof contained in the
Prospectus.
5. The Company's authorized equity capitalization is as set forth in
the Prospectus; the capital stock of the Company conforms in all material
respects to the descriptions thereof contained in the Prospectus; the
outstanding shares of Common Stock have been duly and validly authorized and
issued and are fully paid and non-assessable; the holders of outstanding shares
of capital stock of the Company are not entitled to preemptive or other rights
to subscribe for the Securities; and, except as set forth in the Prospectus, no
options, warrants or other rights to purchase, agreements or other obligations
to issue, or rights to convert any obligations into or
A-1
33
exchange any securities for, shares of capital stock of or ownership interests
in the Company are outstanding.
6. (i) The Underlying Securities into which the Securities are
convertible have been duly authorized by all necessary corporate action of the
Company and reserved for issuance upon conversion and, upon issuance thereof on
conversion of the Securities in accordance with the terms of the Securities and
the Indenture, will be validly issued, fully paid and non-assessable; and (ii)
the Underlying Securities are duly listed, and admitted and authorized for
trading, subject to official notice of issuance, on the NYSE.
7. The statements set forth (i) in the Prospectus under the headings,
"Description of Notes", "Description of Our Common Stock", "Description of
Senior Debt Securities and Subordinated Debt Securities", "Description of
Warrants", "Plan of Distribution", and "Underwriting", (ii) in Item 15 of the
Registration Statement, (iii) in "Item 3 - Legal Proceedings" of the Company's
most recent annual report on Form 10-K incorporated by reference in the
Prospectus, and (iv) in "Item 1 - Legal Proceedings" of Part II of the Company's
quarterly reports on Form 10-Q filed since such annual report, in each case
insofar as such statements constitute matters of law, summaries of legal
matters, summaries of certain provisions of the Securities and the Indenture,
the Certificate of Incorporation and By-laws of the Company, other documents or
legal proceedings, or legal conclusions, have been reviewed by such counsel and
fairly present and summarize in all material respects, the matters referred to
therein.
8. (i) The execution and delivery of the
Underwriting Agreement and the
Indenture, the performance by the Company of its obligations thereunder, the
issuance and delivery by the Company of the Securities pursuant to the Indenture
and the consummation of the offering of the Securities have been duly authorized
by all necessary corporate action of the Company, and (ii) the
Underwriting
Agreement has been duly executed and delivered by, and is a valid and binding
agreement of, the Company, enforceable in accordance with its terms, except as
rights to indemnification thereunder may be limited by applicable laws and
except as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting creditors'
rights generally or by general equitable principles.
9. No consent, approval, authorization, filing with or order of any
court of governmental agency or body is required in connection with the
performance by the Company of its obligations under the
Underwriting Agreement,
the Indenture, the Securities, and the consummation of the offering of the
Securities, except such as have been obtained under the Securities Act and such
as may be required under the blue sky laws of any jurisdiction in connection
with the purchase and distribution of the Securities by the Underwriters in the
manner contemplated in this Agreement and in the Prospectus and such other
approvals (specified in such opinion) as have been obtained.
10. The Company is not, and after giving effect to the consummation of
the offering and sale of the Securities and the application of the proceeds
thereof as described in the
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34
Prospectus, will not be, an "investment company" and the Company is not a
company "controlled" by an "investment company", as defined in the Investment
Company Act of 1940, as amended.
11. Each of the Registration Statement and the Rule 462(b) Registration
Statement, if any, has become effective under the Securities Act; any required
filing of the Basic Prospectus, any preliminary prospectus and the Prospectus,
and any supplements thereto, pursuant to Rule 424(b) has been made in the manner
and within the time period required by Rule 424(b); and, to the knowledge of
such counsel, no stop order suspending the effectiveness of the Registration
Statement has been issued, no proceedings for that purpose have been instituted
or threatened.
12. To the knowledge of such counsel, the Registration Statement and
the Prospectus (other than the financial statements and other financial
information contained therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the applicable requirements of
the Securities Act and the Exchange Act and the respective rules thereunder; and
such counsel has no reason to believe that on the date the Registration
Statement became effective or the date the Registration Statement was last
deemed amended, the Registration Statement and the prospectus included therein
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus as of its date and on the First
Closing Date or the Second Closing Date, as applicable, included or includes any
untrue statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (in each case, other than the
financial statements and other financial information contained therein and
except for that part of the Registration Statement that constitutes the
Statement of Eligibility (form T-1) under the Trust Indenture Act of the
Trustee, as to which such counsel need express no opinion).
13. Each document filed pursuant to the Exchange Act (other than the
financial statements and supporting schedules included therein, as to which no
opinion need be rendered) and incorporated or deemed to be incorporated by
reference in the Prospectus complied when so filed as to form in all material
respects with the Exchange Act; and such counsel has no reason to believe that
any of such documents, when they were so filed, contained an untrue statement of
a material fact or omitted to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made when such documents were filed, not misleading.
14. No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement.
15. To the knowledge of such counsel, there is no pending or threatened
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of its
subsidiaries or its or their property of a character required to
A-3
35
be disclosed in the Registration Statement which is not adequately disclosed in
the Prospectus, and there is no franchise, contract or other document of a
character required to be described in the Registration Statement or the
Prospectus, or to be filed as an exhibit thereto, which is not described or
filed as required; and the statements included or incorporated by reference in
the Prospectus under the headings "Certain Legal Matters", "Business - Legal
Proceedings", and "Legal Matters" insofar as such statements summarize legal
matters, agreements, documents, or proceedings discussed therein, are accurate
and fair summaries of such legal matters, agreements, documents or proceedings.
16. The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement, the Indenture and the
Securities will not conflict with, result in a breach or violation of or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or its subsidiaries pursuant to (i) the charter or by-laws of the
Company or its subsidiaries, (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which the Company or its
subsidiaries is a party or bound or to which its or their property is subject,
or (iii) any statute, law, rule, regulation, judgment, order or decree
applicable to the Company or its subsidiaries of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or its subsidiaries or any of its or their
properties.
17. In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State of
Delaware or the federal laws 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 Underwriters) 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 responsible officers of the Company and public
officials. References to the Prospectus in this Exhibit A include any
supplements thereto at the First Closing Date or the Second Closing Date, as
applicable.
A-4
36
ANNEX A
HCC INSURANCE HOLDINGS, INC.
MANAGEMENT CERTIFICATE
The undersigned, Xxxxxx X. Xxxxx, the Chief Financial Officer of HCC Insurance
Holdings, Inc., a Delaware corporation (the "Company"), in connection with the
closing of the transactions contemplated by the
Underwriting Agreement,
dated_________, 2001 (the "Agreement"), by and among the Company and Banc of
America Securities LLC and Xxxxxxx Xxxxx Barney Inc. (the "Representatives") as
representatives of several underwriters named in Schedule A thereto; capitalized
terms used but not defined herein shall have the meanings ascribed to them in
the Agreement, hereby certifies that:
1. The only states in which the Company conducts business and owns
property are the following : (i) Texas; and (ii) Delaware.
Xxxxxx and Xxxxx, LLP is expressly authorized to rely on this
Management Certificate in rendering its opinion to the Representatives pursuant
to the Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Management
Certificate of HCC Insurance Holdings, Inc. as of the 20th day of August, 2001.
By:
----------------------------------------
Xxxxxx X. Xxxxx, Chief Financial Officer
The undersigned, Xxxxx X. Xxxxxxxx, Executive Vice President of the
Company, hereby certifies that Xxxxxx X. Xxxxx is the duly elected Chief
Financial Officer of the Company and is duly authorized to sign the Agreement,
this Certificate and all other agreements, documents, instruments or
certificates to be delivered pursuant to the Agreement on behalf of the Company.
The undersigned further certifies that the signature appearing above is the true
and correct signature of Xxxxxx X. Xxxxx.
IN WITNESS WHEREOF, the undersigned has executed this certificate to
the Management Certificate of HCC Insurance Holdings, Inc. as of the 20th day of
August, 2001.
By:
----------------------------------------
Xxxxx X. Xxxxxxxx,
Executive Vice President
37
EXHIBIT B
Opinion of Xxxxxxxxxxx X. Xxxxxx, General Counsel of the
Company, to be delivered pursuant to Section 5(f) of the
Underwriting Agreement.
1. The Company and each of its subsidiaries is duly qualified
to do business as a foreign corporation and is in good standing under the laws
of all other jurisdictions in the United States where the ownership or leasing
of its respective assets or the conduct of its business as described in the
Prospectus requires such qualification, except where the failure to be so
qualified would not, individually or in the aggregate, result in a Material
Adverse Change;
2. To the knowledge of such counsel, after due inquiry, none
of the Company or any of its subsidiaries is, except as disclosed in the
Prospectus, in Default in the performance or observance of any Existing
Instrument, or in violation of any law, statute, judgment, decree, order, rule
or regulation of any domestic or foreign court with jurisdiction over the
Company or any of its subsidiaries or any of their respective assets, or other
governmental or regulatory authority, agency or other body, other than such
defaults or violations which, individually or in the aggregate, would not result
in a Material Adverse Change; and
3. Such counsel has no reason to believe that on the date the
Registration Statement became effective or the date the Registration Statement
was last deemed amended, the Registration Statement contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not misleading or
that the Prospectus as of its date and on the First Closing Date or the Second
Closing Date, as applicable, included or includes any untrue statement of a
material fact or omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (in each case, other than the financial statements and
other financial information contained therein and except for that part of the
Registration Statement that constitutes the Statement of Eligibility (form T-1)
under the Trust Indenture Act, of the Trustee, as to which such counsel need
express no opinion).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State of
Delaware or the federal laws 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 Underwriters) 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 responsible officers of the Company and public
officials. References to the Prospectus in this Exhibit B include any
supplements thereto as the First Closing Date or the Second Closing Date, as
applicable.
B-1
00
XXXXXXX X
Xxxx xx Xxxxxxx Securities LLC
Xxxxxxx Xxxxx Xxxxxx Inc.
as Representatives of the several Underwriters
c/o Banc of America Securities LLC
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
And
Xxxxxxx Xxxxx Barney Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
RE: HCC Insurance Holdings, Inc. (the "Company")
Ladies & Gentlemen:
The undersigned understands that the Company proposes to make a public
offering (the "Offering") of $150,000,000 aggregate principal amount of 2.00%
Convertible Notes due 2021 (the "Offered Securities") for which you will act as
the Underwriters. The undersigned recognizes that the Offering will be of
benefit to the undersigned and will benefit the Company. The undersigned
acknowledges that you are relying on the representations and agreements of the
undersigned contained in this letter in carrying out the Offering and in
entering into the proposed underwriting agreement (the "Underwriting Agreement")
with the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that
the undersigned will not, without the prior written consent of Banc of America
Securities LLC ("BAS") (which consent may be withheld in its sole discretion),
(i) 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 Offered
Securities, any equity securities of the Company, any options or warrants to
acquire any such securities, or securities exchangeable or exercisable for or
convertible into such securities, or (ii) enter into any swap or other agreement
that transfers, in whole or in part, any of the economic consequences of
ownership of any equity securities of the Company (whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of equity
securities of the Company, other securities, cash or otherwise) 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 publicly
announce the undersigned's intention to do any of the foregoing, for a
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39
period commencing on the date hereof and continuing through the close of trading
on the date 45 days after the date of the Underwriting Agreement, other than the
disposition to the Company of any shares of common stock of the Company utilized
in connection with the exercise of outstanding stock options. The 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 the
Company's common stock or securities convertible into or exchangeable or
exercisable for the Company's common stock held by the undersigned except in
compliance with the foregoing restrictions.
With respect to the Offering only, the undersigned waives any
registration rights relating to registration under the Securities Act of any the
Company's 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.
--------------------------------------------
Printed Name of Holder
By:
-----------------------------------------
Signature
--------------------------------------------
Printed Name of Person Signing
(and indicate capacity of person signing if
signing as custodian, trustee, or on behalf
of an entity)
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