Exhibit 1.1
2,882,643 SHARES
CRM HOLDINGS, LTD.
COMMON STOCK
PURCHASE AGREEMENT
[_________], 2007
XXXXXXX XXXXXXX XXXXXX SECURITIES LLC
Xxx Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
The shareholders of CRM Holdings, Ltd., a Bermuda exempted holding company
(the "Company") listed on Schedule I hereto (each, a "Selling Shareholder" and,
collectively, the "Selling Shareholders") propose, subject to the terms and
conditions contained herein, to sell to Xxxxxxx Xxxxxxx Xxxxxx Securities LLC
(the "Underwriter") an aggregate of 2,882,643 shares (the "Shares") of common
stock, par value $0.01 per share (the "Common Stock") of the Company in the
respective amounts set forth on Schedule I hereto.
The Company and each Selling Shareholder hereby confirm their agreement
with respect to the sale of the Shares to the Underwriter. Unless otherwise
specified herein, or unless the context otherwise requires, references to a
"subsidiary of the Company" or "subsidiaries of the Company" shall be deemed to
include all of the direct and indirect subsidiaries of the Company.
1. REGISTRATION STATEMENT AND PROSPECTUS. A registration statement on Form
S-1 (File No. 333-139741) with respect to the Shares, including a preliminary
form of prospectus, has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and the rules and regulations ("Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder and has been filed with the
Commission; one or more amendments to such registration statement have also been
so prepared and have been, or will be, so filed; and, if the Company has elected
to rely upon Rule 462(b) of the Rules and Regulations to increase the size of
the offering registered under the Securities Act, the Company will prepare and
file with the Commission a registration statement with respect to such increase
pursuant to Rule 462(b). Copies of such registration statement(s) and amendments
and each related preliminary prospectus have been delivered to the Underwriter.
Promptly after execution of this Agreement, the Company will prepare and
file a prospectus pursuant to Rule 424(b) that discloses the information
previously omitted from the prospectus in reliance upon Rule 430A of the Rules
and Regulations. Each part of such registration statement as amended at the time
it is or was declared effective by the Commission, and, in the event of any
amendment thereto after the effective date, each part of such registration
statement as so amended (but only from and after the effectiveness of such
amendment), including a registration statement (if any) filed pursuant to Rule
462(b) of the Rules and Regulations increasing the size of the offering
registered under the Securities Act, and information (if any) deemed to be part
of the registration statement at the time of effectiveness pursuant to Rules
430A(b) of the Rules and Regulations, is hereinafter called the "Registration
Statement." The prospectus included in the Registration Statement at the time it
is or was declared effective by the Commission is hereinafter called the
"Prospectus," except that if any prospectus filed by the Company with the
Commission pursuant to Rule 424(b) of the Rules and Regulations or any other
such prospectus provided to the Underwriter by the Company for use in connection
with the offering of the Shares (whether or not required to be filed by the
Company with the Commission pursuant to Rule 424(b) of the Rules and
Regulations, but not including a "free writing prospectus" as defined in Rule
405 of the Rules and Regulations) differs from the prospectus on file at the
time the Registration Statement is or was declared effective by the Commission,
the term "Prospectus" shall refer to such differing prospectus from and after
the time such prospectus is filed with the Commission or transmitted to the
Commission for filing pursuant to such Rule 424(b) or from and after the time of
its first use within the meaning of the Rules and Regulations. The term
"Preliminary Prospectus" as used herein means any preliminary prospectus
included in the Registration Statement prior to the time it becomes or became
effective under the Securities Act and any prospectus subject to completion as
described in Rule 430A of the Rules and Regulations. All references in this
Agreement to the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement to any of the foregoing, shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval System ("XXXXX").
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
SHAREHOLDERS.
(a) The Company represents and warrants to, and agrees
with, the Underwriter as follows:
(i) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission and each
Preliminary Prospectus, at the time of filing or the time of first use
within the meaning of the Rules and Regulations, complied in all material
respects with the requirements of the Securities Act and the Rules and
Regulations and did not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; except that the foregoing shall not
apply to statements in or omissions from any Preliminary Prospectus in
reliance upon, and in conformity with, written information furnished to
the Company by the Underwriter, specifically for use in the preparation
thereof.
(ii) As of the time any part of the Registration Statement (or
any post effective amendment thereto, including a registration statement
(if any) filed pursuant to
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Rule 462(b) of the Rules and Regulations increasing the size of the
offering registered under the Securities Act) became effective, upon the
filing or first use within the meaning of the Rules and Regulations of the
Prospectus (or any supplement to the Prospectus) and at the Closing Date
and (as hereinafter defined), (A) the Registration Statement and the
Prospectus (in each case, as so amended and/or supplemented) complied and
will comply in all material respects to the requirements of the Securities
Act and the Rules and Regulations, (B) the Registration Statement (as so
amended) did not and will not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and (C) the
Prospectus (as so supplemented) did not and will not include an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances in which they are or were made, not misleading; except
that the foregoing shall not apply to statements in or omissions from any
such document in reliance upon, and in conformity with, written
information furnished to the Company by the Underwriter, specifically for
use in the preparation thereof. If the Registration Statement has been
declared effective by the Commission, no stop order suspending the
effectiveness of the Registration Statement has been issued, and no
proceeding for that purpose has been initiated or, to the Company's
knowledge, threatened by the Commission.
(iii) Neither (A) the Issuer General Free Writing
Prospectus(es) issued at or prior to the Time of Sale and the Statutory
Prospectus, all considered together (collectively, the "Time of Sale
Disclosure Package"), nor (B) any individual Issuer Limited-Use Free
Writing Prospectus issued at or prior to the Time of Sale, when considered
together with the Time of Sale Disclosure Package, includes or included as
of the Time of Sale any untrue statement of a material fact or omits or
omitted as of the Time of Sale to state any material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The preceding sentence does
not apply to statements in or omissions from any Statutory Prospectus
included in the Registration Statement or any Issuer Free Writing
Prospectus based upon and in conformity with written information furnished
to the Company by the Underwriter, specifically for use therein. As used
in this paragraph and elsewhere in this Agreement:
(1) "Time of Sale" means [7:30] pm (Eastern time) on the
date of this Agreement.
(2) "Statutory Prospectus" means the Preliminary
Prospectus that is included in the Registration
Statement immediately prior to the Time of Sale. For
purposes of this definition, information contained in a
form of prospectus that is deemed retroactively to be a
part of the Registration Statement pursuant to Rule 430A
under the Securities Act shall be considered to be
included in the Statutory Prospectus as of the actual
time that form of prospectus is filed with the
Commission pursuant to Rule 424(b) under the Securities
Act.
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(3) "Issuer Free Writing Prospectus" means any "issuer
free writing prospectus," as defined in Rule 433 under
the Securities Act, relating to the Shares that (A) is
required to be filed with the Commission by the Company,
or (B) is exempt from filing pursuant to Rule
433(d)(5)(i) under the Securities Act or pursuant to
Rule 433(d)(8)(i) under the Securities Act, in each case
in the form filed or required to be filed with the
Commission or, if not required to be filed, in the form
retained in the Company's records pursuant to Rule
433(g) under the Securities Act.
(4) "Issuer General Free Writing Prospectus" means any
Issuer Free Writing Prospectus that is intended for
general distribution to prospective investors, as
evidenced by its being specified in Schedule II to this
Agreement.
(5) "Issuer Limited-Use Free Writing Prospectus" means
any Issuer Free Writing Prospectus that is not an Issuer
General Free Writing Prospectus. The term Issuer
Limited-Use Free Writing Prospectus also includes any
"road show," as defined in Rule 433 of the Rules and
Regulations that is not required to be filed with the
Commission pursuant to Rule 433(d)(8)(i).
(iv) (A) Each Issuer Free Writing Prospectus, as of its issue
date and at all subsequent times through the completion of the public
offer and sale of the Shares or until any earlier date that the Company
notified or notifies the Underwriter as described in Section 4(a)(iii)(B),
did not, does not and will not include any information that conflicted,
conflicts or will conflict with the information contained in the
Registration Statement, any Statutory Prospectus or the Prospectus. The
foregoing sentence does not apply to statements in or omissions from any
Issuer Free Writing Prospectus based upon and in conformity with written
information furnished to the Company by the Underwriter, specifically for
use therein.
(B) The Company (1) was not at the earliest time after
the filing of the Registration Statement that the Company or
another offering participant made a bona fide offer (within
the meaning of Rule 164(h)(2) under the Shares Act) of the
Shares and (2) at the date hereof, is not an "ineligible
issuer," as defined in Rule 405 under the Securities Act,
including the Company or any subsidiary in the preceding three
years not having been convicted of a felony or misdemeanor or
having been made the subject of a judicial or administrative
decree or order as described in Rule 405 (without taking
account of any determination by the Commission pursuant to
Rule 405 that it is not necessary that the Company be
considered an ineligible issuer), nor an "excluded issuer" as
defined in Rule 164 under the Securities Act.
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(C) Each Issuer Free Writing Prospectus satisfied, as of
its issue date and at all subsequent times through the
completion of the public offer and sale of the Shares, all
other conditions to use thereof as set forth in Rules 164 and
433 under the Securities Act.
(v) The financial statements of the Company, together with the
related schedules and notes, and the financial statements of Embarcadero
Insurance Holdings, Inc. and the related schedules and notes, each as set
forth in the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus comply in all material respects with the requirements
of the Securities Act and the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and fairly present the financial condition of the
Company and Embarcadero Insurance Holdings, Inc., respectively, as of the
dates indicated and the results of operations and changes in cash flows
for the periods therein specified in conformity with generally accepted
accounting principles consistently applied throughout the periods
involved; and the supporting schedules included in the Registration
Statement, present fairly the information required to be stated therein.
No other financial statements, schedules or financial information are
required to be included in the Registration Statement, the Time of Sale
Disclosure Package or the Prospectus. To the Company's knowledge, Xxxxxxx
Xxxxxxx & Co., which has expressed its opinion with respect to certain of
the financial statements and schedules filed as a part of the Registration
Statement and included in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus, is (A) an independent public
accounting firm within the meaning of the Securities Act and the Rules and
Regulations and in accordance with the requirements of applicable
insurance laws and regulations and the published standards of the National
Association of Insurance Commissioners, (B) a registered public accounting
firm (as defined in Section 2(a)(12) of the Xxxxxxxx-Xxxxx Act of 2002
(the "Xxxxxxxx-Xxxxx Act")) and (C) not in violation of the auditor
independence requirements of the Xxxxxxxx-Xxxxx Act. To the Company's
knowledge, Deloitte & Touche LLP, which has expressed its opinion with
respect to the financial statements and schedules of Embarcadero Insurance
Holdings, Inc. filed as a part of the Registration Statement and included
in the Registration Statement, the Time of Sale Disclosure Package and the
Prospectus, is an independent public accounting firm with respect to the
Company under Rule 101 of the American Institute of Certified Public
Accountants' Code of Professional Conduct. The pro forma information
included in the Registration Statement, the Time of Sale Disclosure
Package and the Prospectus presents fairly the information presented
therein, has been prepared in accordance with generally accepted
accounting principles and the Commission's rules and guidelines with
respect to pro forma information, has been presented on the pro forma
basis described therein and, in the opinion of the Company, the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate under the circumstances. Except
as disclosed in the Registration Statement, the Time of Sale Disclosure
Package and the Prospectus, there are no material off-balance sheet
transactions, arrangements, obligations (including contingent
obligations), or any other relationships with unconsolidated entities or
other persons, that may have a material current or, to the Company's
knowledge, future effect on the Company's financial condition, results of
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operations, liquidity, capital expenditures, capital resources or
significant components of revenue or expenses.
(vi) The statistical and marketing data contained in the
Registration Statement, Prospectus and Time of Sale Disclosure Package are
based on or derived from sources which the Company believes are reliable.
(vii) Each of the Company and its subsidiaries has been duly
organized and is validly existing as a corporation, limited liability
company or other entity in good standing (or its equivalent) under the
laws of its jurisdiction of organization. Each of the Company and its
subsidiaries has full corporate power and authority to own its properties
and conduct its business as currently being carried on and as described in
the Registration Statement, the Time of Sale Disclosure Package and the
Prospectus and is duly qualified to do business as a foreign corporation
and is in good standing (or its equivalent) in each jurisdiction in which
it owns or leases real property or in which the conduct of its business
makes such qualification necessary and in which the failure to so qualify
or to be in good standing (or its equivalent) has had or would reasonably
be expected to have, individually or in the aggregate, a material adverse
effect upon the business, prospects, properties, operations, condition
(financial or otherwise) or results of operations of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect").
(viii) Except as disclosed in the Registration Statement, the
Time of Sale Disclosure Package and in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus; (A)
neither the Company nor any of its subsidiaries has incurred any material
liabilities or obligations, direct or contingent, or entered into any
material transactions (other than in the ordinary course of business), or
declared or paid any dividends or made any distribution of any kind with
respect to its capital stock; and (B) there has not been any (1) change in
the capital stock (other than a change in the number of outstanding shares
of Common Stock due to the issuance of shares upon the exercise of
outstanding options), (2) any material change in the short-term or
long-term debt, (3) any issuance of options, warrants, convertible
securities or other rights to purchase the capital stock, of the Company
or any of its subsidiaries (other than pursuant to the Company's employee
benefit plans described in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus) or (4) any material adverse change
in the condition (financial or otherwise), business, prospects, property,
operations or results of operations of the Company and its subsidiaries,
taken as a whole (a "Material Adverse Change") or any development known to
the Company involving a prospective Material Adverse Change.
(ix) Except as disclosed in the Registration Statement, the
Time of Sale Disclosure Package and the Prospectus, there is not pending
or, to the knowledge of the Company, threatened or contemplated, any
action, suit or proceeding to which the Company or any of its subsidiaries
is a party or of which any property or assets of the Company is the
subject before or by any court or governmental agency, authority or body,
or any arbitrator, which, if determined adversely to the Company,
individually or in the aggregate, would reasonably be expected to result
in a Material Adverse Change.
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(x) There are no statutes, regulations, contracts or documents
that are required to be described in the Registration Statement, the Time
of Sale Disclosure Package or the Prospectus or to be filed as exhibits to
the Registration Statement by the Securities Act or by the Rules and
Regulations that have not been so described or filed.
(xi) This Agreement has been duly authorized, executed and
delivered by the Company, and constitutes a valid, legal and binding
obligation of the Company, enforceable in accordance with its terms,
except as rights to indemnity hereunder may be limited by federal or state
securities laws and except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and subject to general
principles of equity. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein and
in the Registration Statement will not result in a breach or violation of
any of the terms or provisions of, or constitute a default under, (i) any
statute, any agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of its subsidiaries is bound
or to which any of its or its subsidiaries' property is subject, (ii) the
Company's or any of its subsidiaries' charter, by-laws, or other
organizational documents or (iii) any order, rule, regulation, judgment or
decree of any court, arbitrator or federal, state or Bermuda governmental
agency, authority or body having jurisdiction over the Company, its
subsidiaries, or any of its properties that, in the case of (i) and (iii),
would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. No consent, approval, authorization or order of,
or filing with, any court or governmental agency, authority or body is
required for the execution, delivery and performance of this Agreement or
for the consummation of the transactions contemplated hereby, except such
as may be required under the Securities Act or state securities or blue
sky laws; and the Company has full power and authority to enter into this
Agreement.
(xii) All of the issued and outstanding shares of capital
stock of the Company, including the outstanding shares of Common Stock,
are duly authorized and validly issued, and are fully paid and
nonassessable, have been issued in compliance with all Bermuda, federal
and state securities laws, including Bermuda insurance securities laws,
were not issued in violation of or subject to any preemptive rights or
other rights to subscribe for or purchase securities that have not been
waived in writing (a copy of which has been delivered to counsel to the
Underwriter), and the holders thereof are not subject to personal
liability by reason of being such holders. The capital stock of the
Company, including the Common Stock, conforms to the description thereof
in the Registration Statement, the Time of Sale Disclosure Package and in
the Prospectus. Except as otherwise disclosed in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus, there
are no preemptive rights or other rights to subscribe for or to purchase,
or any restriction upon the voting or transfer of, any shares of Common
Stock pursuant to the Company's charter, by-laws or any agreement or other
instrument to which the Company is a party or by which the Company is
bound. Neither the filing of the Registration Statement nor the offering
or sale of the Shares as contemplated by this Agreement gives rise to any
rights for or relating to the registration of any shares of Common Stock
or other securities of the Company. All of the issued and outstanding
shares of capital stock, or other ownership interest, of each of the
Company's subsidiaries
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have been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise described in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus, the
Company owns, directly or through its subsidiaries, free and clear of any
security interests, claims, liens, proxies, equities or other
encumbrances, all of the issued and outstanding shares of such stock or
other ownership interests. Except as described in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus, there
are no options, warrants, agreements, contracts or other rights in
existence to purchase or acquire from the Company or any subsidiary of the
Company any shares of the capital stock of the Company or any subsidiary
of the Company. The Company has authorized and outstanding capitalization
as set forth in the Registration Statement, the Time of Sale Disclosure
Package and the Prospectus.
(xiii) The Company and each of its subsidiaries holds, and is
operating in compliance in all material respects with, all franchises,
grants, authorizations, licenses, including insurance licenses, permits,
easements, consents, certificates and orders of any governmental or
self-regulatory body (including, without limitation, of the insurance
regulatory agencies of the various jurisdictions where it conducts its
business) except where the failure to hold such has not had and would not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, and has made all filings, applications and
registrations and given all notices to all governmental or self-regulatory
bodies, required for the conduct of its business except where the failure
to do so has not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect and all such
franchises, grants, authorizations, licenses, permits, easements,
consents, certifications and orders are valid and in full force and effect
and the Company and each of its subsidiaries is in compliance in all
material respects with all applicable federal, state, local and foreign
laws, regulations, orders and decrees except where such invalidity has not
had and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect; there is no pending or, to the
knowledge of the Company, threatened action, suit, proceeding or
investigation that would reasonably be expected to result in the
revocation, termination or suspension of any franchises, grants,
authorizations, licenses, permits, easements, consents, or certificates
that would reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect; and no insurance regulatory agency,
authority or body has issued, or, to the knowledge of the Company,
commenced any proceeding for the issuance of, any order or decree
impairing, restricting or prohibiting the payment of dividends by a
subsidiary to the Company.
(xiv) The Company and its subsidiaries have good and
marketable title to all property (whether real or personal) described in
the Registration Statement, the Time of Sale Disclosure Package and the
Prospectus as being owned by them, in each case free and clear of all
liens, claims, security interests, other encumbrances or defects except
such as are disclosed in the Registration Statement, the Time of Sale
Disclosure Package and in the Prospectus or such as do not, and would not
reasonably be expected to, materially affect the value of such property
and do not, in any material respect interfere with the use made or
proposed to be made of such property by the Company and its subsidiaries.
The property held under lease by the Company and its subsidiaries is held
by them under valid, subsisting and enforceable leases with only such
exceptions with respect to any particular
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lease as are not material and as do not and would not be reasonably
expected to, in any material respect, interfere with the use made or
proposed to be made of such property by the Company or its subsidiaries.
(xv) The Company and each of its subsidiaries owns or
possesses all patents, patent applications, trademarks, service marks,
tradenames, trademark registrations, service xxxx registrations,
copyrights, licenses, inventions, trade secrets and rights necessary for
the conduct of the business of the Company and its subsidiaries as
currently carried on and as described in the Registration Statement, the
Time of Sale Disclosure Package and the Prospectus, except where failure
to so own or possess has not had and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect, and no
name which the Company or any of its subsidiaries uses and no other aspect
of the business of the Company or any of its subsidiaries will involve or
give rise to any infringement of, or license or similar fees for, any
patents, patent applications, trademarks, service marks, tradenames,
trademark registrations, service xxxx registrations, copyrights, licenses,
inventions, trade secrets or other similar rights of others that would
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect and neither the Company nor any of its
subsidiaries has received any notice alleging any such infringement or
fee.
(xvi) Neither the Company nor any of its subsidiaries is (A)
in violation of its respective charter, by-laws or other organizational
documents or (B) in breach of or otherwise in default, and no event has
occurred which, with notice or lapse of time or both, would constitute
such a default in the performance or observance of any term, covenant,
obligation, agreement or condition contained in any bond, debenture, note,
indenture, loan agreement, mortgage or any other contract, lease or other
instrument to which it is subject or by which any of them may be bound, or
to which any of the property or assets of the Company or any of its
subsidiaries is subject except for those breaches or defaults which have
not and would not reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect.
(xvii) The Company and its subsidiaries have timely filed all
federal, state, local and foreign tax returns required to be filed, which
returns are true and correct in all material respects, and are not in
default in the payment of any taxes which were payable pursuant to said
returns or any assessments with respect thereto, other than any which the
Company or any of its subsidiaries is contesting in good faith. There is
no pending dispute with any taxing authority relating to any of such
returns and the Company has made adequate charges, accruals and reserves
in the applicable financial statements referred to in Section 2(a)(v)
hereof in respect of all federal, state and foreign income, franchise,
premium and other taxes for all periods as to which the tax liability of
the Company has not fully been determined.
(xviii) The Company has not distributed and will not
distribute any prospectus or other offering material in connection with
the offering and sale of the Shares other than any Preliminary Prospectus,
the Time of Sale Disclosure Package or the Prospectus or other materials
permitted by the Securities Act to be distributed by the
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Company; provided, however, that, except as set forth on Schedule II, the
Company has not made and will not make any offer relating to the Shares
that would constitute a "free writing prospectus" as defined in Rule 405
under the Securities Act, except in accordance with the provisions of
Section 4(a)(xvi) of this Agreement.
(xix) The Common Stock is registered pursuant to Section 12(b)
of the Exchange Act and is included or approved for inclusion on the
Nasdaq Global Select Market and the Company has taken no action designed
to, or likely to have the effect of, terminating the registration of the
Common Stock under the Exchange Act or delisting the Common Stock from the
Nasdaq Global Select Market nor has the Company received any notification
that the Commission or the National Association of Securities Dealers,
Inc. is contemplating terminating such registration or listing. The
Company has complied in all material respects with the applicable
requirements of the Nasdaq Global Select Market for maintenance of
inclusion of the Common Stock thereon.
(xx) Other than the subsidiaries of the Company listed in
Exhibit 21.1 to the Registration Statement, the Company, directly or
indirectly, owns no capital stock or other equity or ownership or
proprietary interest in any corporation, partnership, association, trust
or other entity other than investments purchased by the Company or its
subsidiaries in the ordinary course of their respective businesses.
(xxi) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (A) transactions
are executed in accordance with management's general or specific
authorization; (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (C)
access to assets is permitted only in accordance with management's general
or specific authorization; and (D) the recorded accountability for assets
is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences. Except as disclosed in
the Registration Statement, in the Time of Sale Disclosure Package and in
the Prospectus, since the most recent audit of the effectiveness of the
Company's internal control over financial reporting, (X) neither the board
of directors of the Company nor the audit committee of the board of
directors of the Company has been informed of any significant deficiency
or any material weakness in the design or operation of the Company's
internal control over financial reporting (whether or not remediated), nor
any fraud, whether or not material, that involves management or other
employees of the Company or its subsidiaries and (Y) there has been no
change in the Company's internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the
Company's internal control over financial reporting.
(xxii) The Company has not incurred any liability for any
finder's or broker's fee or agent's commission in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
(xxiii) The Company carries, or is covered by, insurance in
such amounts and covering such risks as is adequate for the conduct of its
business and the value of its
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properties and as is customary for companies engaged in similar businesses
in similar industries. The Company has no reason to believe that it will
not be able to renew its existing insurance coverage from substantially
similar insurers as may be necessary to continue its business at a cost
that would not reasonably be expected to have a Material Adverse Effect
and the Company has not been denied any insurance coverage which it has
sought or for which it has applied.
(xxiv) The Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company," as
such term is defined in the Investment Company Act of 1940, as amended.
(xxv) There is and has been no failure on the part of the
Company and any of the Company's directors or officers, in their
capacities as such, to comply with any applicable provisions of the
Xxxxxxxx-Xxxxx Act and the rules and regulations promulgated thereunder.
(xxvi) Other than CRM USA Holdings Trust I, no subsidiary of
the Company is currently prohibited, directly or indirectly, under any
agreement or other instrument to which it is a party or is subject, from
paying any dividends to the Company, from making any other distribution on
such subsidiary's capital stock or from repaying to the Company any loans
or advances to such subsidiary from the Company, other than general
restrictions and limitations applicable to all insurance companies
domiciled in the country or state of organization of Majestic Insurance
Company, Twin Bridges (Bermuda) Ltd. or Redhorse Insurance Company Ltd.
(each an "Insurance Subsidiary" and, collectively, the "Insurance
Subsidiaries"), as applicable, pursuant to applicable law and other than
as described in each of Registration Statement, the Time of Sale
Disclosure Package and the Prospectus.
(xxvii) The Company has received no written comments from the
SEC staff regarding its periodic or current reports under the Exchange Act
that remain unresolved and have not been disclosed in the Registration
Statement, Time of Sale Disclosure Package and Prospectus.
(xxviii) No relationship, direct or indirect, exists between
or among the Company or any of its subsidiaries on the one hand and any
director, officer or shareholder of the Company or any of its
subsidiaries, or any member of his or her immediate family, or any
customers or suppliers on the other hand, which is required to be
described in the Registration Statement, the Time of Sale Disclosure
Package or the Prospectus which is not so described in compliance with
such requirement and is complete and accurate in all material respects.
There are no outstanding loans, advances (except normal advances for
business expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the officers
or directors of the Company or any member of their respective immediate
families, except as disclosed in the Registration Statement, the Time of
Sale Disclosure Package and the Prospectus.
-11-
(xxix) To the knowledge of the Company, no change in any laws
or regulations is pending which could reasonably be expected to be adopted
and if adopted, would reasonably be expected to have, individually or in
the aggregate with all such changes, a Material Adverse Effect, except as
set forth in or contemplated in each of the Regulation Statement, Time of
Sale Disclosure Package and the Prospectus. For the purpose of this
paragraph, a law is considered to be "pending" if has been passed by a
legislative committee for consideration for adoption by the legislature
and if it has been published, and a regulation is considered to be
"pending" if has been published for comment by a regulatory agency.
(xxx) No insurance agent or producer appointed by any
Insurance Subsidiary has ceased selling insurance policies on behalf of
such Insurance Subsidiary or has indicated to the Company or any of its
subsidiaries an interest in decreasing or ceasing the amount of insurance
it sells on behalf of such Insurance Subsidiary or otherwise modifying its
relationship with the Company or the Insurance Subsidiaries, other than
(A) in the normal and ordinary course of business consistent with past
practices or (B) that does not and would not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect.
(xxxi) Except as disclosed in the Registration Statement, Time
of Sale Disclosure Package and Prospectus, all reinsurance treaties and
similar arrangements (including placement slips) to which any Insurance
Subsidiary is a party are in full force and effect and no Insurance
Subsidiary is in violation of, or in default in the performance,
observance or fulfillment of, any obligation, agreement, covenant or
condition contained therein, except for such violation or default which
does not and would not reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect; no Insurance Subsidiary has
received any notice from any of the other parties to such treaties or
arrangements that such other party intends not to perform such treaty or
arrangement and, to the knowledge of the Company and each Insurance
Subsidiary, none of the other parties to such treaties or arrangements
will be unable to perform such treaty or arrangement except (A) to the
extent adequately and properly reserved for in the audited historical
financial statements of the Company included in the Registration Statement
or the Prospectus or (B) to the extent that such nonperformance does not
and would not reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect; and no Insurance Subsidiary has received
any notice from any of the other parties to such treaties or arrangements
that such other party intends to terminate such treaty or arrangements
except to the extent that such termination would not reasonably be
expected to, individually or in the aggregate, have a Material Adverse
Effect.
(xxxii) Except as disclosed in each of the Registration
Statement, Time of Sale Disclosure Package and the Prospectus, the Company
and its Insurance Subsidiaries have made no material change in their
insurance reserving practices since December 31, 2005.
(xxxiii) The reserves reflected on the statutory statements of
each Insurance Subsidiary, as of the dates specified in such statements,
(A) were computed in
-12-
accordance with currently accepted actuarial standards consistently
applied and are fairly stated, in accordance with sound actuarial
principles; (B) met the requirements of the applicable insurance laws,
rules and regulations of the State of California and Bermuda, as
applicable, and are at least as great as the minimum aggregate amounts
required by applicable law; and (C) included provision for all actuarial
reserves and related statement items which should be established.
(xxxiv) The statutory financial statements of the Insurance
Subsidiaries are prepared for each relevant period in conformity with
applicable statutory accounting principles or practices required or
permitted by the National Association of Insurance Commissioners or
applicable Bermuda statutes and by the appropriate insurance department of
the jurisdiction of domicile of each Insurance Subsidiary, respectively,
and such statutory accounting practices have been applied on a consistent
basis throughout the periods involved, except as may otherwise be
indicated therein or in the notes thereto, and present fairly in all
material respects the statutory financial position of each Insurance
Subsidiary as of the dates thereof, and the statutory basis results of
operations of each Insurance Subsidiary for the periods covered thereby.
(xxxv) No transaction has occurred between or among the
Company and any of its officers or directors or beneficial owners of 5% or
more of the Company's outstanding Common Stock (the "5% Shareholders") or
any affiliate or affiliates of any such officer or director or 5%
Shareholders that is required to be described in and is not described in
the Registration Statement, Time of Sale Disclosure Package and the
Prospectus.
(xxxvi) To the knowledge of the Company, there are no
affiliations or associations between any member of the National
Association of Securities Dealers, Inc. and any of the Company's officers,
directors or 5% Shareholders except as set forth in the Registration
Statement, Time of Sale Disclosure Package or Prospectus.
(xxxvii) The Company and each subsidiary is in compliance in
all material respects with all currently applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder (herein called
"ERISA"); with respect to each "employee benefit plan" (as defined in
Section 3(3) of ERISA), the Company and each subsidiary is in compliance
in all material respects with all currently applicable provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), including the
regulations and published interpretations thereunder; to the knowledge of
the Company, no "reportable event" (as defined in Section 4043 of ERISA)
has occurred with respect to any "pension plan" (as defined in Section
3(2) of ERISA) for which the Company or any subsidiary would have any
liability; neither the Company nor any subsidiary has incurred, and does
not expect to incur, liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections
412 or 4971 of the Code; and each "pension plan" sponsored by the Company
or any subsidiary that is intended to be qualified under Section 401(a) of
the Code has received a favorable letter of determination from the
Internal Revenue Service as to its qualified status within the last
-13-
three years, and nothing has occurred, to Company's knowledge, since such
date, whether by action or failure to act, that would reasonably be
expected to cause the loss of such qualification.
(xxxviii) Neither the Company nor any of its subsidiaries nor,
to the knowledge of the Company, any director, officer, agent, employee or
affiliate of the Company or any of its subsidiaries is aware of or has
taken any action, directly or indirectly, that would result in a violation
by such persons of the FCPA (as defined below), including, without
limitation, making use of the mails or any means or instrumentality of
interstate commerce corruptly in furtherance of an offer, payment, promise
to pay or authorization of the payment of any money, or other property,
gift, promise to give, or authorization of the giving of anything of value
to any "foreign official" (as such term is defined in the FCPA) or any
foreign political party or official thereof or any candidate for foreign
political office, in contravention of the FCPA and the Company, its
subsidiaries and, to the knowledge of the Company, its affiliates have
conducted their businesses in compliance with the FCPA and have instituted
and maintain policies and procedures designed to ensure, and which are
reasonably expected to continue to ensure, continued compliance therewith.
"FCPA" means the Foreign Corrupt Practices Act of 1977, as amended, and
the rules and regulations thereunder. Neither the Company nor any of its
subsidiaries nor, to the Company's knowledge, any employee or agent of the
Company or any subsidiary in his/her capacity as an 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 in an amount or of the character required to be
disclosed in the Registration Statement, Time of Sale Disclosure Package
or Prospectus.
(xxxix) The operations of the Company and its subsidiaries are
and have been conducted at all times in compliance in all material
respects with applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the money laundering statutes of all jurisdictions, the
rules and regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any
governmental agency (collectively, the "Money Laundering Laws") and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of its
subsidiaries with respect to the Money Laundering Laws is pending or, to
the knowledge of the Company, threatened.
(xl) Neither the Company nor any of its subsidiaries nor, to
the knowledge of the Company, any director, officer, agent, employee or
affiliate of the Company or any of its subsidiaries is currently subject
to any U.S. sanctions administered by the Office of Foreign Assets Control
of the U.S. Department of the Treasury ("OFAC").
(xli) The Company has established and maintains disclosure
controls and procedures (as defined in Rules 13a-14 and 15d-14 under the
Exchange Act) and such controls and procedures are effective in ensuring
that material information relating
-14-
to the Company, including its subsidiaries, is made known to the Company's
chief executive officer and the chief financial officer by others within
those entities to allow timely decisions regarding disclosures and are
effective to perform the functions for which they were established. The
Company has utilized such controls and procedures in preparing and
evaluating the disclosures in the Registration Statement, in the Time of
Sale Disclosure Package and in the Prospectus.
(xlii) Except as disclosed in the Registration Statement, the
Time of Sale Disclosure Package and Prospectus, neither the Company nor
any of its subsidiaries is subject or is party to, or has received any
notice that any of them may become subject or party to any investigation
with respect to, any corrective, suspension or cease-and-desist order,
agreement, consent agreement or other regulatory enforcement action,
proceeding or order with or by, or is a party to any commitment letter or
similar undertaking to, or is subject to any directive by, or has been a
recipient of any supervisory letter from, or has adopted any board
resolutions at the request of, any governmental or self-regulatory agency,
authority or body that currently relates to or restricts in any material
respect their business or that in any manner relates to their capital and
surplus adequacy (including, but not limited to, any calculation or ratio
relating to the "risk-based capital," of any Insurance Subsidiary as
contemplated under corresponding guidance published by the National
Association of Insurance Commissioners or applicable Bermuda statutes or
regulations) or their management, other than the agreement by and between
CRM and the Workers' Compensation Board of the State of New York, dated
December 15, 2005, which agreement, in the reasonable judgment of the
Company, is not expected to result in a Material Adverse Effect, nor has
the Company or any of its subsidiaries been advised by any governmental or
self-regulatory agency, authority or body that it is considering issuing
or requesting any such agreement; there is no unresolved violation,
criticism or exception by any governmental or self-regulatory agency,
authority or body with respect to any report or statement relating to any
examinations of the Company or any of its subsidiaries except which does
not have and would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.
(xliii) Except for the Public Entities Trust of New York or as
set forth in the Registration Statement, Time of Sale Disclosure Package
and Prospectus, each of the self-insured groups managed by Compensation
Risk Managers, L.L.C. or Compensation Risk Managers of California, LLC, as
the case may be, on the date hereof are in full compliance with all laws,
statutes or any order, rule or regulation of any applicable governmental
or regulatory agency, authority or body, except where the failure to so
comply has not had and would not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the
business, properties, assets, current or future combined or consolidated
financial position, business prospects, shareholders' equity or results of
operations of such self-insured group and in the aggregate such failures
to so comply by all of the self-insured groups (including the Public
Entities Trust of New York) would not have a Material Adverse Effect. Each
of such self-insured groups was duly formed and is validly existing under
the laws of the state in which it was formed and none of such self-insured
groups, other than the Public Entities Trust of New York or as set forth
in the Registration Statement, Time of Sale Disclosure Package and
Prospectus,
-15-
is currently deemed to be "underfunded" as determined by the New York
Workers' Compensation Board or the California Department of Industrial
Relations, as applicable, except as disclosed in the Registration
Statement, Time of Sale Disclosure Package and Prospectus.
(xliv) Based upon and subject to the assumptions and
qualifications set forth in the Prospectus under the heading "Certain U.S.
Federal Income Tax Considerations" and "Risk Factors," the Company has no
reason to believe that the Company or any of its subsidiaries is, or upon
the sale of the Shares herein contemplated will be, (A) a "passive foreign
investment company" as defined in Section 1297(a) of the Code, (B) a
"controlled foreign corporation" as defined in Section 957 of the Code,
(C) except for the Company's subsidiaries that are domiciled in the United
States, considered to be engaged in a trade or business within the United
States for purposes of Section 864(b) of the Code or (D) characterized as
a "personal holding company" as defined in Section 542 of the Code; and
neither the Company or any of its subsidiaries has taken, or has a plan or
intention to take, directly or indirectly, any action that would or would
be reasonably expected to cause or result in any shareholder of the
Company having "related party insurance income" inclusions for U.S.
federal income tax purposes as a result of being a shareholder of the
Company.
(b) Xxxxxx X. Xxxxxx, a Selling Shareholder ("Rakoff") represents
and warrants to, and agrees with, the Underwriter as follows:
(i) Rakoff is the sole record and beneficial owner of, and
has, and on the Closing Date will have, valid title to the Shares to be
sold by Rakoff, free and clear of all security interests, claims, liens,
restrictions on transferability, legends, proxies, equities or other
encumbrances. If delivery of the Shares is made by credit through full
fast transfer to the accounts at The Depository Trust Company ("DTC")
designated by the Underwriter, and assuming that the Uniform Commercial
Code ("UCC") as in effect in the State of New York is applicable to the
sale of the Shares, upon payment for the Shares to be sold by Rakoff as
provided herein, delivery of such Shares, as directed by the Underwriter,
to Cede & Co. ("Cede") or such other nominee as may be designated by DTC,
registration of such Shares in the name of Cede or such other nominee on
the Company's share registry in accordance with the Company's memorandum
of association, bye-laws and applicable law and as required by Section
8-401 of the UCC and an indication from DTC by book entry that the Shares
being purchased by or on behalf of the Underwriter have been credited to
"securities accounts" (as defined in Section 8-501 of the UCC) of the
Underwriter with DTC (assuming that neither DTC nor the Underwriter has
notice of any adverse claim (as such phrase is defined in Section 8-105 of
the UCC) to such Shares), (A) DTC shall be a "protected purchaser" of such
Shares within the meaning of Section 8-303 of the UCC as in effect in the
State of New York, (B) under Section 8-501 of the UCC, the Underwriter
will acquire a valid "security entitlement" (as defined in Section 8-102
of the UCC) to the Shares being so purchased by or on behalf of the
Underwriter, and, to the extent governed by the UCC, no action based on
any "adverse claim" (as defined in Section 8-102 of the UCC) to such
Shares (or security entitlement with respect thereto) may properly be
asserted against the Underwriter with respect to such security
entitlement; it being understood that
-16-
for the purpose of this representation and warranty, Rakoff may assume
that when such payment, delivery, registration and crediting occur, (x)
Cede or such other nominee is not a "securities intermediary" (as defined
in Section 8-102 of the UCC), (y) registration of such Shares in the name
of Cede or another nominee designated by DTC is effective to register such
Shares in the name of DTC for purposes of Section 8-106(b)(2) of the UCC,
and (z) DTC is a "clearing corporation" (as defined in Section 8-102 of
the UCC). Rakoff is selling the Shares to be sold by him for his own
account and is not selling such Shares, directly or indirectly, for the
benefit of the Company, and no part of the proceeds of such sale received
by Rakoff will inure, either directly or indirectly, to the benefit of the
Company other than as described in the Registration Statement, the Time of
Sale Disclosure Package and Prospectus.
(ii) Rakoff has duly authorized, executed and delivered a
Custody Agreement ("Custody Agreement"), which Custody Agreement is a
valid and binding obligation of Rakoff, to Computershare Shareholder
Services, Inc., as Custodian (the "Custodian"); pursuant to the Custody
Agreement Rakoff has placed in custody with the Custodian, for delivery
under this Agreement, the Shares to be sold by Rakoff; and all action
required to be taken by Rakoff to validly transfer title of such Shares,
to the Underwriter, free of any legend, restriction on transferability,
proxy, lien or claim, whatsoever, has been taken.
(iii) Rakoff has the power and authority to enter into this
Agreement and to sell, transfer and deliver the Shares to be sold by
Rakoff.
(iv) This Agreement and the Custody Agreement have each been
duly executed and delivered by Rakoff and constitutes a valid and binding
agreement of Rakoff, enforceable in accordance with its terms, except as
rights to indemnity or contribution hereunder or thereunder may be limited
by federal or state securities laws and except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or similar laws affecting the rights of creditors
generally and subject to general principles of equity. The execution and
delivery of this Agreement, and the Custody Agreement and the performance
of the terms hereof and thereof and the consummation of the transactions
herein and therein contemplated will not result in a breach or violation
of any of the terms and provisions of, or constitute a default under, any
material agreement or instrument to which Rakoff is a party or by which
Rakoff is bound, or any law, regulation, order or decree applicable to
Rakoff except where any such breach or violation would not, individually
or in the aggregate, prevent Rakoff's ability to meet his obligations
under this Agreement or the Custody Agreement; no consent, approval,
authorization or order of, or filing with, any court or governmental
agency, authority or body is required for the execution, delivery and
performance by Rakoff of this Agreement, or the Custody Agreement or for
the consummation by Rakoff of the transactions contemplated hereby or
thereby, including the sale of the Shares being sold by Rakoff, except
such as may be required under the Securities Act or state securities laws
or blue sky laws.
-17-
(v) Rakoff does not have any registration or other similar
rights to have any equity or debt securities registered for sale by the
Company under the Registration Statement or included in the offering
contemplated by this Agreement, except as disclosed in the Registration
Statement.
(vi) Rakoff has not distributed and will not distribute any
prospectus or other offering material in connection with the offering and
sale of the Shares other than any Preliminary Prospectus, the Time of Sale
Disclosure Package or the Prospectus or other materials permitted by the
Securities Act to be distributed by Rakoff; provided, however, that Rakoff
has not made nor will make any offer relating to the Shares that would
constitute a "free writing prospectus" as defined in Rule 405 under the
Securities Act except a Permitted Free Writing Prospectus authorized by
the Company and the Underwriter for distribution in accordance with the
provisions of Section 4(a)(xvi) hereof.
(vii) Other than as contemplated by this Agreement and except
as disclosed in the Registration Statement, the Time of Sale Disclosure
Package and the Prospectus, there is no broker, finder or other party that
is entitled to receive from Rakoff any brokerage or finder's fee or any
other fee (other than fees of counsel), commission or payment as a result
of the transactions contemplated by this Agreement.
(viii) The information specifically relating to Rakoff in the
Registration Statement, the Time of Sale Disclosure Package and the
Prospectus, in each case under the caption "Selling Shareholders," does
not contain any untrue statement of material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading regarding Rakoff.
(ix) Rakoff is not prompted to sell the Shares to be sold by
Rakoff hereunder by any material adverse information concerning the
Company or any subsidiary of the Company which is not set forth in the
Registration Statement, the Time of Sale Disclosure Package and the
Prospectus.
(c) Each Selling Shareholder, other than Rakoff, represents and
warrants to, and agrees with, the Underwriter as follows:
(i) Such Selling Shareholder is the sole record and beneficial
owner of, and has, and on the Closing Date will have, valid title to the
Shares to be sold by such Selling Shareholder, free and clear of all
security interests, claims, liens, restrictions on transferability,
legends, proxies, equities or other encumbrances. If delivery of the
Shares is made by credit through full fast transfer to the accounts at DTC
designated by the Underwriter, and assuming that the UCC as in effect in
the State of New York is applicable to the sale of the Shares, upon
payment for the Shares to be sold by such Selling Shareholder as provided
herein, delivery of such Shares, as directed by the Underwriter, to Cede
or such other nominee as may be designated by DTC, registration of such
Shares in the name of Cede or such other nominee on the Company's share
registry in accordance with the Company's memorandum of association,
bye-laws and applicable law and as required by Section 8-401 of the UCC
and an indication from DTC by book entry that the
-18-
Shares being purchased by or on behalf of the Underwriter have been
credited to "securities accounts" (as defined in Section 8-501 of the UCC)
of the Underwriter with DTC (assuming that neither DTC nor the Underwriter
has notice of any adverse claim (as such phrase is defined in Section
8-105 of the UCC) to such Shares), (A) DTC shall be a "protected
purchaser" of such Shares within the meaning of Section 8-303 of the UCC
as in effect in the State of New York, (B) under Section 8-501 of the UCC,
the Underwriter will acquire a valid "security entitlement" (as defined in
Section 8-102 of the UCC) to the Shares being so purchased by or on behalf
of the Underwriter, and, to the extent governed by the UCC, no action
based on any "adverse claim" (as defined in Section 8-102 of the UCC) to
such Shares (or security entitlement with respect thereto) may properly be
asserted against the Underwriter with respect to such security
entitlement; it being understood that for the purpose of this
representation and warranty, such Selling Shareholder may assume that when
such payment, delivery, registration and crediting occur, (x) Cede or such
other nominee is not a "securities intermediary" (as defined in Section
8-102 of the UCC), (y) registration of such Shares in the name of Cede or
another nominee designated by DTC is effective to register such Shares in
the name of DTC for purposes of Section 8-106(b)(2) of the UCC, and (z)
DTC is a "clearing corporation" (as defined in Section 8-102 of the UCC).
Such Selling Shareholder is selling the Shares to be sold by such Selling
Shareholder for such Selling Shareholder's own account and is not selling
such Shares, directly or indirectly, for the benefit of the Company, and
no part of the proceeds of such sale received by such Selling Shareholder
will inure, either directly or indirectly, to the benefit of the Company
other than as described in the Registration Statement, the Time of Sale
Disclosure Package and Prospectus.
(ii) Such Selling Shareholder has duly authorized, executed
and delivered the Custody Agreement, which Custody Agreement is a valid
and binding obligation of such Selling Shareholder, to the Custodian;
pursuant to the Custody Agreement such Selling Shareholder has placed in
custody with the Custodian, for delivery under this Agreement, the Shares
to be sold by such Selling Shareholder; the Shares are validly issued,
outstanding, fully paid and nonassessable shares of Common Stock; and all
action has been taken to validate the transfer of title of such Shares, to
the Underwriter, free of any legend, restriction on transferability,
proxy, lien or claim, whatsoever.
(iii) Such Selling Shareholder has the power and authority to
enter into this Agreement and to sell, transfer and deliver the Shares to
be sold by such Selling Shareholder.
(iv) This Agreement and the Custody Agreement have each been
duly authorized, executed and delivered by such Selling Shareholder and
constitutes a valid and binding agreement of such Selling Shareholder,
enforceable in accordance with its terms, except as rights to indemnity
hereunder or thereunder may be limited by federal or state securities laws
and except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally and subject to general principles of equity.
The execution and delivery of this Agreement and the Custody Agreement and
the performance of the terms hereof and thereof and the
-19-
consummation of the transactions herein and therein contemplated will not
result in a breach or violation of any of the terms and provisions of, or
constitute a default under, any material agreement or instrument to which
such Selling Shareholder is a party or by which such Selling Shareholder
is bound, or any law, regulation, order or decree applicable to such
Selling Shareholder except where any such breach or violation would not,
individually or in the aggregate, prevent such Selling Shareholder's
ability to meet its obligations under this Agreement and the Custody
Agreement; no consent, approval, authorization or order of, or filing
with, any court or governmental agency, authority or body is required for
the execution, delivery and performance of this Agreement and the Custody
Agreement or for the consummation of the transactions contemplated hereby
or thereby, including the sale of the Shares being sold by such Selling
Shareholder, except such as may be required under the Securities Act or
state securities laws or blue sky laws.
(v) Such Selling Shareholder does not have any registration or
other similar rights to have any equity or debt securities registered for
sale by the Company under the Registration Statement or included in the
offering contemplated by this Agreement, except as disclosed in the
Registration Statement.
(vi) Such Selling Shareholder has not distributed and will not
distribute any prospectus or other offering material in connection with
the offering and sale of the Shares other than any Preliminary Prospectus,
the Time of Sale Disclosure Package or the Prospectus or other materials
permitted by the Securities Act to be distributed by such Selling
Shareholder; provided, however, that no Selling Shareholder has made or
will make any offer relating to the Shares that would constitute a "free
writing prospectus" as defined in Rule 405 under the Securities Act except
a Permitted Free Writing Prospectus authorized by the Company and the
Underwriter for distribution in accordance with the provisions of Section
4(a)(xvi) hereof.
(vii) Other than as contemplated by this Agreement and except
as disclosed in the Registration Statement, the Time of Sale Disclosure
Package and the Prospectus, there is no broker, finder or other party that
is entitled to receive from such Selling Shareholder any brokerage or
finder's fee or any other fee, commission or payment as a result of the
transactions contemplated by this Agreement.
(viii) The information specifically relating to such Selling
Shareholder in the Registration Statement, the Time of Sale Disclosure
Package and the Prospectus, in each case under the caption "Selling
Shareholders" does not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading regarding such Selling
Shareholder.
(ix) Such Selling Shareholder is not prompted to sell the
Shares to be sold by such Selling Shareholder hereunder by any information
concerning the Company or any subsidiary of the Company which is not set
forth in the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus.
-20-
(d) Any certificate signed by any officer of the Company and
delivered to the Underwriter or to counsel for the Underwriter shall be deemed a
representation and warranty by the Company to the Underwriter as to the matters
covered thereby; any certificate signed by or on behalf of a Selling Shareholder
and delivered to the Underwriter or to counsel for the Underwriter shall be
deemed a representation and warranty by such Selling Shareholder to the
Underwriter as to the matters covered thereby.
3. PURCHASE, SALE AND DELIVERY OF THE SHARES.
On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, each
Selling Shareholder agrees, severally and not jointly, to sell the number of
Shares set forth opposite the name of such Selling Shareholder in Schedule I
hereto to the Underwriter, and the Underwriter agrees, jointly and not
severally, to purchase from the Selling Shareholders, the Shares. The purchase
price for each Share shall be $[___] per share.
The Shares will be delivered by the Custodian to the Underwriter for
the account of the Underwriter against payment of the purchase price therefor by
wire transfer of same day funds payable to the order of the Custodian, at the
offices of Xxxxxxx Xxxxxxx Xxxxxx Securities LLC, Xxx Xxxxx Xxxxxx Xxxxx, Xxxxx
0000, Xxxxxxx, XX 00000, or such other location as may be mutually acceptable,
at 9:00 a.m. Central time on the third (or if the Shares are priced, as
contemplated by Rule 15c6-1(c) under the Exchange Act, after 4:30 p.m. Eastern
time, the fourth) full business day following the date hereof, or at such other
time and date as the Underwriter, Rakoff and the Company determine pursuant to
Rule 15c6-1(a) under the Exchange Act, such time and date of delivery being
herein referred to as the "Closing Date." If the Underwriter so elect, delivery
of the Shares may be made by credit through full fast transfer to the accounts
at The Depository Trust Company designated by the Underwriter.
4. COVENANTS.
(a) The Company covenants and agrees with the Underwriter as
follows:
(i) If the Registration Statement has not already been
declared effective by the Commission, the Company will use its reasonable
best efforts to cause the Registration Statement and any post effective
amendments thereto to become effective as promptly as possible; the
Company will notify the Underwriter promptly of the time when the
Registration Statement or any post effective amendment to the Registration
Statement has become effective or any supplement to the Prospectus has
been filed, the receipt of any comments from the Commission with respect
to the Registration Statement, Time of Sale Disclosure Package or
Prospectus and the receipt of any request by the Commission for any
amendment or supplement to the Registration Statement or Prospectus or for
additional information; the Company will prepare and file a Prospectus
containing the information omitted therefrom pursuant to Rule 430A of the
Rules and Regulations with the Commission within the time period required
by, and otherwise in accordance with the provisions of, Rules 424(b) and
430A of the Rules and Regulations; if the Company has elected to rely upon
Rule 462(b) of the Rules and
-21-
Regulations to increase the size of the offering registered under the
Securities Act, the Company will prepare and file a registration statement
with respect to such increase with the Commission within the time period
required by, and otherwise in accordance with the provisions of, Rule
462(b) and the Company will not file any amendment or supplement to the
Registration Statement, Time of Sale Disclosure Package or Prospectus to
which the Underwriter shall reasonably object by notice to the Company
after having been furnished a copy a reasonable time prior to the filing.
(ii) The Company will advise the Underwriter, promptly after
it shall receive notice or obtain knowledge thereof, of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement, or any post-effective amendment thereto or
preventing or suspending the use of any Preliminary Prospectus, the Time
of Sale Disclosure Package, the Prospectus or any Issuer Free Writing
Prospectus, of the suspension of the qualification of the Shares for
offering or sale in any jurisdiction, or of the initiation or threatening
of any proceeding for any such purpose; and the Company will promptly use
its best efforts to prevent the issuance of any stop order or to obtain
its withdrawal if such a stop order should be issued. Additionally, the
Company agrees that it shall comply with the provisions of Rules 424(b)
and 430A, as applicable, under the Securities Act and will use its
reasonable efforts to confirm that any filings made by the Company under
Rule 424(b), Rule 433 or Rule 462 were received in a timely manner by the
Commission.
(iii) (A) Within the time during which a prospectus (or in
lieu thereof the notice referred to in Rule 173(a)) relating to the Shares
is required to be delivered under the Securities Act, the Company will
comply in all material respects with all requirements imposed upon it by
the Securities Act, as now and hereafter amended, and by the Rules and
Regulations, as from time to time in force, and by the Exchange Act so far
as necessary to permit the continuance of sales of or dealings in the
Shares as contemplated by the provisions hereof, the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus. If
during such period any event occurs as a result of which the Prospectus
(or if the Prospectus is not yet available to prospective purchasers, the
Time of Sale Disclosure Package) would include an untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances then existing, not
misleading, or if during such period it is necessary or appropriate in the
opinion of the Company or its counsel or the Underwriter or counsel to the
Underwriter to amend the Registration Statement or supplement the
Prospectus (or, if the Prospectus is not yet available to prospective
purchasers, the Time of Sale Disclosure Package) to comply with the
Securities Act, the Company will promptly notify the Underwriter and will
amend the Registration Statement or supplement the Prospectus (or, if the
Prospectus is not yet available to prospective purchasers, the Time of
Sale Disclosure Package) (at the expense of the Company) so as to correct
such statement or omission or effect such compliance.
(B) If at any time following issuance of an Issuer
Free Writing Prospectus there occurred or occurs an event or
development as a result of which such Issuer Free Writing
Prospectus conflicted or would conflict
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with the information contained in the Registration Statement,
the Statutory Prospectus or the Prospectus or included or
would include an untrue statement of a material fact or
omitted or would omit to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances prevailing at that subsequent time, not
misleading, the Company has promptly notified or will promptly
notify the Underwriter and has promptly amended or will
promptly amend or supplement, at its own expense, such Issuer
Free Writing Prospectus to eliminate or correct such conflict,
untrue statement or omission.
The Company shall take or cause to be taken all necessary
action to qualify the Shares for sale under the securities laws of such
jurisdictions as the Underwriter reasonably designates and to continue
such qualifications in effect so long as required for the distribution of
the Shares, except that the Company shall not be required in connection
therewith to qualify as a foreign corporation or to execute a general
consent to service of process in any state or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is
not otherwise so subject.
(iv) The Company will furnish to the Underwriter and counsel
for the Underwriter, without charge, copies of the Registration Statement
(three of which will be signed and will include all consents and exhibits
filed therewith), each Preliminary Prospectus, the Prospectus, any Issuer
Free Writing Prospectus, and all amendments and supplements to such
documents, in each case as soon as available and in such quantities as the
Underwriter may from time to time reasonably request.
(v) During a period of five years commencing with the date
hereof, the Company will furnish to the Underwriter copies of all periodic
and special reports furnished to the shareholders of the Company and all
information, documents and reports filed with the Commission, the National
Association of Securities Dealers, Inc., the Nasdaq Global Select Market
or any securities exchange (other than any such information, documents and
reports that are filed with the Commission electronically via XXXXX or any
successor system).
(vi) The Company will make generally available to its
securityholders as soon as practicable, but in any event not later than 15
months after the end of the Company's current fiscal quarter, an earnings
statement (which need not be audited) covering a 12-month period beginning
after the effective date of the Registration Statement that shall satisfy
the provisions of Section 11(a) of the Securities Act and Rule 158 of the
Rules and Regulations.
(vii) The Company, whether or not the transactions
contemplated hereunder are consummated or this Agreement is terminated,
will pay or cause to be paid (A) all expenses (including transfer taxes
allocated to the respective transferees) incurred in connection with the
delivery to the Underwriter of the Shares, (B) all expenses and fees
(including, without limitation, fees and expenses of the Company's
accountants and counsel but, except as otherwise provided below, not
including fees of the Underwriter's counsel) in
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connection with the preparation, printing, filing, delivery, and shipping
of the Registration Statement (including the financial statements therein
and all amendments, schedules, and exhibits thereto), the Shares, any
Preliminary Prospectus, the Time of Sale Disclosure Package, the
Prospectus, any Issuer Free Writing Prospectus, and any amendment thereof
or supplement thereto, and the printing, delivery, and shipping of this
Agreement and other underwriting documents, (C) the fees and expenses of
any transfer agent or registrar, (D) all filing fees and fees and
disbursements of the Underwriter's counsel incident to any required review
and approval by the National Association of Shares Dealers, Inc. of the
terms of the sale of the Shares, (E) listing fees of the Nasdaq Global
Select Market, if any, and (F) all other costs and expenses incident to
the performance of its obligations hereunder that are not otherwise
specifically provided for herein.
(viii) If this Agreement is terminated by the Underwriter
pursuant to Section 8(a)(i) or if the sale of the Shares provided for
herein is not consummated by reason of any failure, refusal or inability
on the part of the Company to perform any agreement on its part to be
performed, or because any other condition of the Underwriter's obligations
hereunder required to be fulfilled by the Company is not fulfilled, the
Company agrees to reimburse the Underwriter for all out-of-pocket
disbursements (including fees and disbursements of counsel) incurred by
the Underwriter in connection with their investigation, preparing to
market and marketing the Shares or in contemplation of performing their
obligations hereunder. The Company shall in no event be liable to the
Underwriter for loss of anticipated profits from the transactions covered
by this Agreement.
(ix) The Company will not, without the prior written consent
of the Underwriter, from the date of execution of this Agreement and
continuing to and including the date ninety (90) days after the date of
the Prospectus (the "Lock-Up Period") offer for sale, sell, contract to
sell, pledge, grant any option for the sale of, enter into any transaction
which is designed to, or might reasonably be expected to, result in the
disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) by the Company or any
affiliate, or otherwise issue or dispose of, directly or indirectly (or
publicly disclose the intention to make any such offer, sale, pledge,
grant, issuance or other disposition), any Common Stock or any securities
convertible into or exchangeable for, or any options or rights to purchase
or acquire, Common Stock other than in accordance with the Company's
employee compensation plans described in the Registration Statement, Time
of Sale Disclosure Package and Prospectus. The Company agrees not to
accelerate the vesting of any option or warrant or the lapse of any
repurchase right prior to the expiration of the Lock-Up Period. If (1)
during the period that begins on the date that is 18 calendar days before
the last day of the Lock-Up Period and ends on the last day of the Lock-Up
Period, (a) the Company issues an earnings release, (b) the Company
publicly announces material news or (c) a material event relating to the
Company occurs; or (2) prior to the expiration of the Lock-Up Period, the
Company announces that it will release earnings results during the 16-day
period beginning on the last day of the Lock-Up Period, then the
restrictions in this Agreement, unless otherwise waived by the Underwriter
in writing, shall continue to apply until the expiration of the date that
is 18 calendar days after the date on which (a) the Company issues the
earnings release, (b) the Company publicly announces material news or (c)
a material event relating to the Company occurs. The Company will
-24-
provide the Underwriter and the Selling Shareholders with prior notice of
any such announcement that gives rise to the extension of the Lock-Up
Period.
(x) The Company has caused to be delivered to the
Underwriter prior to the date of this Agreement a letter agreement,
substantially in the form of Exhibit A hereto, from each of the Company's
directors and officers stating that such person agrees that he or she will
not, without the Underwriter's prior written consent, offer for sale,
sell, contract to sell or otherwise dispose of, as set forth in such
letter, any shares of Common Stock or rights to purchase Common Stock,
except to the Underwriter pursuant to this Agreement, for a period of
ninety (90) days after commencement of the public offering of the Shares
by the Underwriter (each a "Lock-Up Agreement"). The Company will enforce
the terms of each Lock-Up Agreement and issue stop-transfer instructions
to the transfer agent for the Common Stock with respect to any transaction
or contemplated transaction that would constitute a breach of or default
under the applicable Lock-Up Agreement.
(xi) The Company has not taken and will not take, directly or
indirectly, any action designed to or which might reasonably be expected
to cause or result in, or which has constituted, the stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares, and has not effected any sales of Common
Stock which are required to be disclosed in response to Item 701 of
Regulation S-K under the Securities Act which have not been so disclosed
in the Registration Statement.
(xii) The Company will not incur any liability for any
finder's or broker's fee or agent's commission in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
(xiii) The Company will file on a timely basis with the
Commission such periodic and special reports as required by the Rules and
Regulations.
(xiv) The Company and its subsidiaries will maintain such
controls and other procedures, including without limitation those required
by Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act and the applicable
regulations thereunder, that are designed to ensure that information
required to be disclosed by the Company in the reports that it files or
submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the Commission's rules and
forms, including without limitation, controls and procedures designed to
ensure that information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is accumulated and
communicated to the Company's management, including its principal
executive officer and its principal financial officer, or persons
performing similar functions, as appropriate to allow timely decisions
regarding required disclosure, to ensure that material information
relating to Company, including its subsidiaries, is made known to them by
others within those entities.
(xv) The Company and its subsidiaries will comply, in all
material respects, with all other applicable provisions of the
Xxxxxxxx-Xxxxx Act.
-25-
(xvi) The Company represents and agrees that, unless it
obtains the prior written consent of the Underwriter, and the Underwriter
represents and agrees that, unless it obtains the prior written consent of
the Company, it has not made and will not make any offer relating to the
Shares that would constitute an "issuer free writing prospectus," as
defined in Rule 433 under the Securities Act, or that would otherwise
constitute a "free writing prospectus," as defined in Rule 405 under the
Securities Act, required to be filed with the Commission; provided that
the prior written consent of the parties hereto shall be deemed to have
been given in respect of the free writing prospectuses included in
Schedule II. Any such free writing prospectus consented to by the Company
and the Underwriter is hereinafter referred to as a "Permitted Free
Writing Prospectus." The Company represents that it has treated or agrees
that it will treat each Permitted Free Writing Prospectus as an "issuer
free writing prospectus," as defined in Rule 433, and has complied and
will comply with the requirements of Rule 433 applicable to any Permitted
Free Writing Prospectus, including timely Commission filing where
required, legending and record keeping. The Company represents that it has
satisfied and agrees that it will satisfy the conditions in Rule 433 to
avoid a requirement to file with the Commission any electronic road show.
(b) Each Selling Shareholder, severally and not jointly, covenants
and agrees with the Underwriter as follows:
(i) Such Selling Shareholder will pay (A) all taxes, if any,
on the transfer and sale, respectively, of the Shares being sold by such
Selling Shareholder, (B) the fees of such Selling Shareholder's counsel,
accountants and other advisors; and (C) if this Agreement is terminated by
the Underwriter pursuant to Section 8(a)(ii), (provided that such Selling
Shareholder shall have so failed, refused or been unable) or if the sale
of the Shares provided for herein is not consummated by reason of any
failure, refusal or inability on the part of such Selling Shareholder to
perform any agreement on such Selling Shareholder's part to be performed,
or because any other condition of the Underwriter's obligations hereunder
required to be fulfilled by such Selling Shareholder is not fulfilled,
such Selling Shareholder agrees to reimburse the Underwriter for all
out-of-pocket disbursements (including fees and disbursements of counsel)
incurred by the Underwriter in connection with their investigation,
preparing to market and marketing the Shares or in contemplation of
performing their obligations hereunder. No Selling Shareholder shall in
any event be liable to the Underwriter for loss of anticipated profits
from the transactions covered by this Agreement.
(ii) The Shares to be sold by such Selling Shareholder are
subject to the interest of the Underwriter; the arrangements made for such
custody are, except as specifically provided in the Custody Agreement,
irrevocable; and the obligations of such Selling Shareholder hereunder
shall not be terminated, except as provided in this Agreement, by any act
of such Selling Shareholder, by operation of law, whether by the
liquidation, dissolution or merger of such Selling Shareholder or by the
occurrence of any other event. If such Selling Shareholder should
liquidate, dissolve or be a party to a merger or if any other such event
should occur before the delivery of the Shares hereunder, the Shares in
the custody of the Custodian shall be delivered by the Custodian in
accordance
-26-
with the terms and conditions of this Agreement as if such liquidation,
dissolution, merger or other event had not occurred, whether or not the
Custodian shall have received notice thereof.
(iii) Such Selling Shareholder has not taken and will not
take, directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in stabilization or manipulation
of the price of any security of the Company to facilitate the sale or
resale of the Shares.
(iv) Such Selling Shareholder shall promptly, but in any
event no later than one (1) day following his becoming aware, notify the
Underwriter if he becomes aware of any event, or of any change in the
information relating to such Selling Shareholder under the caption
"Selling Shareholders" in the Registration Statement, which results in the
Registration Statement, Time of Sale Disclosure Package, the Prospectus
(as supplemented) or any Issuer Free Writing Prospectus including an
untrue statement of a material fact or omitting to state any material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(v) Such Selling Shareholder shall deliver to the
Underwriter prior to the Closing Date, a properly completed and executed
United States Treasury Department Form W-9 (or other applicable form or
statement specified by Treasury Department regulations in lieu thereof).
5. CONDITIONS OF UNDERWRITER'S OBLIGATIONS. The obligations of the
Underwriter hereunder are subject to the accuracy, as of the date hereof and at
the Closing Date (as if made at the Closing Date), of and compliance with all
representations, warranties and agreements of the Company and each Selling
Shareholder contained herein, to the performance by the Company and each Selling
Shareholder of their respective obligations hereunder and to the following
additional conditions:
(a) The Registration Statement shall have become effective not
later than 5:00 p.m., Central time, on the date of this Agreement, or such later
time and date as the Underwriter shall approve and all filings required by Rules
424, 430A and 433 of the Rules and Regulations shall have been timely made,
(without reliance on Rule 424(b)(8) or Rule 164(b)); no stop order suspending
the effectiveness of the Registration Statement or any part thereof or any
amendment thereof nor suspending or preventing the use of the Time of Sale
Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus shall
have been issued; no proceedings for the issuance of such an order shall have
been initiated or threatened; any request of the Commission for additional
information (to be included in the Registration Statement, the Time of Sale
Disclosure Package, the Prospectus, any Issuer Free Writing Prospectus or
otherwise) shall have been complied with; and the National Association of
Securities Dealers, Inc. shall have raised no objection to the fairness and
reasonableness of the underwriting terms and arrangements.
-27-
(b) Each of the Registration Statement, the Time of Sale
Disclosure Package or the Prospectus, or any amendment thereof or supplement
thereto, or any Issuer Free Writing Prospectus, does not contain an untrue
statement of material fact, or omit to state a material fact which is required
to be stated therein or necessary to make the statements therein not misleading.
(c) Except as contemplated in the Registration Statement, the Time
of Sale Disclosure Package and in the Prospectus, subsequent to the respective
dates as of which information is given therein, neither the Company nor any of
its subsidiaries shall have incurred any material liabilities or obligations,
direct or contingent, or entered into any material transactions, or declared or
paid any dividends or made any distribution of any kind with respect to its
capital stock; and there shall not have been any change in the capital stock
(other than a change in the number of outstanding shares of Common Stock due to
the issuance of shares upon the exercise of outstanding options or warrants), or
any material change in the short-term or long-term debt of the Company, or any
issuance of options, warrants, convertible securities or other rights to
purchase the capital stock of the Company or any of its subsidiaries (other than
in accordance with any employee compensation plan of the Company described in
the Registration Statement, Time of Sale Disclosure Package and Prospectus), or
any Material Adverse Change or any development involving a prospective Material
Adverse Change (whether or not arising in the ordinary course of business),
that, in the Underwriter's reasonable judgment, makes it impractical or
inadvisable to offer or deliver the Shares on the terms and in the manner
contemplated in the Time of Sale Disclosure Package and in the Prospectus.
(d) As of the date hereof, A.M. Best Company has assigned a
financial strength rating of "A-" (Excellent) to Majestic Insurance Company. On
or after the date hereof (i) no downgrading or other negative development shall
have occurred in the rating accorded to Majestic Insurance Company's financial
strength by A.M. Best Company or any other "nationally recognized statistical
rating organization," as that term is defined by the SEC for purposes of Rule
436(g)(2) under the Securities Act (whether or not such negative development has
been publicly announced by A.M. Best Company), and (ii) no such organization
shall have publicly announced that it has under surveillance or review, with
possible negative implications, its rating of Majestic Insurance Company's
financial strength.
(e) On the Closing Date, there shall have been furnished to the
Underwriter the opinion of Xxxxxx, Xxxxx Naftalis & Xxxxxxx LLP, counsel for the
Company, dated the Closing Date and addressed to the Underwriter, in form and
substance reasonably satisfactory to counsel for the Underwriter, to the effect
set forth in Exhibit B hereto.
(f) On the Closing Date, there shall have been furnished to the
Underwriter the opinion of Xxxxxxx Xxxxxx Bailhache, counsel for the Company,
dated the Closing Date and addressed to the Underwriter, in form and substance
reasonably satisfactory to counsel for the Underwriter, to the effect set forth
in Exhibit C hereto.
(g) On the Closing Date, there shall have been furnished to the
Underwriter the opinion of Xxxxxxxxxxxx Xxxx & Xxxxxxxxx LLP, special counsel
for the Company, dated the Closing Date and addressed to the Underwriter, to the
effect set forth on Exhibit D hereto.
-28-
(h) On the Closing Date, there shall have been furnished to the
Underwriter the opinion of Xxxxxx, Xxxxx & Bockius LLP, counsel for Rakoff,
dated the Closing Date and addressed to the Underwriter, in form and substance
reasonably satisfactory to counsel for the Underwriter, to the effect set forth
in Exhibit E hereto.
(i) On the Closing Date, there shall have been furnished to the
Underwriter the opinion of Goldenbock Xxxxxxx Xxxxx Xxxx & Xxxxxx LLP counsel
for the Selling Shareholders, other than Rakoff, dated the Closing Date and
addressed to the Underwriter, in form and substance reasonably satisfactory to
counsel for the Underwriter, to the effect set forth in Exhibit F hereto.
(j) On Closing Date, there shall have been furnished to the
Underwriter, such opinion or opinions from Sidley Austin LLP, counsel for the
Underwriter, dated Closing Date and addressed to the Underwriter, with respect
to matters as the Underwriter reasonably may request (in rendering such opinion,
Sidley Austin LLP may rely as to matters involving the application of the laws
of Bermuda on the opinion of Xxxxxxx Xxxxxx Bailhache), and such counsel shall
have received such papers and information as they request to enable them to pass
upon such matters in order to evidence the accuracy, completeness and
satisfaction of the representations, warranties and conditions herein contained.
(k) Immediately prior to the execution hereof and on the Closing
Date the Underwriter shall have received a letter of Xxxxxxx Xxxxxxx & Co. dated
the Closing Date and addressed to the Underwriter, confirming that they are
independent public accountants within the meaning of the Securities Act and are
in compliance with the applicable requirements relating to the qualifications of
accountants under Rule 2-01 of Regulation S-X of the Commission, and stating, as
of the date of such letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Time of Sale Disclosure Package, as of a date not
prior to the date hereof or more than five days prior to the date of such
letter), the conclusions and findings of said firm with respect to the financial
information and other matters covered by its letter delivered to the Underwriter
concurrently with the execution of this Agreement, and the effect of the letter
so to be delivered on the Closing Date shall be to confirm the conclusions and
findings set forth in such prior letter.
(l) Immediately prior to the execution hereof and on the Closing
Date the Underwriter shall have received a letter of Deloitte & Touche LLP,
dated the Closing Date and addressed to the Underwriter, confirming that they
are independent public accountants with respect to the Company under Rule 101 of
the American Institute of Certified Public Accountants' Code of Professional
Conduct, and stating, as of the date of such letter (or, with respect to matters
involving changes or developments since the respective dates as of which
specified financial information is given in the Time of Sale Disclosure Package,
as of a date not prior to the date hereof or more than five days prior to the
date of such letter), the conclusions and findings of said firm with respect to
the financial information and other matters covered by its letter delivered to
the Underwriter concurrently with the execution of this Agreement, and the
effect of the letter so to be delivered on the Closing Date shall be to confirm
the conclusions and findings set forth in such prior letter.
-29-
(m) On the Closing Date, there shall have been furnished to the
Underwriter a certificate, dated the Closing Date and addressed to the
Underwriter, signed by the chief executive officer and by the chief financial
officer of the Company, to the effect that:
(i) The representations and warranties of the Company in
this Agreement are true and correct, in all material respects as if made
at and as of the Closing Date; provided, however, all representation
warranties qualified by materiality or references to Material Adverse
Change or Material Adverse Effect shall be true and correct in all
respects as if made at and as of such Closing Date; and the Company has
complied with all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the Closing Date;
(ii) No stop order or other order suspending the
effectiveness of the Registration Statement or any part thereof or any
amendment thereof or the qualification of the Shares for offering or sale
nor suspending or preventing the use of the Time of Sale Disclosure
Package, the Prospectus or any Issuer Free Writing Prospectus, has been
issued, and no proceeding for that purpose has been instituted or, to the
best of their knowledge, is contemplated by the Commission or any state or
regulatory body; and
(n) On the Closing Date, there shall have been furnished to the
Underwriter a certificate, dated the Closing Date and addressed to the
Underwriter, signed by the chief executive officer and by the chief financial
officer of the Company, to the effect that certain numbers in the Registration
Statement are accurate in all material respects (except insofar as such numbers
reflect estimated or pro forma information, in which case such numbers shall be
management's best estimate or determination as of the Closing Date).
(o) On the Closing Date, there shall have been furnished to the
Underwriter a customary Secretary's certificate, dated the Closing Date and
addressed to the Underwriter.
(p) On the Closing Date, there shall have been furnished to the
Underwriter a certificate or certificates, dated the Closing Date and addressed
to the Underwriter, signed by each Selling Shareholder to the effect that the
representations and warranties of such Selling Shareholder contained in this
Agreement are true and correct in all material respects as if made at and as of
the Closing Date, and that such Selling Shareholder has complied in all material
respects with all the agreements and satisfied in all material respects all the
conditions on such Selling Shareholder's part to be performed or satisfied at or
prior to the Closing Date.
(q) The Underwriter shall not have notice of an adverse claim on
the Shares within the meaning of Section 8-105 of the Uniform Commercial Code.
(r) Each Selling Shareholder shall have delivered to the
Underwriter a properly completed and executed United States Treasury Department
Form W-9 (or other applicable form or statement specified by Treasury department
regulations in lieu thereof).
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(s) The Company shall have furnished to the Underwriter and
counsel for the Underwriter all of the duly and validly executed letter
agreements referred to in Section 4(a)(x) hereof.
(t) The Company shall have furnished to the Underwriter and the
Underwriter's counsel such additional documents, certificates and evidence as
the Underwriter or counsel for the Underwriter may have reasonably requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Underwriter and counsel for the
Underwriter. The Company will furnish the Underwriter with such conformed copies
of such opinions, certificates, letters and other documents as the Underwriter
shall reasonably request.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless the
Underwriter against any losses, claims, damages or liabilities to which the
Underwriter may become subject under the Securities Act or otherwise (including
in settlement of any litigation if such settlement is effected with the written
consent of the Company), insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, including the information deemed to be a part of the
Registration Statement at the time of effectiveness and at any subsequent time
pursuant to Rules 430A and 430C of the Rules and Regulations, if applicable, any
Preliminary Prospectus, the Time of Sale Disclosure Package, the Prospectus, or
any amendment or supplement thereto, any Issuer Free Writing Prospectus or any
"issuer information" filed or required to be filed by the Company pursuant to
Rule 433 or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse the Underwriter for
any legal or other expenses reasonably incurred by it in connection with
investigating or defending against such loss, claim, damage, liability or
action; provided, however, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage, liability or action arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in the Registration Statement, any Preliminary
Prospectus, the Time of Sale Disclosure Package, the Prospectus, or any such
amendment or supplement, any Issuer Free Writing or in any Prospectus, in
reliance upon and in conformity with written information furnished to the
Company by the Underwriter, specifically for use in the preparation thereof.
This indemnity agreement shall be in addition to any liabilities
which the Company may otherwise have.
(b) Each Selling Shareholder, severally and not jointly, agrees to
indemnify and hold harmless the Underwriter against any losses, claims, damages
or liabilities to which the Underwriter may become subject under the Securities
Act or otherwise (including in settlement of any litigation if such settlement
is effected with the written consent of such Selling Shareholder), insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are
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based upon an untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, any Preliminary Prospectus, the Time of
Sale Disclosure Package, the Prospectus, or any amendment or supplement thereto
(including any documents filed under the Exchange Act and deemed to be
incorporated by reference into the Prospectus) or any Issuer Free Writing
Prospectus, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent and only
to the extent that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement, any Preliminary
Prospectus, the Time of Sale Disclosure Package, the Prospectus, or any
amendment or supplement thereto, or in any Issuer Free Writing Prospectus in
reliance upon and in conformity with written information furnished to the
Company by such Selling Shareholder specifically for use in the preparation
thereof and included in the Registration Statement under the caption "Selling
Shareholders," and will reimburse the Underwriter for any legal or other
expenses reasonably incurred by it in connection with investigating or defending
against such loss, claim, damage, liability or action; provided, however, that
in no event shall a Selling Shareholder be liable under the provisions of this
Section 6(b) for any amount in excess of the aggregate amount of proceeds after
underwriting commissions and discounts which such Selling Shareholder received
from the sale of the Shares pursuant to this Agreement less any amounts such
Selling Shareholder otherwise is required to pay as a result of such untrue
statement or alleged untrue statement or omission or alleged omission.
This indemnity agreement shall be in addition to any liabilities
which such Selling Shareholder may otherwise have.
(c) The Underwriter, on a several but not joint basis, agrees to
indemnify and hold harmless the Company and the Selling Shareholders against any
losses, claims, damages or liabilities to which the Company and the Selling
Shareholders may become subject, under the Securities Act or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of the Underwriter), insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, any Preliminary Prospectus, the Time of Sale Disclosure
Package, the Prospectus, or any amendment or supplement thereto or any Issuer
Free Writing Prospectus, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, any Preliminary Prospectus, the Time of Sale Disclosure Package, the
Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing
Prospectus in reliance upon and in conformity with written information furnished
to the Company by the Underwriter, specifically for use in the preparation
thereof, and will reimburse the Company and the Selling Shareholders for any
legal or other expenses reasonably incurred by the Company or any such Selling
Shareholder in connection with investigating or defending against any such loss,
claim, damage, liability or action.
This indemnity agreement shall be in addition to any liabilities
which the Underwriter may otherwise have.
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(d) Promptly after receipt by an indemnified party under
subsection (a), (b) or (c) above of notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the indemnifying
party in writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve the indemnifying party from any liability
that it may have to any indemnified party except to the extent such indemnifying
party has been materially prejudiced by such failure. In case any such action
shall be brought against any indemnified party, and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in, and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of the indemnifying
party's election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
however, that if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest; (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party or counsel chosen by the indemnified party, which shall be
reasonably acceptable to the indemnifying party, shall have reasonably concluded
and advised the indemnified party in writing that there may be legal defenses
available to the indemnified party and/or other indemnified parties which are
different from or additional to those available to the indemnifying party; (iii)
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 the institution of such action has been received by the
indemnifying party, or (iv) the indemnifying party shall authorize the
indemnified party to employ separate counsel at the expense of the indemnifying
party, then the indemnified party shall have the right to employ separate
counsel to represent the indemnified party, in which event the reasonable fees
and expenses of such separate counsel shall be borne by the indemnifying party
or parties and reimbursed to the indemnified party as incurred. An indemnifying
party shall not be obligated under any settlement agreement relating to any
action under this Section 6 to which it has not agreed in writing.
(e) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) of this Section 6, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of the losses, claims, damages or liabilities referred to in subsection (a), (b)
or (c) of this Section 6, (i) in such proportion as is appropriate to reflect
the relative benefits received by the Selling Shareholders on the one hand and
the Underwriter on the other from the offering of the Shares or (ii) if the
allocation provided by clause (i) of this Section 6(e) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) of this Section 6(e) but also the
relative fault of the Company and the Selling Shareholders on the one hand and
the Underwriter on the other in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the Selling
Shareholders on the one hand and the Underwriter on the other shall be deemed to
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be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Selling Shareholders bear to the total
underwriting discounts and commissions received by the Underwriter, in each case
as set forth in the table on the cover page of the Prospectus. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company, the Selling Shareholders or the Underwriter and the parties' relevant
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. For the avoidance of doubt, it is
acknowledged and agreed that the only information supplied by each Selling
Shareholder consists of the respective Selling Shareholder Information as
defined in Section 6(h). The Company, the Selling Shareholders and the
Underwriter agree that it would not be just and equitable if contributions
pursuant to this Section 6(e) were to be determined by pro rata allocation or by
any other method of allocation which does not take account of the equitable
considerations referred to in the first sentence of this Section 6(e). The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this Section 6(e) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending against any
action or claim which is the subject of this Section 6(e). Notwithstanding the
provisions of this Section 6(e), (x) the Underwriter shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages that the Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission and (y) no Selling Shareholder shall be required to
contribute any amount in excess of the amount by which the aggregate amount of
proceeds after underwriting commissions and discounts such Selling Shareholder
received from the sale of Shares pursuant to this Agreement exceeds any amount
that such Selling Shareholder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. For the
avoidance of doubt, no Selling Shareholder shall be required pursuant to this
subsection (e) of Section 6 to make any contribution with respect to any losses,
claims, damages or liabilities, other than those referred to in subsection (b)
of this Section 6 with respect to such Selling Shareholder. 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.
(f) The obligations of the Company and the Selling Shareholders
under this Section 6 shall be in addition to any liability which the Company and
the Selling Shareholders may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls the Underwriter
within the meaning of the Securities Act; and the obligations of the Underwriter
under this Section 6 shall be in addition to any liability that the Underwriter
may otherwise have and shall extend, upon the same terms and conditions, to each
director of the Company (including any person who, with his consent, is named in
the Registration Statement as about to become a director of the Company), to
each officer of the Company who has signed the Registration Statement and to
each person, if any, who controls the Company or such Selling Shareholder within
the meaning of the Securities Act.
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(g) The Underwriter confirms and the Company and each Selling
Shareholder each acknowledge that the statements with respect to the public
offering of the Shares by the Underwriter set forth in (i) the first, second,
third and fourth sentences of the third paragraph, (ii) the fourth paragraph,
(iii) the fifth paragraph and (iv) the eight paragraph, in each case, of the
"Underwriting" section of the Registration Statement (the "Underwriter's
Information") constitute the only information concerning the Underwriter
furnished in writing to the Company by or on behalf of the Underwriter
specifically for inclusion in the Registration Statement, any Preliminary
Prospectus, the Time of Sale Disclosure Package, the Prospectus or any Issuer
Free Writing Prospectus.
(h) Each Selling Shareholder severally confirms that the
statements in the Registration Statement under the caption "Selling
Shareholders" with respect to the beneficial ownership and number of Shares to
be sold by such Selling Shareholder (the "Selling Shareholder Information") are
correct and constitute the only information concerning such Selling Shareholder
furnished in writing to the Company by such Selling Shareholder specifically for
inclusion in the Registration Statement, any Preliminary Prospectus, the Time of
Sale Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus.
The Company and the Underwriter acknowledge that the Selling Shareholder
Information provided by each Selling Shareholder constitutes the only
information concerning such Selling Shareholder furnished in writing to the
Company by or on behalf of such Selling Shareholder specifically for inclusion
in the Registration Statement, any Preliminary Prospectus, the Time of Sale
Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus.
7. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties, and agreements of the Company and each Selling
Shareholder herein or in certificates delivered pursuant hereto, and the
agreements of the Underwriter, the Company and the Selling Shareholders
contained in Section 6 hereof, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Underwriter
or any controlling person thereof, or the Company or any of its officers,
directors, or controlling persons, or any Selling Shareholder or any controlling
person thereof, and shall survive delivery of, and payment for, the Shares to
and by the Underwriter hereunder.
8. TERMINATION OF THIS AGREEMENT.
(a) The Underwriter shall have the right to terminate this
Agreement by giving notice to the Company and each Selling Shareholder as
hereinafter specified at any time at or prior to the First Closing Date, if (i)
the Company shall have failed, refused or been unable, at or prior to the
Closing Date, to perform any material agreement on its part to be performed
hereunder, (ii) any Selling Shareholder shall have failed, refused or been
unable, at or prior to the Closing Date, to perform any material agreement on
its part to be performed hereunder, (iii) any other material condition of the
Underwriter's obligations hereunder is not fulfilled, (iv) trading in the
Company's Common Stock shall have been suspended by the Commission or the Nasdaq
Global Select Market or trading in securities generally on the Nasdaq Global
Select Market, New York Stock Exchange or the American Stock Exchange shall have
been suspended, (v) minimum or maximum prices for trading shall have been fixed,
or maximum ranges for prices for securities shall have been required, on the
Nasdaq Global Select Market, New York Stock Exchange or the
-35-
American Stock Exchange, by such Exchange or by order of the Commission or any
other governmental authority having jurisdiction, (vi) a banking moratorium
shall have been declared by federal or state authorities, or (vii) there shall
have occurred any attack on, outbreak or escalation of hostilities between the
United States and any foreign or terrorist organization or any declaration by
the United States of a national emergency or war, or any change in financial
markets or any calamity or crisis that, in the Underwriter's reasonable
judgment, is material and adverse and makes it impractical or inadvisable to
proceed with the completion of the sale of and payment for the Shares. Any such
termination shall be without liability of any party to any other party except
that the provisions of Section 4(a)(vii) and 4(a)(viii), Section 4(b)(i) and
Section 6 hereof shall at all times be effective.
(b) If the Underwriter elects to terminate this Agreement as
provided in this Section 8, the Company and each Selling Shareholder, or the
Selling Shareholders' Attorney-in-Fact, shall be notified promptly by the
Underwriter by telephone, confirmed by letter.
9. DEFAULT BY A SELLING SHAREHOLDER. If a Selling Shareholder shall
fail at the Closing Date to sell and deliver the number of Shares which such
Selling Shareholder is obligated to sell hereunder, then the Underwriter may at
the Underwriter's option, by notice from the Underwriter to the Company and the
other Selling Shareholders, either (a) terminate this Agreement without any
liability on the part of any non-defaulting party or (b) elect to purchase the
Shares which the non-defaulting Selling Shareholders have agreed to sell
hereunder.
In the event of a default by the a Selling Shareholder as referred to in
this Section 9, either the Underwriter or the Company shall have the right to
postpone the Closing Date for a period not exceeding seven days in order to
effect any required changes in the Registration Statement, in the Time of Sale
Disclosure Package or in the Prospectus or in any other documents or
arrangements.
No action taken pursuant to this Section 9 shall relieve the defaulting
Selling Shareholder from liability, if any, in respect of such default.
10. NOTICES. Except as otherwise provided herein, all communications
hereunder shall be in writing and, if to the Underwriter, shall be mailed,
delivered or telecopied to Xxxxxxx Xxxxxxx Xxxxxx Securities LLC, Xxx Xxxxx
Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, XX 00000, Attention: General Counsel
(telecopy no. [________]); if to the Company, shall be mailed, delivered or
telecopied to it at X.X. Xxx XX 0000, Xxxxxxxx XX XX, Xxxxxxx, Xxxxxxxxx: Xxxxx
Xxxxxxxx; if to the Selling Shareholders other than Rakoff, at the address set
forth in the Custody Agreement, if to Rakoff, to the address set forth in the
Custody Agreement or in each case to such other address as the person to be
notified may have requested in writing. Any party to this Agreement may change
such address for notices by sending to the parties to this Agreement written
notice of a new address for such purpose.
11. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and assigns and the controlling persons, officers and directors
referred to in Section 6. Nothing in this Agreement is intended or shall be
construed to give to any other person, firm or corporation any legal or
equitable
-36-
remedy or claim under or in respect of this Agreement or any provision herein
contained. The term "successors and assigns" as herein used shall not include
any purchaser, as such purchaser, of any of the Shares from the Underwriter.
12. ABSENCE OF FIDUCIARY RELATIONSHIP. The Company and each Selling
Shareholder acknowledges and agrees that: (a) the Underwriter has been retained
solely to act as an underwriter in connection with the sale of the Shares and
that no fiduciary, advisory or agency relationship between the Company or any
Selling Shareholder and the Underwriter has been created in respect of any of
the transactions contemplated by this Agreement, irrespective of whether the
Underwriter have advised or is advising the Company or any Selling Shareholder
on other matters; (b) the price and other terms of the Shares set forth in this
Agreement were established by the Company and the Selling Shareholders following
discussions and arms-length negotiations with the Underwriter and each of the
Selling Shareholders and the Company is capable of evaluating and understanding
and understands and accepts the terms, risks and conditions of the transactions
contemplated by this Agreement; (c) it has been advised that the Underwriter and
its affiliates are engaged in a broad range of transactions that may involve
interests that differ from those of the Company and the Selling Shareholders and
that the Underwriter has no obligation to disclose such interest and
transactions to the Company or the Selling Shareholders by virtue of any
fiduciary, advisory or agency relationship; (d) it has been advised that the
Underwriter is acting, in respect of the transactions contemplated by this
Agreement, solely for the benefit of the Underwriter, and not on behalf of the
Company or any Selling Shareholder; and (e) it waives to the fullest extent
permitted by law, any claims it may have against the Underwriter for breach of
fiduciary duty or alleged breach of fiduciary duty in respect of any of the
transactions contemplated by this Agreement and agrees that the Underwriter
shall have no liability (whether direct or indirect) to the Company or any
Selling Shareholder in respect of such a fiduciary duty claim on behalf of or in
right of the Company or any Selling Shareholder, including shareholders,
employees or creditors of the Company or creditors of any Selling Shareholder.
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
14. SERVICE OF PROCESS. By the execution and delivery of this Agreement,
the Company hereby designates and appoints Xxxxx X. Xxxxxxxx, Esq. as the
authorized agent of the Company upon whom process may be served in any suit,
proceeding or other action against the Company instituted by the Underwriter, by
any person controlling the Underwriter, by any Selling Shareholder or any person
controlling a Selling Shareholder as to which the Underwriter or Selling
Shareholder or any such controlling person is a party and based upon this
Agreement, or in any other action against the Company in any federal or state
court sitting in the County of New York, arising out of the offering made by the
Prospectus or any purchase or sale of Shares in connection therewith. The
Company, on behalf of itself and each of the subsidiaries, and each Selling
Shareholder expressly accepts the exclusive jurisdiction of any such court in
respect of any such suit, proceeding or other action and, without limiting other
methods of obtaining jurisdiction, expressly submit to exclusive personal
jurisdiction of any such court in respect of any such suit, proceeding or other
action. Such designation and appointment shall be irrevocable, unless and until
a successor authorized agent in the County and State of New York reasonably
acceptable to the Underwriter shall have been appointed by the Company, such
-37-
successor shall have accepted such appointment and written notice thereof shall
have been given to the Underwriter. The Company further agrees that service of
process upon its authorized agent or successor shall be deemed in every respect
personal service of process upon the Company in any such suit, proceeding or
other action. In the event that service of any process or notice of motion or
other application to any such court in connection with any such motion in
connection with any such action or proceeding cannot be made in the manner
described above, such service may be made in the manner set forth in conformance
with the Hague Convention on the Service Abroad of Judicial and Extrajudicial
Documents on Civil and Commercial Matters or any successor convention or treaty.
The Company and each of the Selling Shareholders hereby irrevocably waives any
objection that they may have or hereafter have to the laying of venue of any
such action or proceeding arising out of or based on the Shares, or this
Agreement or otherwise relating to the offering, issuance and sale of the Shares
in any federal or state court sitting in the County of New York and hereby
further irrevocably waives any claim that any such action or proceeding in any
such court has been brought in an inconvenient forum. The Company, and each of
the Selling Shareholders agrees that any final judgment after exhaustion of all
appeals or the expiration of time to appeal in any such action or proceeding
arising out of the sale of the Shares or this Agreement rendered by any such
federal court or state court shall be conclusive and may be enforced in any
other jurisdiction by suit on the judgment or in any other manner provided by
law. Nothing contained in this Agreement shall affect or limit the right of the
Underwriter to serve any process or notice of motion or other application in any
other manner permitted by law or limit or affect the right of the Underwriter to
bring any action or proceeding against the Company or any of the Selling
Shareholders or any of their respective property in the courts of any other
jurisdiction. The Company further agrees to take any and all action, including
the execution and filing of all such instruments and documents, as may be
necessary to continue such designations and appointments or such substitute
designations and appointments in full force and effect.
15. COUNTERPARTS. This Agreement may be executed by facsimile signature
and in one or more counterparts and, if executed in more than one counterpart,
the executed counterparts shall each be deemed to be an original and all such
counterparts shall together constitute one and the same instrument.
[Signature Page Follows]
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Please sign and return to the Company the enclosed duplicates of
this letter whereupon this letter will become a binding agreement between the
Company, each of the Selling Shareholders and the Underwriter in accordance with
its terms.
CRM HOLDINGS, LTD.
By
---------------------------------
Name:
Title:
SELLING SHAREHOLDERS
------------------------------------
Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx Xxxxxxx, Xx.
------------------------------------
Xxxxx X. Xxxxxxx, Xx.
------------------------------------
Xxxx Xxxxxxx
------------------------------------
Xxxxxxxx Xxxxxxxx
Confirmed as of the date first
above mentioned.
XXXXXXX XXXXXXX XXXXXX SECURITIES LLC
By:
-------------------------------
Name:
Title:
