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4,188,129 Shares
CNA Surety Corporation
Common Stock
FORM OF UNDERWRITING AGREEMENT
July 8, 1998
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
XXXXX XXXXXX INC.
As representatives of the
several underwriters
named in Schedule I hereto
c/x Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Certain stockholders named in Schedule II hereto (the "Selling
Shareholders") of CNA Surety Corporation (the "Company"), severally propose to
sell to the several underwriters named in Schedule I hereto (the "Underwriters")
an aggregate of 4,188,129 shares of Common Stock, par value $.01 per share, of
the Company (the "Firm Shares"), each Selling Shareholder selling the amount of
Firm Shares set forth opposite such Selling Shareholder's name set forth on
Schedule II hereto. The Company also proposes to issue and sell to the several
Underwriters not more than 628,219 additional shares of Common Stock, par value
$.01 per share, of the Company (the "Additional Shares"), if requested by the
Underwriters as provided in Section 2 hereof. The Firm Shares and the Additional
Shares are herein collectively called the "Shares". The shares of common stock
of the Company to be outstanding after giving effect to the sales contemplated
hereby are hereinafter referred to as the "Common Stock". The Company and the
Selling Shareholders are hereinafter collectively called the "Sellers".
SECTION 1. Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with
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the provisions of the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "Act"), a
registration statement on Form S-1 (No. 333-56063) including a prospectus
relating to the Shares. The registration statement, as amended at the time when
it became effective, including the information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A under
the Act, is hereinafter referred to as the "Registration Statement"; and the
prospectus in the form first used to confirm sales of Shares is hereinafter
referred to as the "Prospectus". If the company has filed or is requested
pursuant to the terms hereof to file a registration statement pursuant to Rule
462(b) under the Act registering additional shares of Common Stock (a "Rule
462(b) Registration Statement"), then, unless otherwise specified, any reference
herein to the term "Registration Statement" shall be deemed to include such Rule
462(b) Registration Statement.
SECTION 2. Agreements to Sell and Purchase and Lock-Up Agreements. On
the basis of the representations and warranties contained in this Agreement, and
subject to its terms and conditions, (i) each Selling Shareholder agrees,
severally and not jointly, to sell to the Underwriters the number of Firm Shares
set forth opposite such Selling Shareholder's name in Schedule II hereto and
(ii) each Underwriter agrees, severally and not jointly, to purchase from each
Selling Shareholder at a price per Firm Share of $13.06 (the "Purchase Price")
the number of Firm Shares (subject to such adjustments to eliminate fractional
shares as you may determine) which bears the same proportion to the total number
of Firm Shares to be sold by such Selling Shareholder as the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I hereto
bears to the total number of Firm Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to the terms and conditions hereof, (i) the Company
agrees to issue and sell up to 628,219 Additional Shares and (ii) the
Underwriters shall have the right to purchase, severally and not jointly, up to
an aggregate of 628,219 Additional Shares from the Company at the Purchase
Price. Additional Shares may be purchased solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. The
Underwriters may exercise their right to purchase Additional Shares in whole or
in part from time to time by giving written notice thereof to the Company within
30 days after the date of this Agreement. You shall give any such notice on
behalf of the Underwriters and such notice shall specify the aggregate number of
Additional Shares to be purchased pursuant to such exercise and the date for
payment and delivery thereof. The date specified in any such notice shall be a
business day (i) no earlier than the Closing Date (as hereinafter defined), (ii)
no later than ten business days after such notice has been given and (iii) no
earlier than three business days after such notice has been given. If any
Additional Shares are to be purchased, each Underwriter, severally and not
jointly, agrees to purchase from the Company the number of Additional Shares
(subject to such adjustments to eliminate fractional shares as you may
determine) which bears the same proportion to the total number of Additional
Shares to be purchased from the Company as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I bears to the total number of
Firm Shares.
Each Seller hereby agrees not to (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, or otherwise transfer
or dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common
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Stock or (ii) enter into any swap or other arrangement that transfers all or a
portion of the economic consequences associated with the ownership of any Common
Stock (regardless of whether any of the transactions described in clause (i) or
(ii) is to be settled by the delivery of Common Stock, or such other securities,
in cash or otherwise), except to the Underwriters pursuant to this Agreement,
for a period of 180 days after the date of the Prospectus without the prior
written consent of Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation.
Notwithstanding the foregoing, during such period the Company may (i) grant
stock options pursuant to the Company's existing stock option plans, (ii) issue
shares of Common Stock upon the exercise of any option or warrant or the
conversion of a security outstanding on the date hereof and (iii) issue shares
or options in connection with an acquisition in which the acquiror or acquirors
of such shares agree(s) to the restrictions set forth herein. The Company also
agrees not to file any registration statement with respect to any shares of
Common Stock for a period of 180 days after the date of the Prospectus without
the prior written consent of Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation. In addition, each Selling Shareholder agrees that, for a period of
180 days after the date of the Prospectus without the prior written consent of
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation, it will not make any demand
for, or exercise any right with respect to, the registration of any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock. The Company shall, prior to or concurrently with the execution
of this Agreement, deliver an agreement executed by (i) each Selling
Stockholder, (ii) each of the directors and officers of the Company who is not a
Selling Stockholder and (iii) each other stockholder listed on Annex I hereto to
the effect that such person will not, during the period commencing on the date
such person signs such agreement and ending 180 days after the date of the
Prospectus, without the prior written consent of Xxxxxxxxx, Lufkin & Xxxxxxxx
Corporation, (A) engage in any of the transactions described in the first
sentence of this paragraph or (B) make any demand for, or exercise any right
with respect to, the registration of any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock.
SECTION 3. Terms of Public Offering. The Sellers are advised by you
that the Underwriters propose (i) to make a public offering of their respective
portions of the Shares as soon after the execution and delivery of this
Agreement as in your judgment is advisable and (ii) initially to offer the
Shares upon the terms set forth in the Prospectus.
SECTION 4. Delivery and Payment. The Shares shall be represented by
definitive certificates and shall be issued in such authorized denominations and
registered in such names as Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
shall request not later than two business days prior to the Closing Date or the
applicable Option Closing Date (as defined below), as the case may be. The
Shares shall be delivered by or on behalf of the Sellers, with any transfer
taxes thereon duly paid by the respective Sellers, to Xxxxxxxxx, Lufkin &
Xxxxxxxx Securities Corporation through the facilities of The Depository Trust
Company ("DTC"), for the respective accounts of the several Underwriters,
against payment to the Sellers of the Purchase Price therefore by wire transfer
of Federal or other funds immediately available in New York City. The
certificates representing the Shares shall be made available for inspection not
later than 9:30 A.M., New York City time, on the business day prior to the
Closing Date or the applicable Option Closing Date (as defined below), as the
case may be, at the office of DTC or its designated custodian (the "Designated
Office"). The time and date of delivery and payment for the Firm Shares shall be
9:00 A.M., New York City time, on July 14, 1998 or such other time
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on the same or such other date as Xxxxxxxxx, Lufkin & Xxxxxxxx Securities
Corporation, the Company and the Selling Shareholders shall agree in writing.
The time and date of delivery and payment for the Firm Shares are hereinafter
referred to as the "Closing Date". The time and date of delivery and payment for
any Additional Shares to be purchased by the Underwriters shall be 9:00 A.M.,
New York City time, on the date specified in the applicable exercise notice
given by you pursuant to Section 2 or such other time on the same or such other
date as Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation and the Company
shall agree in writing. The time and date of delivery and payment for any
Additional Shares are hereinafter referred to as the "Option Closing Date".
The documents to be delivered on the Closing Date or any Option Closing
Date on behalf of the parties hereto pursuant to Section 9 of this Agreement
shall be delivered at the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, and the Shares shall be delivered at the Designated
Office, all on the Closing Date or such Option Closing Date, as the case may be.
SECTION 5. Agreements of the Company. The Company agrees with you:
(a) To advise you promptly and, if requested by you, to confirm such
advice in writing, (i) of any request by the Commission for amendments to
the Registration Statement or amendments or supplements to the Prospectus
or for additional information, (ii) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement
or of the suspension of qualification of the Shares for offering or sale in
any jurisdiction, or the initiation of any proceeding for such purposes,
(iii) when any amendment to the Registration Statement becomes effective,
(iv) if the Company is required to file a Rule 462(b) Registration
Statement after the effectiveness of this Agreement, when the Rule 462(b)
Registration Statement has become effective and (v) of the happening of any
event during the period referred to in Section 5(d) below which makes any
statement of a material fact made in the Registration Statement or the
Prospectus untrue or which requires the making of any additions to or
changes in the Registration Statement or the Prospectus in order to make
the statements therein not misleading. If at any time the Commission shall
issue any stop order suspending the effectiveness of the Registration
Statement, the Company will use its best efforts to obtain the withdrawal
or lifting of such order at the earliest possible time.
(b) To furnish to you, without charge, three signed copies of the
Registration Statement as first filed with the Commission and of each
amendment to it, including all exhibits, and to furnish to you and each
Underwriter designated by you such number of conformed copies of the
Registration Statement as so filed and of each amendment to it, without
exhibits, as you may reasonably request.
(c) To prepare the Prospectus, the form and substance of which shall be
satisfactory to you, and to file the Prospectus in such form with the
Commission within the applicable period specified in Rule 424(b) under the
Act; during the period specified in Section 5(d) below, not to file any
further amendment to the Registration Statement and not to make any
amendment or supplement to the Prospectus of which you shall not previously
have been advised or to which you shall reasonably object after being so
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advised; and, during such period, to prepare and file with the Commission,
promptly upon your reasonable request, any amendment to the Registration
Statement or amendment or supplement to the Prospectus which may be
necessary or advisable in connection with the distribution of the Shares by
you, and to use its best efforts to cause any such amendment to the
Registration Statement to become promptly effective.
(d) Prior to 10:00 A.M., New York City time, on the first business day
after the date of this Agreement and from time to time thereafter for such
period as, in the opinion of counsel for the Underwriters, a prospectus is
required by law to be delivered in connection with sales by an Underwriter
or a dealer, to furnish in New York City to each Underwriter and any dealer
as many copies of the Prospectus (and of any amendment or supplement to the
Prospectus) as such Underwriter or dealer may reasonably request.
(e) If during the period specified in Section 5(d) any event shall
occur or condition shall exist as a result of which, in the opinion of
counsel for the Underwriters, it becomes necessary to amend or supplement
the Prospectus in order to make the statements therein, in the light of the
circumstances under which they were made, when the Prospectus is delivered
to a purchaser, not misleading, or if, in the opinion of counsel for the
Underwriters, it is necessary to amend or supplement the Prospectus to
comply with any applicable law, forthwith to prepare and file with the
Commission an appropriate amendment or supplement to the Prospectus so that
the statements in the Prospectus, as so amended or supplemented, will not,
in the light of the circumstances under which they were made, when it is so
delivered, be misleading, or so that the Prospectus will comply with
applicable law, and to furnish to each Underwriter and to any dealer as
many copies thereof as such Underwriter or dealer may reasonably request.
(f) Prior to any public offering of the Shares, to cooperate with you
and counsel for the Underwriters in connection with the registration or
qualification of the Shares for offer and sale by the several Underwriters
and by dealers under the state securities or Blue Sky laws of such
jurisdictions as you may request, to continue such registration or
qualification in effect so long as required for distribution of the Shares
and to file such consents to service of process or other documents as may
be necessary in order to effect such registration or qualification;
provided, however, that the Company shall not be required in connection
therewith to qualify as a foreign corporation in any jurisdiction in which
it is not now so qualified or to take any action that would subject it to
general consent to service of process or taxation other than as to matters
and transactions relating to the Prospectus, the Registration Statement,
any preliminary prospectus or the offering or sale of the Shares, in any
jurisdiction in which it is not now so subject.
(g) To mail and make generally available to its stockholders as soon as
practicable an earnings statement covering the twelve-month period ending
September 30, 1999 that shall satisfy the provisions of Section 11 (a) of
the Act, and to advise you in writing when such statement has been so made
available.
(h) During the period of three years after the date of this Agreement,
to furnish to you as soon as available copies of all reports or other
communications furnished to the record holders of Common Stock or furnished
to or filed with the Commission or any
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national securities exchange on which any class of securities of the
Company is listed and such other publicly available information concerning
the Company and its subsidiaries as you may reasonably request.
(i) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of the Sellers' obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the
Company's counsel and the Company's accountants in connection with the
registration and delivery of the Shares under the Act and all other fees
and expenses in connection with the preparation, printing, filing and
distribution of the Registration Statement (including financial statements
and exhibits), any preliminary prospectus, the Prospectus and all
amendments and supplements to any of the foregoing, including the mailing
and delivering of copies thereof to the Underwriters and dealers in the
quantities specified herein, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters, including any
transfer or other taxes payable thereon, (iii) all costs of printing or
producing this Agreement and any other agreements or documents in
connection with the offering, purchase, sale or delivery of the Shares,
(iv) all expenses in connection with the registration or qualification of
the Shares for offer and sale under the securities or Blue Sky laws of the
several states and all costs of printing or producing any Preliminary and
Supplemental Blue Sky Memoranda in connection therewith (including the
filing fees and fees and disbursements of counsel for the Underwriters in
connection with such registration or qualification and memoranda relating
thereto), (v) the filing fees and disbursements of counsel for the
Underwriters in connection with the review and clearance of the offering of
the Shares by the National Association of Securities Dealers, Inc., (vi)
the cost of printing certificates representing the Shares, (vii) the costs
and charges of any transfer agent, registrar and/or depositary, and (viii)
all other costs and expenses incident to the performance of the obligations
of the Company and the Selling Shareholders hereunder for which provision
is not otherwise made in this Section. The provisions of this Section shall
not supersede or otherwise affect any agreement that the Company and the
Selling Shareholders may otherwise have for allocation of such expenses
among themselves.
(j) To use its best efforts to maintain the listing of the Shares on
the New York Stock Exchange ("NYSE") for a period of three years after the
date of this Agreement.
(k) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by the Company
prior to the Closing Date or any Option Closing Date, as the case may be,
and to satisfy all conditions precedent to the delivery of the Shares.
(l) If the Registration Statement at the time of the effectiveness of
this Agreement does not cover all of the Shares, to file a Rule 462(b)
Registration Statement with the Commission registering the Shares not so
covered in compliance with Rule 462(b) by 10:00 P.M., New York City time,
on the date of this Agreement and to pay to the Commission the filing fee
for such Rule 462(b) Registration Statement at the time of the filing
thereof or to give irrevocable instructions for the payment of such fee
pursuant to
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Rule 111 (b) under the Act.
SECTION 6. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) The Registration Statement has become effective (other than any
Rule 462(b) Registration Statement to be filed by the Company after the
effectiveness of this Agreement); any Rule 462(b) Registration Statement
filed after the effectiveness of this Agreement will become effective no
later than 10:00 P.M., New York City time, on the date of this Agreement;
and no stop order suspending the effectiveness of the Registration
Statement is in effect, and no proceedings for such purpose are pending
before or threatened by the Commission.
(b) (i) The Registration Statement (other than any Rule 462(b)
Registration Statement to be filed by the Company after the effectiveness
of this Agreement), when it became effective, did not contain and, as
amended, if applicable, will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) the
Registration Statement (other than any Rule 462(b) Registration Statement
to be filed by the Company after the effectiveness of this Agreement) and
the Prospectus comply and, as amended or supplemented, if applicable, will
comply in all material respects with the Act, (iii) if the Company is
required to file a Rule 462(b) Registration Statement after the
effectiveness of this Agreement, such Rule 462(b) Registration Statement
and any amendments thereto when they become effective (A) will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading and (B) will comply in all material respects with the Act
and (iv) the Prospectus does not contain, and, as amended or supplemented,
if applicable, will not contain, any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this paragraph
do not apply to statements or omissions in the Registration Statement or
the Prospectus based upon information relating to any Underwriter furnished
to the Company in writing by such Underwriter through you expressly for use
therein.
(c) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Act, complied when so filed in all material
respects with the Act, 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
representations and warranties set forth in this paragraph do not apply to
statements or omissions in any preliminary prospectus based upon
information relating to any Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use therein.
(d) Each of the Company and its subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing under
the laws of its jurisdiction of
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incorporation and has the corporate power and authority to carry on its
business as described in the Prospectus and to own, lease and operate its
properties, and each is duly qualified and is in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property requires
such qualification, except where the failure to be so qualified would not
have a material adverse effect on the business, financial condition or
results of operations of the Company and its subsidiaries, taken as a
whole.
(e) Except as disclosed on Schedule III hereto, there are no
outstanding subscriptions, rights, warrants, options, calls, convertible
securities, commitments of sale or liens granted or issued by the Company
or any of its subsidiaries relating to or entitling any person to purchase
or otherwise to acquire any shares of the capital stock of the Company or
any of its subsidiaries, except as otherwise disclosed in the Registration
Statement.
(f) All the Firm Shares have been duly authorized and validly issued
and are fully paid, non-assessable and none of the outstanding shares of
capital stock of the Company (including the Shares to be sold by the
Selling Stockholders) are subject to any preemptive or similar rights; and
the Additional Shares to be issued and sold by the Company have been duly
authorized and, when issued and delivered to the Underwriters against
payment therefor as provided by this Agreement, will be validly issued,
fully paid and non-assessable, and the issuance of such Additional Shares
will not be subject to any preemptive or similar rights.
(g) All of the outstanding shares of capital stock of each of the
Company's subsidiaries have been duly authorized and validly issued and are
fully paid and non-assessable, and are owned by the Company, directly or
indirectly through one or more subsidiaries, free and clear of any security
interest, claim, lien, encumbrance or adverse interest of any nature.
(h) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus under
"Description of Capital Stock"; and the only outstanding shares of capital
stock of the Company are shares of Common Stock.
(i) Neither the Company nor any of its subsidiaries is in violation of
its respective charter or by-laws or in default in the performance of any
material obligation, agreement, covenant or condition contained in any
indenture, loan agreement, mortgage, lease or other agreement or instrument
that is material to the Company and its subsidiaries, taken as a whole, to
which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or their respective property is bound.
(j) The execution, delivery and performance of this Agreement by the
Company, the compliance by the Company with all the provisions hereof and
the consummation of the transactions contemplated hereby will not (i)
require any consent, approval, authorization or other order of, or
qualification with, any court or governmental body or agency (except such
as may be required under the securities or Blue Sky laws of the
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various states), (ii) conflict with or constitute a breach of any of the
terms or provisions of, or a default under, the charter or by-laws of the
Company or any of its subsidiaries, (iii) conflict with or constitute a
material breach of any indenture, loan agreement, mortgage, lease or other
agreement or instrument that is material to the Company and its
subsidiaries, taken as a whole, to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries
or their respective property is bound, (iv) violate or conflict with any
applicable law or any rule, regulation, judgment, order or decree of any
court or any governmental body or agency having jurisdiction over the
Company, any of its subsidiaries or their respective property or (v) result
in the suspension, termination or revocation of any Authorization (as
defined below) of the Company or any of its subsidiaries or any other
impairment of the rights of the holder of any such Authorization, except
where such suspension, termination, revocation or impairment would not,
singly or in the aggregate, have a material adverse effect on the business,
prospects, financial condition or results of operations of the Company and
its subsidiaries, taken as a whole.
(k) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened to which the Company or any of its
subsidiaries is a party or to which any of their respective property is
subject that are required to be described in the Registration Statement or
the Prospectus and are not so described; nor are there any statutes,
regulations, contracts or other documents that are required to be described
in the Registration Statement or the Prospectus or to be filed as exhibits
to the Registration Statement that are not so described or filed as
required.
(l) Each of the Company and its subsidiaries has such permits,
licenses, consents, exemptions, franchises, authorizations and other
approvals (each, an "Authorization") of, and has made all filings with and
notices to, all governmental or regulatory authorities and self-regulatory
organizations and all courts and other tribunals, including, without
limitation, under any applicable Environmental Laws, as are necessary to
own, lease, license and operate its respective properties and to conduct
its business, except where the failure to have any such Authorization or to
make any such filing or notice would not, singly or in the aggregate, have
a material adverse effect on the business, financial condition or results
of operations of the Company and its subsidiaries, taken as a whole. Each
such Authorization is valid and in full force and effect and each of the
Company and its subsidiaries is in material compliance with all the terms
and conditions thereof and with the rules and regulations of the
authorities and governing bodies having jurisdiction with respect thereto;
and no event has occurred (including, without limitation, the receipt of
any notice from any authority or governing body) which allows or, after
notice or lapse of time or both, would allow, revocation, suspension or
termination of any such Authorization or results or, after notice or lapse
of time or both, would result in any other impairment of the rights of the
holder of any such Authorization; except where such failure to be valid and
in full force and effect or to be in compliance, the occurrence of any such
event or the presence of any such restriction would not, singly or in the
aggregate, have a material adverse effect on the business, financial
condition or results of operations of the Company and its subsidiaries,
taken as a whole.
(m) This Agreement has been duly authorized, executed and delivered by
the
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Company.
(n) Deloitte & Touche LLP are independent public accountants with
respect to the Company and its subsidiaries as required by the Act.
(o) Coopers & Xxxxxxx L.L.P. were independent public accountants with
respect to Capsure Holdings Corp., a Delaware corporation ("Capsure"), as
required by the Act.
(p) The financial statements, together with related schedules and notes
forming part of the Registration Statement and the Prospectus (and any
amendment or supplement thereto), present fairly in all material respects
the consolidated financial position, results of operations and cash flows
of the Company and its subsidiaries on the basis stated in the Registration
Statement at the respective dates or for the respective periods to which
they apply; such statements and related schedules and notes have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the other financial and statistical information and data set
forth in the Registration Statement and the Prospectus (and any amendment
or supplement thereto) is, in all material respects, accurately presented
and prepared on a basis consistent with such financial statements and the
books and records of the Company.
(q) The financial statements, together with related schedules and notes
forming part of the Registration Statement and the Prospectus (and any
amendment or supplement thereto), presented fairly in all material respects
the consolidated financial position, results of operations and changes in
financial position of Capsure and its subsidiaries on the basis stated in
the Registration Statement at the respective dates or for the respective
periods to which they apply; such statements and related schedules and
notes were prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed therein; and the other financial and statistical information and
data set forth in the Registration Statement and the Prospectus (and any
amendment or supplement thereto) is, in all material respects, accurately
presented and prepared on a basis consistent with such financial statements
and the books and records of Capsure.
(r) The pro forma financial statements of the Company and its
subsidiaries and the related notes thereto set forth in the Registration
Statement and the Prospectus (and any supplement or amendment thereto) have
been prepared on a basis consistent with the historical financial
statements of the Company and its subsidiaries, give effect to the
assumptions used in the preparation thereof on a reasonable basis and in
good faith. Such pro forma financial statements have been prepared in
accordance with the applicable requirements of Rule 11-02 of Regulation S-X
promulgated by the Commission. The other pro forma financial and
statistical information and data set forth in the Registration Statement
and the Prospectus (and any supplement or amendment thereto) are, in all
material respects, accurately presented and prepared on a basis consistent
with the pro forma financial statements.
(s) The Company is not and, after giving effect to the offering and
sale of the
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Shares and the application of the proceeds thereof as described in the
Prospectus, will not be, an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended.
(t) Except as disclosed on Schedule IV hereto, there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company or to
require the Company to include such securities with the Shares registered
pursuant to the Registration Statement.
(u) Since the respective dates as of which information is given in the
Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this
Agreement), (i) there has not occurred any material adverse change or, to
the knowledge of the Company, any development which could reasonably be
expected to cause a prospective material adverse change in the condition,
financial or otherwise, or the earnings, business, management or operations
of the Company and its subsidiaries, taken as a whole, (ii) there has not
been any material adverse change or, to the knowledge of the Company, any
development which could reasonably be expected to cause a prospective
material adverse change in the capital stock or in the long-term debt of
the Company or any of its subsidiaries and (iii) neither the Company nor
any of its subsidiaries has incurred any material liability or obligation,
direct or contingent, other than liabilities under surety bonds in the
ordinary course of business.
(v) The Common Stock is listed on the NYSE.
(w) Except as disclosed in the Prospectus, there are no business
relationships or related party transactions required to be disclosed
therein by Item 404 of Regulation S-K of the Commission.
(x) There is (i) no significant unfair labor practice complaint pending
against the Company or any of its subsidiaries or, to the best knowledge of
the Company, threatened against any of them, before the National Labor
Relations Board or any state or local labor relations board, and no
significant grievance or more significant arbitration proceeding arising
out of or under any collective bargaining agreement is so pending against
the Company or any of its subsidiaries or, to the best knowledge of the
Company, threatened against any of them, and (ii) no significant strike,
labor dispute, slowdown or stoppage pending against the Company or any of
its subsidiaries or, to the best knowledge of the Company, threatened
against it or any of its subsidiaries except for such actions specified in
clause (i) or (ii) above, which, singly or in the aggregate could not
reasonably be expected to have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(y) The Company and each of its subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in
12
conformity with generally accepted accounting principles and to maintain
asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.
(z) All material tax returns required to be filed by the Company and
each of its subsidiaries in any jurisdiction have been filed, other than
those filings being contested in good faith, and all material taxes,
including withholding taxes, penalties and interest, assessments, fees and
other charges due pursuant to and as set forth in such returns or pursuant
to any assessment received by the Company or any of its subsidiaries have
been paid, other than those being contested in good faith or for which
adequate reserves have been provided.
(aa) The Company and each of its subsidiaries (i) own or possess
adequate rights to use all material trademarks, copyrights and licenses
necessary for the conduct of their respective businesses and (ii) have no
reason to believe that the conduct of their respective businesses will
conflict with, and have not received any notice of any claim of conflict
with, any such rights of others which would render any rights of the
Company or any of its subsidiaries invalid or inadequate to protect the
interest of the Company or such subsidiary therein and which infringement
or conflict (if the subject of any unfavorable decision, ruling or
finding), invalidity or inadequacy, individually or in the aggregate, would
have a material adverse affect on the Company and its subsidiaries, taken
as a whole.
(bb) To the best of the Company's knowledge, except as disclosed in the
Registration Statement, no change in any insurance laws, rules or
regulations has been introduced which would 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 upon
the financial condition, business affairs or results of operations of the
Company and its Insurance Subsidiaries (as defined below) considered as one
enterprise. As used in this Agreement, "Insurance Subsidiaries" shall be
the collective reference to Western Surety Company ("Western Surety") and
Universal Surety of America ("USA").
(cc) The Company and the Insurance Subsidiaries have filed all reports,
information statements and other documents with the insurance regulatory
authorities of their respective jurisdictions of incorporation as are
required to be filed pursuant to the insurance statutes of such
jurisdictions and the rules and regulations of the insurance regulator
authorities thereunder (the "Applicable Insurance Laws"), except where the
failure to file such statements or reports would not, individually or in
the aggregate, have a material adverse effect on the financial condition,
business affairs or results of operations of the Company and its
subsidiaries taken as a whole.
(dd) The Company and the Insurance Subsidiaries have made no material
changes in their reserving practices or accounting policies since December
31, 1997.
13
(ee) All reinsurance treaties, agreements and arrangements to which the
Company or any Insurance Subsidiary is a party are in full force and effect
and neither the Company nor any Insurance Subsidiary is in violation of or
in default in the performance, observance or fulfillment of, any
obligation, agreement, covenant or condition contained therein which
violation or default would reasonably be expected to have a material
adverse effect on the financial condition, business affairs or results of
operations of the Company and its subsidiaries taken as a whole; neither
the Company nor any Insurance Subsidiary has received any notice from any
of the other parties to such treaties, contracts or agreements that such
other party intends not to perform such treaty and, to the best knowledge
of the Company, the Company has no reason to believe that any of the other
parties to such treaties or arrangements will be unable to perform such
treaty or arrangement.
(ff) The 1997 statutory financial statements of the Company and the
Insurance Subsidiaries have been prepared in conformity with statutory
accounting principles or practices required or permitted by the National
Association of Insurance Commissioners, by the South Dakota Department of
Commerce and Regulation -- Division of Insurance (in the case of Western
Surety) and the Texas Department of Insurance (in the case of USA) and such
statutory accounting principles and 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 combined statutory financial position of the Company
or the Insurance Subsidiaries, as the case may be, as of the dates thereof,
and the statutory basis results of operations of the Company or the
Insurance Subsidiaries, as the case may be, for the periods covered thereby
is in conformity with such statutory accounting principles and practices.
(gg) Western Surety is rated "A+" (Superior) and USA is rated "A"
(Excellent) by A.M. Best & Company.
(hh) Each certificate signed by any officer of the Company and
delivered to the Underwriters or counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company to the
Underwriters as to the matters covered thereby.
SECTION 7. Representations and Warranties of the Selling Shareholders.
Each Selling Shareholder represents and warrants to each Underwriter that:
(a) Such Selling Shareholder is the lawful owner of the Firm Shares to
be sold by such Selling Shareholder pursuant to this Agreement and has, and
on the Closing Date will have, good and clear title to such Firm Shares,
free of all restrictions on transfer, liens, encumbrances, security
interests, equities and claims whatsoever (subject to any lien created
hereby and restrictions arising under applicable securities law, which do
not survive the Closing).
(b) Such Selling Shareholder has, and on the Closing Date will have,
full legal right, power and authority, and all authorization and approval
required by law, to enter into this Agreement and the Power of Attorney
(the "Power of Attorney") of such Selling Shareholder, if applicable,
appointing certain individuals as such Selling Shareholder's
14
attorneys-in-fact (the "Attorneys") to the extent set forth therein,
relating to the transactions contemplated hereby and by the Registration
Statement and to sell, assign, transfer and deliver the Shares to be sold
by such Selling Shareholder in the manner provided herein and therein.
(c) This Agreement has been duly authorized, executed and delivered by
or on behalf of such Selling Shareholder.
(d) The Power of Attorney of such Selling Shareholder has been duly
authorized, executed and delivered by such Selling Shareholder and is a
valid and binding instrument of such Selling Shareholder, enforceable in
accordance with its terms, and, pursuant to such Power of Attorney, such
Selling Shareholder has, among other things, authorized the Attorneys, or
any one of them, to execute and deliver on such Selling Shareholder's
behalf this Agreement and any other document that they, or any one of them,
may deem necessary or desirable in connection with the transactions
contemplated hereby and thereby and to deliver the Firm Shares to be sold
by such Selling Shareholder pursuant to this Agreement.
(e) Upon delivery of and payment for the Firm Shares to be sold by such
Selling Shareholder pursuant to this Agreement, the Underwriters will
acquire all of the rights of such Selling Shareholder and will also acquire
their interest in such Firm Shares free of any adverse claim.
(f) The execution, delivery and performance of this Agreement and Power
of Attorney, if applicable, of such Selling Shareholder by or on behalf of
such Selling Shareholder, the compliance by such Selling Shareholder with
all the provisions hereof and thereof and the consummation of the
transactions contemplated hereby and thereby will not (i) require any
consent, approval, authorization or other order of, or qualification with,
any court or governmental body or agency (except such as may be required
under the securities or Blue Sky laws of the various states), (ii) conflict
with or constitute a breach of any of the terms or provisions of, or a
default under, the organizational documents of such Selling Shareholder, if
such Selling Shareholder is not an individual, or any indenture, loan
agreement, mortgage, lease or other agreement or instrument to which such
Selling Shareholder is a party or by which such Selling Shareholder or any
property of such Selling Shareholder is bound or (iii) violate or conflict
with any applicable law or any rule, regulation, judgment, order or decree
of any court or any governmental body or agency having jurisdiction over
such Selling Shareholder or any property of such Selling Shareholder, other
than, in the case of clauses (ii) and (iii), any conflict or violation
that, would not affect the validity of, or adversely affect the Selling
Shareholder's ability to consummate the transactions contemplated
hereunder.
(g) The information in the Registration Statement under the caption
"Principal and Selling Stockholders" which specifically relates to such
Selling Shareholder does not, and will not on the Closing Date, 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,
in the light of the circumstances under which they were made, not
misleading.
15
(h) At any time during the period described in Section 5(d), if there
is any change in the information referred to in Section 7(g), such Selling
Shareholder will immediately notify you of such change.
(i) Such Selling Stockholder 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 pursuant to the distribution contemplated by this Agreement, and
other than as permitted by the Act, such Selling Stockholder has not
distributed and will not distribute any prospectus or other offering
material in connection with the offering and sale of the Shares.
(j) Each certificate signed by or on behalf of such Selling Shareholder
and delivered to the Underwriters or counsel for the Underwriters shall be
deemed to be a representation and warranty by such Selling Shareholder to
the Underwriters as to the matters covered thereby.
SECTION 8. Indemnification. (a) The Company agrees to indemnify and
hold harmless each Underwriter, its directors, its officers and each person, if
any, who controls any Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), from and against any and all losses, claims, damages, liabilities and
judgments (including, without limitation, any legal or other expenses incurred
in connection with investigating or defending any matter, including any action,
that could give rise to any such losses, claims, damages, liabilities or
judgments) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or any amendment
thereto), the Prospectus (or any amendment or supplement thereto) or any
preliminary prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or judgments are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information relating
to any Underwriter furnished in writing to the Company by such Underwriter
through you expressly for use therein; provided, however, that the foregoing
indemnity agreement with respect to any preliminary prospectus shall not inure
to the benefit of any Underwriter who failed to deliver a Prospectus (as then
amended or supplemented, provided by the Company to the several Underwriters in
the requisite quantity and on a timely basis to permit proper delivery on or
prior to the Closing Date) to the person asserting any losses, claims, damages
and liabilities and judgments caused by any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, if
such material misstatement or omission or alleged material misstatement or
omission was cured in such Prospectus and such Prospectus was required by law to
be delivered at or prior to the written confirmation of sale to such person.
(b) Each of the Selling Shareholders agrees, severally and not jointly,
to indemnify and hold harmless each Underwriter, its directors, its officers and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to each
16
Underwriter, but only with reference to information relating to such Selling
Shareholder furnished in writing by or on behalf such Selling Shareholder
expressly for use in the Registration Statement, the Prospectus or any
preliminary prospectus. Notwithstanding the foregoing, the aggregate liability
of any Selling Shareholder pursuant to this Section 8(b) shall be limited to an
amount equal to the total proceeds (before deducting underwriting discounts and
commissions and expenses) received by such Selling Shareholder from the
Underwriters for the sale of the Firm Shares sold by such Selling Shareholder
hereunder; provided, however, that the foregoing indemnity agreement with
respect to any preliminary prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages and
liabilities and judgments purchased Shares, or any person controlling such
Underwriter, if a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not sent
or given by or on behalf of such Underwriter to such person, if required by law
so to have been delivered, at or prior to the written confirmation of the sale
of the Shares to such person, and if the Prospectus (as so amended and
supplemented) would have cured the defect giving rise to such loss, claim,
damage, liability or judgment. The Company and the Selling Shareholders may
enter into other agreements amongst themselves with respect to the
indemnification obligations hereunder, provided that such agreements shall not
affect the indemnification obligations of the Company and the Selling
Shareholders to the several Underwriters under this Agreement.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement, each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, each Selling
Shareholder and each person, if any, who controls such Selling Shareholder
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company and the Selling
Shareholders to such Underwriter but only with reference to information relating
to such Underwriter furnished in writing to the Company by such Underwriter
through you expressly for use in the Registration Statement (or any amendment
thereto), the Prospectus (or any amendment or supplement thereto) or any
preliminary prospectus.
(d) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a), 8(b) or 8(c)
(the "indemnified party"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "indemnifying party") in
writing and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) or 8(b) and 8(c), the Underwriter shall
not be required to assume the defense of such action pursuant to this Section
8(d), but may employ separate counsel and participate in the defense thereof,
but the fees and expenses of such counsel, except as provided below, shall be at
the expense of such Underwriter). Any indemnified party shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the indemnified party unless (i) the employment of such counsel shall have been
specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party shall have failed to assume the defense of such action or
employ counsel reasonably satisfactory to the indemnified party or (iii) the
named parties to any such action (including any impleaded parties)
17
include both the indemnified party and the indemnifying party, and the
indemnified party shall have been advised by such counsel that there may be one
or more legal defenses available to it which are different from or additional to
those available to the indemnifying party (in which case the indemnifying party
shall not have the right to assume the defense of such action on behalf of the
indemnified party). In any such case, the indemnifying party shall not, in
connection with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for (i) the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for all Underwriters, their
officers and directors and all persons, if any, who control any Underwriter
within the meaning of either Section 15 of the Act or Section 20 of the Exchange
Act, (ii) the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for the Company, its directors, its officers who
sign the Registration Statement and all persons, if any, who control the Company
within the meaning of either such Section and (iii) the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all Selling Shareholders and all persons, if any, who control any Selling
Shareholder within the meaning of either such Section, and all such fees and
expenses shall be reimbursed as they are incurred. In the case of any such
separate firm for the Underwriters, their officers and directors and such
control persons of any Underwriters, such firm shall be designated in writing by
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation. In the case of any such
separate firm for the Company and such directors, officers and control persons
of the Company, such firm shall be designated in writing by the Company. In the
case of any such separate firm for the Selling Shareholders and such control
persons of any Selling Shareholders, such firm shall be designated in writing by
the Attorneys. The indemnifying party shall indemnify and hold harmless the
indemnified party from and against any and all losses, claims, damages,
liabilities and judgments by reason of any settlement of any action (i) effected
with its written consent or (ii) effected without its written consent if the
settlement is entered into more than twenty business days after the indemnifying
party shall have received a request from the indemnified party for reimbursement
for the fees and expenses of counsel (in any case where such fees and expenses
are at the expense of the indemnifying party) and, prior to the date of such
settlement, the indemnifying party shall have failed to comply with such
reimbursement request. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement or compromise of, or
consent to the entry of judgment with respect to, any pending or threatened
action in respect of which the indemnified party is or could have been a party
and indemnity or contribution may be or could have been sought hereunder by the
indemnified party, unless such settlement, compromise or judgment (i) includes
an unconditional release of the indemnified party from all liability on claims
that are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(e) To the extent the indemnification provided for in this Section 8 is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in the case of
the Company (x) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Shareholders on the one hand
and the Underwriters on the other hand from the offering of the Shares or (y) if
the allocation provided by clause 8(e)(i)(x) above is not permitted
18
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 8(e)(i)(x) above but also the relative
fault of the Company and the Selling Shareholders on the one hand and the
Underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or judgments, as
well as any other relevant equitable considerations and (ii) in the case of any
Selling Shareholder (x) in such proportion as is appropriate to reflect the
relative benefits received by such Selling Shareholder on the
one hand and the Underwriters on the other hand from the offering of the Firm
Shares sold by such Selling Shareholder or (y) if the allocation provided by
clause 8(e)(ii)(x) above is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause 8(e)(ii)(x) above but also the relative fault of such Selling
Shareholders on the one hand and the Underwriters on the other hand in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received (A) as between the
Company and the Selling Shareholders on the one hand and the Underwriters on the
other hand shall be deemed to be in the same proportion as the total net
proceeds from the offering (after deducting underwriting discounts and
commissions, but before deducting expenses) received by the Selling
Shareholders, and the total underwriting discounts and commissions received by
the Underwriters, bear to the total price to the public of the Shares and (B) as
between each Selling Shareholder on the one hand and the Underwriters on the
other hand shall be deemed to be in the same proportion as the total net
proceeds from the offering (after deducting underwriting discounts and
commissions, but before deducting expenses) received by such Selling Shareholder
bear to the underwriting discounts and commissions received by the Underwriters
in respect of the Firm Shares sold by such Selling Shareholder, in each case as
set forth in the table on the cover page of the Prospectus. The relative fault
(A) as between the Company and the Selling Shareholders on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Selling Shareholders on the one hand or the
Underwriters on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission and (B) as between each Selling Shareholder on the one hand and the
Underwriters on the other hand 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 such Selling Shareholder on the one hand or the Underwriters on the
other hand and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Sellers and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 8(e) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such indemnified party in
connection with investigating or defending any matter, including any action,
that could have given rise to such losses, claims, damages, liabilities or
judgments. Notwithstanding the provisions of this Section 8, no Underwriter
shall
19
be required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission and no Selling Shareholder shall be
required to contribute any amount in excess of the amount by which the total
price at which the Firm Shares of such Selling Shareholders were offered to the
public exceeds the amount of any damages which such Selling Shareholder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission and no Selling Shareholder shall be
required to contribute in respect of any losses, claims, damages, liabilities or
judgments (or expenses incurred in connection therewith) unless the same arise
with respect to information relating to such Selling Shareholder furnished in
writing by or on behalf of the Selling Shareholder for use in the Registration
Statement (or any amendment thereto), the Prospectus (or any amendment or
supplement thereto) or any preliminary prospectus. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 8(e) are several in proportion to the respective number
of Shares purchased by each of the Underwriters hereunder and not joint.
(f) The remedies provided for in this Section 8 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
(g) Each Selling Shareholder hereby designates CNA Surety Corporation,
XXX Xxxxx, Xxxxxxx, Xxxxxxxx 00000, as its authorized agent, upon which process
may be served in any action which may be instituted in any state or federal
court in the State of New York by any Underwriter, any director or officer of
any Underwriter or any person controlling any Underwriter asserting a claim for
indemnification or contribution under or pursuant to this Section 8, and each
Selling Shareholder will accept the jurisdiction of such court in such action,
and waives, to the fullest extent permitted by applicable law, any defense based
upon lack of personal jurisdiction or venue. A copy of any such process shall be
sent or given to such Selling Shareholder, at the address for notices specified
in Section 12 hereof.
SECTION 9. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Firm Shares under this Agreement
are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company contained in
this Agreement shall be true and correct on the Closing Date with the same
force and effect as if made on and as of the Closing Date.
(b) If the Company is required to file a Rule 462(b) Registration
Statement after the effectiveness of this Agreement, such Rule 462(b)
Registration Statement shall have become effective by 10:00 P.M., New York
City time, on the date of this Agreement; and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been commenced or shall be pending
before or, to the knowledge of the Company or the Underwriters,
contemplated
20
by the Commission.
(c) You shall have received on the Closing Date a certificate dated the
Closing Date, signed by Xxxx X. Xxxxxxxx, in his capacity as President and
Chief Executive Officer of the Company, and Xxxx X. Xxxxxxxx, in his
capacity as Vice President and Chief Financial Officer of the Company,
confirming the matters set forth in Sections 6(w), 9(a) and 9(b) and that
the Company has complied with all of the agreements and satisfied all of
the conditions herein contained and required to be complied with or
satisfied by the Company on or prior to the Closing Date.
(d) Since the respective dates as of which information is given in the
Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this
Agreement), (i) there shall not have occurred any change or any development
involving a prospective change in the condition, financial or otherwise, or
the earnings, business, management or operations of the Company and its
subsidiaries, taken as a whole, (ii) there shall not have been any change
or any development involving a prospective change in the capital stock or
in the long-term debt of the Company or any of its subsidiaries and (iii)
neither the Company nor any of its subsidiaries shall have incurred any
liability or obligation, direct or contingent, the effect of which, in any
such case described in clause 9(d)(i), 9(d)(ii) or 9(d)(iii), in your
judgment, is material and adverse and, in your judgment, makes it
impracticable to market the Shares on the terms and in the manner
contemplated in the Prospectus.
(e) All the representations and warranties of each Selling Shareholder
contained in this Agreement shall be true and correct on the Closing Date
with the same force and effect as if made on and as of the Closing Date and
you shall have received on the Closing Date a certificate dated the Closing
Date from each Selling Shareholder to such effect and to the effect that
such Selling Shareholder has complied with all of the agreements and
satisfied all of the conditions herein contained and required to be
complied with or satisfied by such Selling Shareholder on or prior to the
Closing Date.
(f) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the Closing
Date, of Seyfarth, Shaw, Xxxxxxxxxxx & Xxxxxxxxx ("Xxxxxxxx, Xxxx"),
counsel for the Company, to the effect that:
(i) each of the Company and its subsidiaries has been
incorporated, is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation and has the
corporate power and authority to carry on its business as described in
the Prospectus and to own, lease and operate its properties;
(ii) the Firm Shares have been duly authorized and validly
issued and are fully paid, non-assessable and not subject to any
preemptive or similar rights;
(iii) the Additional Shares to be issued and sold by the
Company hereunder have been duly authorized and, if and when issued
and delivered to the
21
Underwriters against payment therefor as provided by this Agreement,
will be validly issued, fully paid and non-assessable, and the
issuance of such Additional Shares will not be subject to any
preemptive or similar rights;
(iv) all of the outstanding shares of capital stock of each
of the Company's Insurance Subsidiaries have been duly authorized and
validly issued and are fully paid and non-assessable, and are owned by
the Company, directly or indirectly through one or more subsidiaries,
free and clear of any security interest, claim, lien, encumbrance or
adverse interest of any nature;
(v) this Agreement has been duly authorized, executed and
delivered by the Company;
(vi) the authorized capital stock of the Company conforms as
to legal matters to the description thereof contained in the
Prospectus under the heading "Description of Capital Stock";
(vii) the Registration Statement has become effective under
the Act, no stop order suspending its effectiveness has been issued
and no proceedings for that purpose are, to the best of such counsel's
knowledge, pending before or contemplated by the Commission;
(viii) the statements under the captions "Description of
Capital Stock" in the Prospectus and Items 14 and 15 of Part II of the
Registration Statement, insofar as such statements constitute a
summary of the legal matters, documents or proceedings referred to
therein, fairly present the information required with respect to such
legal matters, documents and proceedings;
(ix) the execution, delivery and performance of this
Agreement by the Company, the compliance by the Company with all the
provisions hereof and the consummation of the transactions
contemplated hereby will not (A) require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the
securities or Blue Sky laws of the various states or under applicable
state insurance laws if any person acquires an aggregate of more than
10% of the outstanding Common Stock pursuant to the offering), (B)
conflict with or constitute a breach of any of the terms or provisions
of, or a default under, the charter or by-laws of the Company or any
of its subsidiaries or conflict with or constitute a material breach
of any of the terms or provisions of, or a default under, any
indenture, loan agreement, mortgage, lease or other agreement or
instrument that has been identified as material to the business of the
Company and its subsidiaries by an officer of the Company to such
counsel to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries or their respective
property is bound (other than as to whether any such action would
constitute a breach or default with respect to any financial ratios or
representation or warranty relating to the financial condition of the
Company or any of its subsidiaries as to which such counsel need not
express any
22
opinion) or (C) violate or conflict with, in any material respect, any
applicable U.S. Federal, Illinois or Delaware General Corporation law,
rule, regulation (other than with respect to any state securities or
"blue sky" laws or any insurance regulatory or administrative matters
or tax matters as to which such counsel need not express any opinion),
or any judgment, order or decree of any Illinois court, governmental
body or agency having jurisdiction over the Company, any of its
subsidiaries or their respective property;
(x) such counsel does not know of any legal or governmental
proceedings pending or threatened (other than insurance regulatory or
administrative proceedings, as to which such counsel need not express
any opinion) to which the Company or any of its subsidiaries is a
party or to which any of their respective property is subject that are
required to be described in the Registration Statement or the
Prospectus and are not so described, or of any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement that are not so described or filed as
required;
(xi) the Company is not and, after giving effect to the
offering and sale of the Additional Shares and the application of the
proceeds thereof as described in the Prospectus, will not be, an
"investment company" as such term is defined in the Investment Company
Act of 1940, as amended;
(xii) except as set forth on Schedule IV hereto, to the best
of such counsel's knowledge, there are no contracts, agreements or
understandings between the Company and any person granting such person
the right to require the Company to file a registration statement
under the Act with respect to any securities of the Company or to
require the Company to include such securities with the Shares
registered pursuant to the Registration Statement;
(xiii) (A) the Registration Statement and the Prospectus and
any supplement or amendment thereto (except for the financial
statements, schedules and other financial and statistical data
included therein as to which no opinion need be expressed) comply as
to form, in all material respects, with the Act, (B) nothing has come
to the attention of such counsel that has caused such counsel to
believe that at the time the Registration Statement became effective,
the Registration Statement (except for the financial statements,
schedules and other financial and statistical data as to which such
counsel need not express any belief) contained any untrue statement of
a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading and (C) nothing has come to the attention of such counsel
that has caused such counsel to believe that the Prospectus, as
amended or supplemented, if applicable (except for the financial
statements and other financial and statistical data, as aforesaid)
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading;
23
The opinion of Seyfarth, Xxxx described in Section 9(f) above shall be
rendered to you at the request of the Company and the Selling Shareholders and
shall so state therein.
(g) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the Closing Date,
of Xxxxxxxxx & Xxxxxxxxxxx, P.C., counsel for the Selling Shareholders, with
respect to each of the Selling Shareholders other than Xxxxx X. Xxxxxxxxx and
Xxxxxxxx Xxxxxxxxx to the effect that:
(i) such Selling Stockholder is the record owner of the
Shares to be sold by such Selling Stockholder pursuant to this
Agreement;
(ii) such Selling Shareholder has full legal right, power
and authority, and all authorization and approval required by law, to
enter into this Agreement and the Power of Attorney of such Selling
Shareholder, as applicable, and to sell, assign, transfer and deliver
the Shares to be sold by such Selling Shareholder in the manner
provided herein and therein;
(iii) this Agreement has been duly authorized, executed and
delivered by or on behalf of each Selling Shareholder;
(iv) the Power of Attorney of each such Selling Shareholder,
as applicable, has been duly authorized, executed and delivered by
such Selling Shareholder and is a valid and binding instrument of such
Selling Shareholder, enforceable in accordance with its terms, and,
pursuant to such Power of Attorney such Selling Shareholder has, among
other things, authorized the Attorneys, or any one of them, to execute
and deliver on such Selling Shareholder's behalf this Agreement and
any other document they, or any one of them, may deem necessary or
desirable in connection with the transactions contemplated hereby and
thereby and to deliver the Shares to be sold by such Selling
Shareholder pursuant to this Agreement;
(v) assuming that the Underwriters purchase the Shares to be
delivered by or on behalf of each of such Selling Shareholders at the
Closing without notice of any adverse claim, as such term is used in
Section 8-303 of the Uniform Commercial Code, upon the delivery of
certificates representing such Shares and payment by the Underwriters
of the purchase price therefor pursuant to the Underwriting Agreement,
the Underwriters will acquire their interest in such Shares, free and
clear of all adverse claims.
(vi) the execution, delivery and performance of this
Agreement and Power of Attorney of each such Selling Shareholder by
such Selling Shareholder, the compliance by such Selling Shareholder
with all the provisions hereof and thereof and the consummation of the
transactions contemplated hereby and thereby will not (A) require any
consent, approval, authorization or other order of, or qualification
with, any court or governmental body or agency (except such as may be
required under the securities or Blue Sky laws of the various
24
states), (B) conflict with or constitute a breach of any of the terms
or provisions of, or a default under, the organizational documents of
such Selling Shareholder, if such Selling Shareholder is not an
individual, or, to our knowledge, any indenture, loan agreement,
mortgage, lease or other agreement or instrument to which such Selling
Shareholder is a party or by which any property of such Selling
Shareholder is bound or (C) violate or conflict with any applicable
law or any rule, regulation, judgment, order or decree of any court or
any governmental body or agency having jurisdiction over such Selling
Shareholder or any property of such Selling Shareholder, except in the
case of clauses (B) or (C), for such conflicts, breaches, defaults or
violations that, singly or in the aggregate, could not reasonably be
expected to have a material adverse effect on the consummation of the
transactions contemplated hereby or thereby;
and with respect to Xxxxx X. Xxxxxxxxx and Xxxxxxxx Xxxxxxxxx, an
opinion to the effect that:
(vii) assuming that the Underwriters purchase the Shares to
be delivered by or on behalf of such Selling Shareholder at the
Closing without notice of any adverse claim, as such term is used in
Section 8-303 of the Uniform Commercial Code, upon the delivery of
certificates representing such Shares and payment by the Underwriters
of the purchase price therefor pursuant to the Underwriting Agreement,
the Underwriters will acquire their interest in such Shares, free and
clear of all adverse claims.
The opinion of Xxxxxxxxx & Xxxxxxxxxxx, P.C. described in Section 9(g)
above shall be rendered to you at the request of the Selling Shareholders
and shall so state therein.
(h) You shall have received on the Closing Date an opinion, dated the
Closing Date, of Xxxxxxx Xxxxxxx & Xxxxxxxx, counsel for the Underwriters,
in form and substance satisfactory to you.
In giving such opinions with respect to the matters covered by Section
9(f)(xiv), counsel for the Company and counsel for the Underwriters may
state that their opinion and belief are based upon their participation in
the preparation of the Registration Statement and Prospectus and any
amendments or supplements thereto and review and discussion of the contents
thereof, but are without independent check or verification except as
specified.
(i) You shall have received, on each of the date hereof and the Closing
Date, a letter dated the date hereof or the Closing Date, as the case may
be, in form and substance satisfactory to you, from Deloitte & Touche LLP,
independent public accountants, containing the information and statements
of the type ordinarily included in accountants' "comfort letters" to
Underwriters with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus.
(j) You shall have received, on each of the date hereof and the Closing
Date, a
25
letter dated the date hereof or the Closing Date, as the case may be, in
form and substance satisfactory to you, from Coopers & Xxxxxxx L.L.P.,
independent public accountants, containing the information and statements
of the type ordinarily included in accountants' "comfort letters" to
Underwriters with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus.
(k) The Company shall have delivered to you the agreements specified in
Section 2 hereof which agreements shall be in full force and effect on the
Closing Date.
(l) The Company and the Selling Shareholders shall not have failed on
or prior to the Closing Date to perform or comply with any of the
agreements herein contained and required to be performed or complied with
by the Company or the Selling Shareholders, as the case may be, on or prior
to the Closing Date.
(m) You shall have received on the Closing Date, a certificate of each
Selling Shareholder who is not a U.S. Person (as defined under applicable
U.S. federal tax legislation) to the effect that such Selling Shareholder
is not a U.S. Person, which certificate may be in the form of a properly
completed and executed United States Treasury Department Form W-8 (or other
applicable form or statement specified by Treasury Department regulations
in lieu thereof).
The several obligations of the Underwriters to purchase any Additional
Shares hereunder are subject to the delivery to you on the applicable Option
Closing Date of such documents as you may reasonably request with respect to the
good standing of the Company, the due authorization and issuance of such
Additional Shares and other matters related to the issuance of such Additional
Shares.
SECTION 10. Effectiveness of Agreement and Termination. This Agreement
shall become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time on or prior to the Closing
Date by you by written notice to the Sellers if any of the following has
occurred: (i) any outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic conditions or in the
financial markets of the United States or elsewhere that, in your judgment, is
material and adverse and, in your judgment, makes it impracticable to market the
Shares on the terms and in the manner contemplated in the Prospectus, (ii) the
suspension or material limitation of trading in securities or other instruments
on the New York Stock Exchange, the American Stock Exchange, the Chicago Board
of Options Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade
or the Nasdaq National Market or limitation on prices for securities or other
instruments on any such exchange or the Nasdaq National Market, (iii) the
suspension of trading of any securities of the Company on any exchange or in the
over-the-counter market, (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of any
court or other governmental authority which in your opinion materially and
adversely affects, or will materially and adversely affect, the business,
prospects, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, (v) the declaration of a banking moratorium by
either federal or New York State authorities, (vi) the taking of any action by
any federal, state or local government or agency in respect of its
26
monetary or fiscal affairs which in your opinion has a material adverse effect
on the financial markets in the United States or (vii) A.M. Best shall have
publicly announced that it has under review, with possible negative
implications, its rating of the claims-paying ability of any Insurance
Subsidiary.
If on the Closing Date or on an Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase the
Firm Shares or Additional Shares, as the case may be, which it has or they have
agreed to purchase hereunder on such date and the aggregate number of Firm
Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase is not more
than one-tenth of the total number of Firm Shares or Additional Shares, as the
case may be, to be purchased on such date by all Underwriters, each
non-defaulting Underwriter shall be obligated severally, in the proportion which
the number of Firm Shares set forth opposite its name in Schedule I bears to the
total number of Firm Shares which all the non-defaulting Underwriters have
agreed to purchase, or in such other proportion as you may specify, to purchase
the Firm Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date; provided that in no event shall the number of Firm Shares or Additional
Shares, as the case may be, which any Underwriter has agreed to purchase
pursuant to Section 2 hereof be increased pursuant to this Section 10 by an
amount in excess of one-ninth of such number of Firm Shares or Additional
Shares, as the case may be, without the written consent of such Underwriter. If
on the Closing Date any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased by all Underwriters and arrangements satisfactory to you,
the Company and the Selling Shareholders for purchase of such Firm Shares are
not made within 48 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter, the Company or
the Selling Shareholders. In any such case which does not result
in termination of this Agreement, either you or the Sellers shall have the right
to postpone the Closing Date, but in no event for longer than seven days, in
order that the required changes, if any, in the Registration Statement and the
Prospectus or any other documents or arrangements may be effected. If, on an
Option Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Additional Shares and the aggregate number of Additional Shares with
respect to which such default occurs is more than one-tenth of the aggregate
number of Additional Shares to be purchased on such date, the non-defaulting
Underwriters shall have the option to (i) terminate their obligation hereunder
to purchase such Additional Shares or (ii) purchase not less than the number of
Additional Shares that such non-defaulting Underwriters would have been
obligated to purchase on such date in the absence of such default. Any action
taken under this paragraph shall not relieve any defaulting Underwriter from
liability in respect of any default of any such Underwriter under this
Agreement.
SECTION 11. Agreements of the Selling Shareholders. Each Selling
Shareholder agrees with you and the Company:
(a) To pay or to cause to be paid all transfer taxes payable in
connection with the transfer of the Firm Shares to be sold by such Selling
Shareholder to the Underwriters.
27
(b) To do and perform all things to be done and performed by such
Selling Shareholder under this Agreement prior to the Closing Date and to
satisfy all conditions precedent to the delivery of the Firm Shares to be sold
by such Selling Shareholder pursuant to this Agreement.
SECTION 12. Miscellaneous. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (i) if to the Company, to CNA
Surety Corporation, XXX Xxxxx, Xxxxxxx, Xxxxxxxx 00000, (ii) if to the Selling
Shareholders, to Xxx Xxxxxxxx, 0 Xxxxx Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxx, 00000, and (iii) if to any Underwriter or to you, to you c/x
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation, 000 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Syndicate Department, or in any case to such other
address as the person to be notified may have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, the Selling Shareholders and the
several Underwriters set forth in or made pursuant to this Agreement shall
remain operative and in full force and effect, and will survive delivery of and
payment for the Shares, regardless of (i) any investigation, or statement as to
the results thereof, made by or on behalf of any Underwriter, the officers or
directors of any Underwriter, any person controlling any Underwriter, the
Company, the officers or directors of the Company, any person controlling the
Company, any Selling Shareholder or any person controlling such Selling
Shareholder, (ii) acceptance of the Shares and payment for them hereunder and
(iii) termination of this Agreement.
If the sale of the Shares provided for herein is not consummated
because of the refusal, inability or failure of any Selling Shareholder to
perform its agreements herein, comply with any provision hereof or satisfy any
condition to the obligations of the Underwriters set forth in Section 9 hereof
(in each case, other than by reason of a default by any of the Underwriters),
such defaulting Selling Shareholder agrees, severally and not jointly, to
reimburse the several Underwriters for all out of pocket expenses (including
reasonable fees and disbursements of counsel) incurred by them as a result of
such refusal, inability or failure. If the sale of the Shares provided for
herein is not consummated because of the refusal, inability or failure of the
Company to perform its agreements herein, comply with any provision hereof or
satisfy any condition to the obligations of the Underwriters set forth in
Section 9 hereof (in each case, other than by reason of a default by any of the
Underwriters), the Company agrees, severally and not jointly, to reimburse the
several Underwriters for all out of pocket expenses (including reasonable fees
and disbursements of counsel) incurred by them as a result of such refusal,
inability or failure. Notwithstanding any termination of this Agreement, the
Company shall be liable for all expenses which it has agreed to pay pursuant to
Section 5(i) hereof. Each Selling Shareholder also agrees, severally and not
jointly, to reimburse the several Underwriters, their directors and officers and
any persons controlling any of the Underwriters for all out of pocket expenses
(including reasonable fees and disbursements of counsel) incurred by them in
connection with enforcing their rights hereunder against such Selling
Shareholder (including, without limitation, pursuant to Section 8 hereof). The
Company also agrees to reimburse the several Underwriters, their directors and
officers and any persons controlling any of the Underwriters for all out of
pocket expenses (including reasonable fees and disbursements of counsel)
incurred by them in connection with enforcing their rights hereunder against the
Company (including, without limitation, pursuant to Section 8 hereof).
28
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the Selling
Shareholders, the Underwriters, the Underwriters' directors and officers, any
controlling persons referred to herein, the Company's directors and the
Company's officers who sign the Registration Statement and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Shares from any of the several Underwriters merely because of such
purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
29
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Selling Shareholders and the several Underwriters.
Very truly yours,
CNA SURETY CORPORATION
By:_____________________________
Title:
THE SELLING SHAREHOLDERS
NAMED IN SCHEDULE II
HERETO (OTHER THAN ANDA
PARTNERSHIP, LFT
PARTNERSHIP AND THE XXX
AND XXXXXX X. XXXXX
FAMILY FOUNDATION),
ACTING SEVERALLY
By:_____________________________
Attorney-in-fact
LFT PARTNERSHIP
By:_____________________________
Attorney-in-fact
ANDA PARTNERSHIP
By The Xxx Only Trust, a general partner
By The Xxx and Descendants Trust, a
general partner
By:_____________________________
Attorney-in-fact
30
THE XXX AND XXXXXX X. XXXXX
FAMILY FOUNDATION
By:_____________________________
Attorney-in-fact
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
XXXXX XXXXXX INC.
Acting severally on behalf
of themselves and the
several Underwriters named
in Schedule I hereto
By: XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
By: ______________________________
31
SCHEDULE I
Number of Firm Shares
Underwriters Being Sold
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation 1,664,576
Xxxxx Xxxxxx Inc. 1,664,575
ABN AMRO Chicago Corporation 95,442
Chatsworth Securities, LLC 95,442
Xxxxxxx, Xxxxxxx & Co., Inc. 95,442
Conning & Company 95,442
Xxxxxxx & Partners Securities LLC 95,442
Xxx-Xxxx, Xxxxxx Incorporated 95,442
Xxxxxx Xxxxxxxxxx Xxxxx Inc. 95,442
Xxxxx, Xxxxxxxx & Xxxxx, Inc. 95,442
Xxxxxx International 95,442
-----------
Total 4,188,129
32
SCHEDULE II
Selling Shareholders
Number of Firm Shares
Name Being Sold
Samstock, L.L.C. 1,988,769
Alpha/ZFT General Partnership 578,649
Anda Partnership 498,684
LFT Partnership 486,760
Xxxxxx Xxxx 65,000
Xxx and Xxxxxx X. Xxxxx
Family Foundation 486,760
Xxxxx and Xxxxxxxx Xxxxxxxxx 83,507
-----------
Total 4,188,129
33
SCHEDULE III
Securities issued or issuable pursuant to:
(i) CNA Surety Corporation Non Employee Directors Deferred Compensation
Plan;
(ii) CNA Surety Corporation Replacement Stock Option Plan; and
(iii) CNA Surety Corporation 1997 Long-Term Equity Compensation Plan.
34
SCHEDULE IV
- Registration Rights Agreement, dated as of September 30, 1996, between CNA
Surety Corporation and Equity Capsure Limited Partnership
- Restricted Stock and Registration Rights Agreement, dated as of September
22, 1994, by and between Capsure Financial Group, Inc., Capsure Holdings
Corp. and Xxxx Xxxx, Jr.
35
Annex I
Continental Casualty Company
National Fire Insurance Company of Hartford
American Casualty Company of Reading, Pennsylvania
Fireman's Insurance Company of Newark, New Jersey
Continental Insurance Company
CNA Surety Corporation
Samstock, L.L.C.
Alpha/ZFT General Partnership
Anda Partnership
LFT Partnership
Xxxxxx Xxxx
The Xxx and Xxxxxx X. Xxxxx
Family Foundation
Xxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxxx
Xxxxxx Xxxx
Xxx X. Xxxxx
Xxx Xxxxxx
Xxxxxx X. Xxxxxxx
Xxxx X. Xxxxxxxx
Xxxxxx X. Xxx
Xxx X. Xxxxx
Xxxxxxx X. Xxxx
Xxxx X. Xxxxxxxx
Xxxxxxx Xxxxxx
Xxxxxx X. Xxxxx
Xxx X. Xxxxxxxx
Xxxxxx X. Xxx Xxxxxx
Xxxxxxx Xxxx
Xxxxxxx Xxxxxxxxx
Xxxxxx Xxxxxxxxx
Xxxxxx X. Xxxxxxx
Xxxx X. Xxxxxx
Xxxx X. XxXxxxxxxx
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxx