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EXHIBIT 1.1
Execution Copy
HCC Insurance Holdings, Inc.
6,000,000 Shares*
Common Stock
($1.00 par value per share)
Underwriting Agreement
New York, New York
February 28, 2001
Xxxxxxx Xxxxx Xxxxxx Inc.
Xxxxxx Brothers Inc.
Xxxxxxx Xxxxx & Associates, Inc.
Xxxxxxx Xxxxx & Company, L.L.C.
As Representatives of the several Underwriters
c/o Xxxxxxx Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
HCC Insurance Holdings, Inc., a corporation organized under
the laws of the State of Delaware (the "Company"), proposes to sell to the
several underwriters named in Schedule I hereto (the "Underwriters"), for whom
you (the "Representatives") are acting as representatives, 6,000,000 shares of
its Common Stock, $1.00 par value ("Common Stock"; said Common Stock to be
issued and sold by the Company being hereinafter called the "Underwritten
Securities"). The Company also proposes to grant to the Underwriters an option
to purchase up to 900,000 additional shares of Common Stock to cover
over-allotments (the "Option Securities"; the Option Securities, together with
the Underwritten Securities, being hereinafter called the "Securities").
To the extent there are no additional Underwriters listed on
Schedule I hereto other than you, the term Representatives as used herein shall
mean you, as Underwriters, and the terms Representatives and Underwriters shall
mean either the singular or plural as the context requires. Any reference herein
to the Registration Statement, the Basic Prospectus, any Preliminary Final
Prospectus or the Final Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
which were filed under the Exchange Act on or before the Effective Date of the
Registration Statement or the
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* Plus an option to purchase from HCC Insurance Holdings, Inc., up to
900,000 additional shares to cover over-allotments.
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issue date of the Basic Prospectus, such Preliminary Final Prospectus or the
Final Prospectus, as the case may be; and any reference herein to the terms
"amend", "amendment" or "supplement" with respect to the Registration Statement,
the Basic Prospectus, any Preliminary Final Prospectus or the Final Prospectus
shall be deemed to refer to and include the filing of any document under the
Exchange Act after the Effective Date of the Registration Statement or the issue
date of the Basic Prospectus, such Preliminary Final Prospectus or the Final
Prospectus, as the case may be, deemed to be incorporated therein by reference.
Certain terms used herein are defined in Section 17 hereof.
1. Representations and Warranties. The Company represents and
warrants to, and agrees with, each Underwriter as set forth below in this
Section 1.
(a) The Company meets the requirements for use of Form S-3
under the Act and has prepared and filed with the Commission a
registration statement, file number 333-46432, on Form S-3, including a
related basic prospectus, for registration under the Act of the
offering and sale of the Securities. The Company may have filed one or
more amendments thereto, including a Preliminary Final Prospectus, each
of which has previously been furnished to you. The Company will next
file with the Commission one of the following: (1) after the Effective
Date of such registration statement, a final prospectus supplement
relating to the Securities in accordance with Rules 430A and 424(b);
(2) prior to the Effective Date of such registration statement, an
amendment to such registration statement (including the form of final
prospectus supplement); or (3) a final prospectus in accordance with
Rules 415 and 424(b). In the case of clause (1), the Company has
included in such registration statement, as amended at the Effective
Date, all information (other than Rule 430A Information) required by
the Act and the rules thereunder to be included in such registration
statement and the Final Prospectus. As filed, such final prospectus
supplement or such amendment and form of final prospectus supplement
shall contain all Rule 430A Information, together with all other such
required information, and, except to the extent the Representatives
shall agree in writing to a modification, shall be in all substantive
respects in the form furnished to you prior to the Execution Time or,
to the extent not completed at the Execution Time, shall contain only
such specific additional information and other changes (beyond that
contained in the Basic Prospectus and any Preliminary Final Prospectus)
as the Company has advised you, prior to the Execution Time, will be
included or made therein. The Registration Statement, at the Execution
Time, meets the requirements set forth in Rule 415(a)(1)(x).
(b) On the Effective Date, the Registration Statement did or
will, and when the Final Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date (as defined in
Section 3 below) and on any date on which Option Securities are
purchased, if such date is not the Closing Date (a "settlement date"),
the Final Prospectus (and any supplements thereto) will, comply in all
material respects with the applicable requirements of the Act and the
Exchange Act and the respective rules thereunder; on the Effective Date
and at the Execution Time, the Registration Statement did not or will
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order
to make the statements therein not misleading; and, on the Effective
Date, the Final Prospectus, if not filed pursuant to Rule 424(b), will
not, and on the date of any filing pursuant to Rule 424(b)
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and on the Closing Date and any settlement date, the Final Prospectus
(together with any supplement thereto) will not, include any untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the Company makes no representations or warranties as to
the information contained in or omitted from the Registration Statement
or the Final Prospectus (or any supplement thereto) in reliance upon
and in conformity with information furnished in writing to the Company
by or on behalf of any Underwriter through the Representatives
specifically for inclusion in the Registration Statement or the Final
Prospectus (or any supplement thereto).
(c) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or
organized with full corporate power and authority to own or lease, as
the case may be, and to operate its properties and conduct its business
as described in the Final Prospectus, and is duly qualified to do
business as a foreign corporation and is in good standing under the
laws of each jurisdiction which requires such qualification and where
the failure to be so qualified could reasonably be expected,
individually or in the aggregate, to have a material adverse effect on
the condition (financial or otherwise), prospects, earnings, business
or properties of the Company and its subsidiaries, taken as a whole (a
"Material Adverse Effect").
(d) All the outstanding shares of capital stock of each
subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable, and, except as otherwise set forth in the
Final Prospectus, all outstanding shares of capital stock of the
subsidiaries are owned by the Company either directly or through wholly
owned subsidiaries free and clear of any perfected security interest or
any other security interests, claims, liens or encumbrances.
(e) The Company's authorized equity capitalization is as set
forth in the Final Prospectus; the capital stock of the Company
conforms in all material respects to the description thereof contained
in the Final Prospectus; the outstanding shares of Common Stock have
been duly and validly authorized and issued and are fully paid and
nonassessable; the Securities have been duly and validly authorized,
and, when issued and delivered to and paid for by the Underwriters
pursuant to this Agreement, will be fully paid and nonassessable; the
Securities are duly listed, and admitted and authorized for trading,
subject to official notice of issuance, on the New York Stock Exchange;
the certificates for the Securities are in valid and sufficient form;
the holders of outstanding shares of capital stock of the Company are
not entitled to preemptive or other rights to subscribe for the
Securities; and, except as set forth in the Final Prospectus, no
options, warrants or other rights to purchase, agreements or other
obligations to issue, or rights to convert any obligations into or
exchange any securities for, shares of capital stock of or ownership
interests in the Company are outstanding.
(f) There is no franchise, contract or other document of a
character required to be described in the Registration Statement or
Final Prospectus, or to be filed as an exhibit thereto, which is not
described or filed as required or to be filed as an exhibit thereto,
which is not described or filed as required; and the statements
included or
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incorporated by reference in the Final Prospectus under the headings
"Certain Legal Matters", "Business--Legal Proceedings", and "Legal
Matters" fairly summarize the matters therein described.
(g) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation
of the Company.
(h) The Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Final Prospectus, will not be an
"investment company" as defined in the Investment Company Act of 1940,
as amended.
(i) No consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in connection
with the transactions contemplated herein, except such as have been
obtained under the Act and such as may be required under the blue sky
laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters in the manner
contemplated herein and in the Final Prospectus.
(j) Neither the issue and sale of the Securities nor the
consummation of any other of the transactions contemplated herein nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its subsidiaries
pursuant to, (i) the charter or by-laws of the Company or any of its
subsidiaries, (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which the
Company or any of its subsidiaries is a party or bound or to which its
or their property is subject, or (iii) any statute, law, rule,
regulation, judgment, order or decree applicable to the Company or any
of its subsidiaries of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or any of its subsidiaries or any of its
or their properties.
(k) No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement.
(l) The consolidated historical financial statements and
schedules of the Company and its consolidated subsidiaries included in
the Final Prospectus and the Registration Statement present fairly in
all material respects the financial condition, results of operations
and cash flows of the Company and its consolidated subsidiaries as of
the dates and for the periods indicated, comply as to form with the
applicable accounting requirements of the Act and have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved (except as otherwise
noted therein). The summary financial and operating data set forth
under the caption "Summary Financial and Operating Data" in the Final
Prospectus fairly present, on the basis stated in the Final Prospectus,
the information included therein. No action, suit or proceeding by or
before any court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries or its or
their property is pending or, to the best knowledge of the Company,
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threatened that (i) could reasonably be expected to have a material
adverse effect on the performance of this Agreement or the consummation
of any of the transactions contemplated hereby or (ii) could reasonably
be expected to have a Material Adverse Effect, whether or not arising
from transactions in the ordinary course of business, except as set
forth in or contemplated in the Final Prospectus (exclusive of any
supplement thereto).
(m) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries or its or their property is pending
or, to the best knowledge of the Company, threatened that (i) could
reasonably be expected to have a Material Adverse Effect on the
performance of this Agreement or the consummation of any of the
transactions contemplated hereby or (ii) could reasonably be expected
to have a Material Adverse Effect, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Final Prospectus (exclusive of any supplement
thereto).
(n) Each of the Company and each of its subsidiaries owns or
leases all such properties as are necessary to the conduct of its
operations as presently conducted.
(o) Neither the Company nor any subsidiary is in violation or
default of (i) any provision of its charter or bylaws, (ii) the terms
of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which it is a party or bound or to which its
property is subject, or (iii) except where any such violation or
default could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, any statute, law, rule,
regulation, judgment, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority
having jurisdiction over the Company or such subsidiary or any of its
properties, as applicable.
(p) PricewaterhouseCoopers LLP, who have certified certain
financial statements of the Company and its consolidated subsidiaries
and delivered their report with respect to the audited consolidated
financial statements and schedules included or incorporated by
reference in the Final Prospectus, are independent public accountants
with respect to the Company within the meaning of the Act and the
applicable published rules and regulations thereunder.
(q) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed or has requested
extensions thereof (except in any case in which the failure so to file
would not have a Material Adverse Effect, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Final Prospectus (exclusive of any supplement
thereto) and has paid all taxes required to be paid by it and any other
assessment, fine or penalty levied against it, to the extent that any
of the foregoing is due and payable, except for any such assessment,
fine or penalty that is currently being contested in good faith or as
would not have a Material Adverse Effect, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Final Prospectus (exclusive of any supplement
thereto).
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(r) The Company and each of its subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with 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.
(s) The Company is not required to be licensed as an insurance
company in any state. Houston Casualty Company ("HCC"), U.S. Specialty
Insurance Company ("USSIC"), HCC Life Insurance Company ("HCCLIC"),
Avemco Insurance Company ("AIC"), National Insurance Underwriters, USF
Insurance Company and Centris Insurance Company, the ("Insurance
Subsidiaries") are the only subsidiaries of the Company which are
insurance companies. Each of HCC and USSIC is duly licensed as an
insurer under the insurance laws and regulations of Texas. Each of
HCCLIC and AIC is duly licensed as an insurer under the insurance laws
and regulations of Indiana and Maryland, respectively. HCC operates a
branch office in London, England which is subject to regulation by
regulatory authorities in the United Kingdom. Since January 1, 1996,
the Company and each of its Insurance Subsidiaries have filed all
material reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were
required to file with any state or foreign insurance commission, agency
or authority. As of their respective dates, such reports, registrations
and statements complied in all material respects with all of the laws,
statutes, rules and regulations of each such jurisdiction, including,
without limitation, those rules and regulations promulgated by the
applicable insurance commission, agency or authority in any such state.
(t) No loss experience has occurred since December 31, 1999
which would require or make it necessary or appropriate for the Company
to change, alter, modify or amend the Company's methodology or
assumptions relating to losses.
(u) The Company has delivered to the Underwriters, for the
years 1997 through 1999, copies of the statutory Annual Statements and
for the period January 1, 2000 through September 30, 2000 Quarterly
Statements (collectively, the "Statutory Statements") of HCC and USSIC
filed with the Texas Department of Insurance, and HCCLIC and AIC filed
with the Indiana Department of Insurance and the Maryland Insurance
Administration, respectively. The statutory financial statements
contained in each Statutory Statement fairly present the statutory
financial condition of each of the respective corporations at the date
of each such statement, and the statutory results of operations and
other data contained therein for each of the periods then ended, have
been prepared in accordance with the prescribed or permitted statutory
insurance accounting requirements and practices, and in accordance with
accounting practices prescribed or permitted by the National
Association of Insurance Commissioners, and have been applied on a
consistent basis except as expressly set forth or disclosed in the
notes, exhibits or schedules thereto. The exhibits and schedules
included in each Statutory Statement fairly present the data purported
to be shown thereby.
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(v) Except as set forth in the Final Prospectus, all
reinsurance treaties, contracts, agreements and arrangements to which
the Company or any of the Insurance Subsidiaries is a party and as to
which any of them reported recoverables, premiums due or other amounts
in its most recent Statutory Statement are in full force and effect and
none of the Company or any of its Insurance Subsidiaries is in
violation of, or in default in the performance, observance or
fulfillment of, any material obligation, agreement, covenant or
condition contained therein, which violation or default would, singly
or in the aggregate, have a Material Adverse Effect.
(w) Each of the Insurance Subsidiaries holds all licenses,
certificates and permits from insurance departments and other
governmental authorities ("Insurance Licenses") necessary to conduct
its business as presently conducted, except where the failure to hold
any such Insurance Licenses would not have a Material Adverse Effect.
Each of the Insurance Subsidiaries has fulfilled and performed all
material obligations necessary to maintain its Insurance Licenses, and
no event or events have occurred which would result in the impairment,
modification, termination or revocation of such Insurance Licenses,
except where such impairment, modification, termination or revocation
would not have a Material Adverse Effect.
(x) A.M. Best Company, Inc. ("A.M. Best") has not taken any
action to, or to the Company's knowledge, threatened to: (i) downgrade
the ratings or any of the Insurance Company Subsidiaries or (ii)
publicly announce or otherwise indicate to the Company that its ratings
of any of the Insurance Subsidiaries are under review.
Any certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters in connection
with the offering of the Securities shall be deemed a representation and
warranty by the Company, as to matters covered thereby, to each Underwriter.
2. Purchase and Sale. (a) Subject to the terms and conditions
and in reliance upon the representations and warranties set forth herein, the
Company agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Company, at $22.24 per share,
the number of shares of the Underwritten Securities set forth opposite such
Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon
the representations and warranties set forth herein, the Company hereby grants
an option to the several Underwriters to purchase, severally and not jointly,
the Option Securities at the same purchase price per share as the Underwritten
Securities. Said option may be exercised only to cover over-allotments in the
sale of the Underwritten Securities by the Underwriters. Said option may be
exercised in whole or in part at any time (but not more than once) on or before
the 30th day after the date of the Final Prospectus upon written or telegraphic
notice by the Representatives to the Company setting forth the number of shares
of the Option Securities as to which the several Underwriters are exercising the
option and the settlement date. The number of shares of Option Securities to be
purchased by each Underwriter shall be the same percentage of the total number
of shares of the Option Securities to be purchased by the several Underwriters
as such Underwriter is purchasing of the Underwritten Securities, subject to
such adjustments as you in your absolute discretion shall make to eliminate any
fractional shares.
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3. Delivery and Payment. Delivery of and payment for the
Underwritten Securities and the Option Securities (if the option provided for in
Section 2(b) hereof shall have been exercised on or before the third Business
Day prior to the Closing Date) shall be made on March 6, 2001 at 10:00 a.m. New
York City time or at such time on such later date not more than three Business
Days after the foregoing date as the Representatives shall designate, which date
and time may be postponed by agreement between the Representatives and the
Company or as provided in Section 9 hereof (such date and time of delivery and
payment for the Securities being called herein the "Closing Date"). Delivery of
the Securities shall be made to the Representatives for the respective accounts
of the several Underwriters against payment by the several Underwriters through
the Representatives of the purchase price thereof to or upon the order of the
Company by wire transfer payable in same-day funds to an account specified by
the Company. Delivery of the Underwritten Securities and the Option Securities
shall be made through the facilities of The Depository Trust Company unless the
Representatives shall otherwise instruct.
If the option provided for in Section 2(b) hereof is exercised
after the third Business Day prior to the Closing Date, the Company will deliver
the Option Securities (at the expense of the Company) to the Representatives, at
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, xx the date specified by the
Representatives (which shall be within three Business Days after exercise of
said option) for the respective accounts of the several Underwriters, against
payment by the several Underwriters through the Representatives of the purchase
price thereof to or upon the order of the Company by wire transfer payable in
same-day funds to an account specified by the Company. If settlement for the
Option Securities occurs after the Closing Date, the Company will deliver to the
Representatives on the settlement date for the Option Securities, and the
obligation of the Underwriters to purchase the Option Securities shall be
conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Closing Date pursuant to Section 6 hereof.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Final Prospectus.
5. Agreements. The Company agrees with the several
Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the
offering of the Securities, the Company will not file any amendment of
the Registration Statement or supplement (including the Final
Prospectus or any Preliminary Final Prospectus) to the Basic Prospectus
or any Rule 462(b) Registration Statement unless the Company has
furnished you a copy for your review prior to filing and will not file
any such proposed amendment or supplement to which you reasonably
object. Subject to the foregoing sentence, if the Registration
Statement has become or becomes effective pursuant to Rule 430A, or
filing of the Final Prospectus is otherwise required under Rule 424(b),
the Company will cause the Final Prospectus, properly completed, and
any supplement thereto to be filed with the Commission pursuant to the
applicable paragraph of Rule 424(b) within the time period prescribed
and will provide evidence satisfactory to the Representatives of such
timely filing. The Company will promptly advise the Representatives (1)
when the Registration Statement, if not effective at the Execution
Time, shall have become effective, (2) when the Final
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Prospectus, and any supplement thereto, shall have been filed (if
required) with the Commission pursuant to Rule 424(b) or when any Rule
462(b) Registration Statement shall have been filed with the
Commission, (3) when, prior to termination of the offering of the
Securities, any amendment to the Registration Statement shall have been
filed or become effective, (4) of any request by the Commission or its
staff for any amendment of the Registration Statement, or any Rule
462(b) Registration Statement, or for any supplement to the Final
Prospectus or for any additional information, (5) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any
proceeding for that purpose and (6) of the receipt by the Company of
any notification with respect to the suspension of the qualification of
the Securities for sale in any jurisdiction or the institution or
threatening of any proceeding for such purpose. The Company will use
its best efforts to prevent the issuance of any such stop order or the
suspension of any such qualification and, if issued, to obtain as soon
as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs
as a result of which the Final Prospectus as then supplemented would
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light of
the circumstances under which they were made not misleading, or if it
shall be necessary to amend the Registration Statement or supplement
the Final Prospectus to comply with the Act or the Exchange Act or the
respective rules thereunder, the Company promptly will (1) notify the
Representatives of any such event, (2) prepare and file with the
Commission, subject to the second sentence of paragraph (a) of this
Section 5, an amendment or supplement which will correct such statement
or omission or effect such compliance and (3) supply any supplemented
Final Prospectus to you in such quantities as you may reasonably
request.
(c) As soon as practicable, the Company will make generally
available to its security holders and to the Representatives an
earnings statement or statements of the Company and its subsidiaries
which will satisfy the provisions of Section 11(a) of the Act and Rule
158 under the Act.
(d) The Company will furnish to the Representatives and
counsel for the Underwriters, without charge, signed copies of the
Registration Statement (including exhibits thereto) and to each other
Underwriter a copy of the Registration Statement (without exhibits
thereto) and, so long as delivery of a prospectus by an Underwriter or
dealer may be required by the Act, as many copies of each Preliminary
Final Prospectus and the Final Prospectus and any supplement thereto as
the Representatives may reasonably request. The Company will pay the
expenses of printing or other production of all documents relating to
the offering.
(e) The Company will arrange, if necessary, for the
qualification of the Securities for sale under the laws of such
jurisdictions as the Representatives may designate, will maintain such
qualifications in effect so long as required for the distribution of
the Securities and will pay any fee of the National Association of
Securities Dealers, Inc., in connection with its review of the
offering, if required; provided, that in no event shall the Company be
obligated to qualify to do business in any
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jurisdiction where it is not now so qualified or to take any action
that would subject it to service of process in suits, other than those
arising out of the offering or sale of the Securities, in any
jurisdiction where it is not now so subject.
(f) The Company will not, without the prior written consent of
Xxxxxxx Xxxxx Xxxxxx Inc., offer, sell, contract to sell, pledge, or
otherwise dispose of (or enter into any transaction which is designed
to, or might reasonably be expected to, result in the disposition
(whether by actual disposition or effective economic disposition due to
cash settlement or otherwise) by the Company or any affiliate of the
Company or any person in privity with the Company or any affiliate of
the Company), directly or indirectly, including the filing (or
participation in the filing) of a registration statement with the
Commission in respect of, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within the
meaning of Section 16 of the Exchange Act, any shares of Common Stock
(other than the Securities) or any securities convertible into, or
exercisable or exchangeable for, shares of Common Stock, or publicly
announce an intention to effect any such transaction, for a period of
90 days after the date of the Final Prospectus, provided, however, that
the Company may (i) issue and sell Common Stock pursuant to any
employee stock option plan, stock ownership plan or dividend
reinvestment plan of the Company in effect at the Execution Time and
(ii) issue Common Stock issuable upon the conversion of securities or
the exercise of warrants or options outstanding at the Execution Time.
(g) The Company will not take, directly or indirectly, any
action that constitutes or that is designed to or might reasonably be
expected to cause or result in, under the Exchange Act or otherwise,
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(h) The Company has furnished or will furnish to the
Representatives "lock-up" letters substantially in the form of Exhibit
A hereto, signed by each of its current officers and directors,
pursuant to which each such person shall agree not to offer, sell,
contract to sell or otherwise dispose of any Common Stock (or any
securities convertible into or exercisable or exchangeable for Common
Stock) or grant any options or warrants to purchase Common Stock for a
period of 90 days after the date of the Final Prospectus without the
prior written consent of Xxxxxxx Xxxxx Xxxxxx Inc.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Underwritten Securities and the
Option Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company contained herein as of
the Execution Time, the Closing Date and any settlement date pursuant to Section
3 hereof, to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions:
(a) If the Registration Statement has not become effective
prior to the Execution Time, unless the Representatives agree in
writing to a later time, the Registration Statement will become
effective not later than (i) 6:00 PM New York City time on the date of
determination of the public offering price, if such determination
occurred at or prior to 3:00 PM New York City time on such date or (ii)
9:30 AM on the
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Business Day following the day on which the public offering price was
determined, if such determination occurred after 3:00 PM New York City
time on such date; if filing of the Final Prospectus, or any supplement
thereto, is required pursuant to Rule 424(b), the Final Prospectus, and
any such supplement, will be filed in the manner and within the time
period required by Rule 424(b); and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and
no proceedings for that purpose shall have been instituted or
threatened.
(b) The Company shall have requested and caused Xxxxxx and
Xxxxx, LLP, counsel for the Company, to have furnished to the
Representatives their opinion, dated the Closing Date and addressed to
the Representatives, to the effect that:
(i) each of the Company and the Subsidiaries has been
duly incorporated and is validly existing as a corporation in
good standing under the laws of the jurisdiction in which it
is chartered or organized, with full corporate power and
authority to own or lease, as the case may be, and to operate
its properties and conduct its business as described in the
Final Prospectus, and the Company is duly qualified to do
business as a foreign corporation and is in good standing
under the laws of each jurisdiction specified in the
Management Certificate attached hereto as Exhibit B;
(ii) all the outstanding shares of capital stock of
each Subsidiary have been duly and validly authorized and
issued and are fully paid and nonassessable, and, except as
otherwise set forth in the Final Prospectus, all outstanding
shares of capital stock of the Subsidiaries are owned by the
Company either directly or through wholly owned subsidiaries
free and clear of any perfected security interest and, to the
knowledge of such counsel, after due inquiry, any other
security interest, claim, lien or encumbrance;
(iii) the Company's authorized equity capitalization
is as set forth in the Final Prospectus; the capital stock of
the Company conforms in all material respects to the
description thereof contained in the Final Prospectus; the
outstanding shares of Common Stock have been duly and validly
authorized and issued and are fully paid and nonassessable;
the Securities have been duly and validly authorized, and,
when issued and delivered to and paid for by the Underwriters
pursuant to this Agreement, will be fully paid and
nonassessable; the Securities are duly listed, and admitted
and authorized for trading, subject to official notice of
issuance, on the New York Stock Exchange; the certificates for
the Securities are in valid and sufficient form; the holders
of outstanding shares of capital stock of the Company are not
entitled to preemptive or other rights to subscribe for the
Securities; and, except as set forth in the Final Prospectus,
no options, warrants or other rights to purchase, agreements
or other obligations to issue, or rights to convert any
obligations into or exchange any securities for, shares of
capital stock of or ownership interests in the Company are
outstanding;
(iv) to the knowledge of such counsel, there is no
pending or threatened action, suit or proceeding by or before
any court or governmental agency, authority or body or any
arbitrator involving the Company or any of its
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subsidiaries or its or their property of a character required
to be disclosed in the Registration Statement which is not
adequately disclosed in the Final Prospectus, and there is no
franchise, contract or other document of a character required
to be described in the Registration Statement or the Final
Prospectus, or to be filed as an exhibit thereto, which is not
described or filed as required; and the statements included or
incorporated by reference in the Final Prospectus under the
headings "Certain Legal Matters", "Business--Legal
Proceedings", and "Legal Matters" insofar as such statements
summarize legal matters, agreements, documents, or proceedings
discussed therein, are accurate and fair summaries of such
legal matters, agreements, documents or proceedings.
(v) the Registration Statement has become effective
under the Act; any required filing of the Basic Prospectus,
any Preliminary Final Prospectus and the Final Prospectus, and
any supplements thereto, pursuant to Rule 424(b) has been made
in the manner and within the time period required by Rule
424(b); to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has
been issued, no proceedings for that purpose have been
instituted or threatened, and the Registration Statement and
the Final Prospectus (other than the financial statements and
other financial information contained therein, as to which
such counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of the Act
and the Exchange Act and the respective rules thereunder; and
such counsel has no reason to believe that on the Effective
Date or the date the Registration Statement was last deemed
amended the Registration Statement contained any untrue
statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading or that the Final Prospectus
as of its date and on the Closing Date included or includes
any untrue statement of a material fact or omitted or omits to
state a material fact necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading (in each case, other than the
financial statements and other financial information contained
therein, as to which such counsel need express no opinion);
(vi) this Agreement has been duly authorized,
executed and delivered by the Company;
(vii) the Company is not and, after giving effect to
the offering and sale of the Securities and the application of
the proceeds thereof as described in the Final Prospectus,
will not be an "investment company" as defined in the
Investment Company Act of 1940, as amended;
(viii) no consent, approval, authorization, filing
with or order of any court or governmental agency or body is
required in connection with the transactions contemplated
herein, except such as have been obtained under the Act and
such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution
of the Securities by the Underwriters in the manner
contemplated in this Agreement and in the Final Prospectus and
such other approvals (specified in such opinion) as have been
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obtained;
(ix) neither the issue and sale of the Securities,
nor the consummation of any other of the transactions
contemplated herein nor the fulfillment of the terms hereof
will conflict with, result in a breach or violation of or
imposition of any lien, charge or encumbrance upon any
property or assets of the Company or its subsidiaries pursuant
to, (i) the charter or by-laws of the Company or its
subsidiaries, (ii) the terms of any indenture, contract,
lease, mortgage, deed of trust, note agreement, loan agreement
or other agreement, obligation, condition, covenant or
instrument to which the Company or its subsidiaries is a party
or bound or to which its or their property is subject, or
(iii) any statute, law, rule, regulation, judgment, order or
decree applicable to the Company or its subsidiaries of any
court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over
the Company or its subsidiaries or any of its or their
properties; and
(x) no holders of securities of the Company have
rights to the registration of such securities under the
Registration Statement.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other
than the State of Delaware or the Federal laws of the United States, to
the extent they deem proper and specified in such opinion, upon the
opinion of other counsel of good standing whom they believe to be
reliable and who are satisfactory to counsel for the Underwriters and
(B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and public
officials. References to the Final Prospectus in this paragraph (b)
include any supplements thereto at the Closing Date.
(c) The Representatives shall have received from Xxxxxxxxxxx
X. Xxxxxx, Esq., Vice President and General Counsel of the Company, his
opinion, dated the Closing Date and addressed to the Representatives,
to the effect that each of the Subsidiaries is duly qualified to do
business as a foreign corporation and is in good standing under the
laws of each jurisdiction which requires such qualification and where
the failure to be so qualified could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
(d) The Representatives shall have received from Cleary,
Gottlieb, Xxxxx & Xxxxxxxx, counsel for the Underwriters, such opinion
or opinions, dated the Closing Date and addressed to the
Representatives, with respect to the issuance and sale of the
Securities, the Registration Statement, the Final Prospectus (together
with any supplement thereto) and other related matters as the
Representatives may reasonably require, and the Company shall have
furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(e) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that
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the signers of such certificate have carefully examined the
Registration Statement, the Final Prospectus, any supplements to the
Final Prospectus and this Agreement and that:
(i) the representations and warranties of the Company
in this Agreement are true and correct on and as of the
Closing Date with the same effect as if made on the Closing
Date and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to the Company's
knowledge, threatened; and
(iii) since the date of the most recent financial
statements included or incorporated by reference in the Final
Prospectus (exclusive of any supplement thereto), there has
been no material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the
Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Final Prospectus
(exclusive of any supplement thereto).
(f) The Company shall have requested and caused
PricewaterhouseCoopers LLP to have furnished to the Representatives, at
the Execution Time and at the Closing Date, letters (which may refer to
letters previously delivered to one or more of the Representatives),
dated respectively as of the Execution Time and as of the Closing Date,
in form and substance satisfactory to the Representatives, confirming
that they are independent accountants within the meaning of the Act and
the Exchange Act and the respective applicable rules and regulations
adopted by the Commission thereunder and stating in effect, that:
(i) In their opinion the audited financial statements
and financial statement schedules included or incorporated by
reference in the Registration Statement and the Final
Prospectus and reported on by them comply as to form in all
material respects with the applicable accounting requirements
of the Act and the Exchange Act and the related rules and
regulations adopted by the Commission.
(ii) For purposes of these letters they have read
minutes of the meetings of the stockholders, the Board of
Directors of the Company and its subsidiaries as set forth in
the minute books at February 23, 2001, officials of the
Company having advised them that the minutes of all such
meetings through that date were set forth therein; and they
have carried out other procedures to February 23, 2001, as
follows (their work did not extend to the period from February
24, 2001, to February 28, 2001, inclusive):
(1) With respect to the three-month period
ended March 31, 2000, the three- and
six- month periods ended June 30, 2000
and the three- and nine-month periods
ended
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September 30, 2000 and each of the
corresponding periods in 1999, they
have -
(I) performed the procedures specified by
the American Institute of Certified
Public Accountants for a review of
interim financial information as
described in SAS No. 71, "Interim
Financial Information", on the
unaudited condensed consolidated
balance sheets as of the end of each
such period and the unaudited
condensed consolidated statements of
income, retained earnings
(shareholders' equity), and cash flows
for each of such periods included or
incorporated by reference in the
Registration Statement and the Final
Prospectus; and
(II) inquired of certain officials of the
Company who have responsibility for
accounting and financial matters
whether the unaudited condensed
consolidated financial statements
referred to in (I) above comply as to
form in all material respects with the
applicable accounting requirements of
the Act and the related published
rules and regulations.
(2) With respect to the period from October 1,
2000, to December 31, 2000, they have -
(I) read the unaudited condensed
consolidated financial statements of
the Company and its subsidiaries for
December of both 1999 and 2000,
furnished to them by the Company, and
agreed the amounts contained therein
to the Company's accounting records,
officials of the Company having
advised them that no such financial
statements as of any date or for any
period subsequent to December 31,
2000, were available; and
(II) inquired of certain officials of the
Company who have responsibility for
financial and accounting matters
whether
(x) the unaudited financial statements
referred to in (I) above are
stated on a basis substantially
consistent with that of the
audited consolidated financial
statements included or
incorporated in the Registration
Statement and the Final
Prospectus;
(y) at December 31, 2000, there was
any change
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16
in the total debt of the Company
and its subsidiaries or decreases
in total assets of the Company and
its subsidiaries or shareholders'
equity of the Company as compared
with the amounts shown on the
September 30, 2000, unaudited
condensed consolidated balance
sheet included or incorporated by
reference in the Registration
Statement and the Final
Prospectus; and
(z) for the period from October 1,
2000, to December 31, 2000, there
were any decreases, as compared
with the corresponding period in
the preceding year, in total
revenue, earnings before income
tax provision, net earnings and
basic and diluted earnings per
share of the Company and its
subsidiaries.
Those officials stated that
(A) the unaudited financial statements
referred to in (I) above are
stated on a basis substantially
consistent with that of the
audited consolidated financial
statements included or
incorporated in the Registration
Statement and the Final
Prospectus;
(B) at December 31, 2000 total debt
decreased to $212,133,000, total
assets decreased to $2,742,976,000
and there were no decreases in
shareholders' equity of the
Company as compared with the
amounts shown on the September 30,
2000, unaudited condensed
consolidated balance sheet
included or incorporated by
reference in the Registration
Statement and the Final
Prospectus; and
(C) there were no decreases for the
period from October 1, 2000, to
December 31, 2000, as compared
with the corresponding period in
the preceding year, in total
revenue, earnings before income
tax provision, net earnings and
basic and diluted earnings per
share of the Company and its
subsidiaries.
(3) As mentioned in 2(I), Company officials have
advised them that no financial statements as
of any date or for any period
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subsequent to December 31, 2000, are
available; accordingly, the procedures
carried out by them with respect to changes
in financial statement items after December
31, 2000, have, of necessity, been even more
limited than those with respect to the
periods referred to in (1) and (2) above.
They have inquired of certain officials of
the Company who have responsibility for
financial and accounting matters whether
(I) at February 23, 2001, there was any
change in the total debt of the
Company and its subsidiaries or
decreases in total assets of the
Company and its subsidiaries or
shareholders' equity of the Company as
compared with the amounts shown on the
September 30, 2000, unaudited
condensed consolidated balance sheet
included or incorporated by reference
in the Registration Statement and the
Final Prospectus, or
(II) for the period from October 1, 2000,
to February 23, 2001, there were any
decreases, as compared with the
corresponding period in the preceding
year, in total revenue, earnings
before income tax provision, net
earnings and basic and diluted
earnings per share of the Company and
its subsidiaries.
Those officials stated that
(x) at February 23, 2001, total debt
decreased to $212,133,000 and to the
best of their knowledge they do not
believe that there were decreases in
total assets or shareholders' equity
of the Company as compared with the
amounts shown on the September 30,
2000, unaudited condensed consolidated
balance sheet included or incorporated
by reference in the Registration
Statement and the Final Prospectus;
and
(y) to the best of their knowledge they do
not believe there were decreases for
the period from October 1, 2000 to
February 23, 2001, as compared with
the corresponding period in the
preceding year, in total revenue,
earnings before income tax provision,
net earnings and basic and diluted
earnings per share of the Company and
its subsidiaries.
(iii) On the basis of the foregoing nothing came to
their attention which caused them to believe that:
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18
(1) any unaudited condensed consolidated
financial statements referred to in
(ii)(1) above do not comply as to
form in all material respects with
applicable accounting requirements
of the Act and with the related
rules and regulations adopted by the
Commission with respect to financial
statements included or incorporated
by reference in quarterly reports on
Form 10-Q under the Exchange Act;
and said unaudited financial
statements are not in conformity
with generally accepted accounting
principles applied on a basis
substantially consistent with that
of the audited financial statements
included or incorporated by
reference in the Registration
Statement and the Final Prospectus;
or
(2) the information included or
incorporated by reference in the
Registration Statement and Final
Prospectus in response to Regulation
S-K, Item 301 (Selected Financial
Data), Item 302 (Supplementary
Financial Information) and Item 402
(Executive Compensation) is not in
conformity with the applicable
disclosure requirements of
Regulation S-K.
(iv) They have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of the
Company and its subsidiaries) set forth or incorporated by
reference in the Registration Statement and the Final
Prospectus, including the information set forth under the
captions "Summary Financial Data" and "Recent Developments" in
the Final Prospectus, the information included or incorporated
by reference in Items 1, 2, 6, 7 and 11 of the Company's
Annual Report on Form 10-K, incorporated by reference in the
Registration Statement and the Final Prospectus, and the
information included in "Management's Discussion and Analysis
of Financial Condition and Results of Operations" included in
the Final Prospectus or included in the Company's Quarterly
Reports on Form 10-Q incorporated by reference in the
Registration Statement and the Final Prospectus agrees with
the accounting records of the Company and its subsidiaries,
excluding any questions of legal interpretation.
References to the Final Prospectus in this paragraph (f)
include any supplement thereto at the date of the letter.
(g) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Registration Statement
(exclusive of any amendment thereof) and the Final Prospectus
(exclusive of any supplement thereto), there shall not have been (i)
any change or decrease specified in the letter or letters referred to
in paragraph (e) of this Section 6 or (ii) any change, or any
development involving a prospective change, in or affecting the
condition (financial or otherwise), earnings, business or properties of
the Company and its subsidiaries taken as a whole, whether or not
arising from transactions
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19
in the ordinary course of business, except as set forth in or
contemplated in the Final Prospectus (exclusive of any supplement
thereto) the effect of which, in any case referred to in clause (i) or
(ii) above, is, in the sole judgment of the Representatives, so
material and adverse as to make it impractical or inadvisable to
proceed with the offering or delivery of the Securities as contemplated
by the Registration Statement (exclusive of any amendment thereof) and
the Final Prospectus (exclusive of any supplement thereto).
(h) At the Execution Time, the Company shall have furnished to
the Representatives a letter substantially in the form of Exhibit A
hereto from each officer and director of the Company addressed to the
Representatives.
(i) Prior to the Closing Date, the Company shall have
furnished to the Representatives such further information, certificates
and documents as the Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and counsel for the
Underwriters, this Agreement and all obligations of the Underwriters hereunder
may be canceled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancelation shall be given to the Company in
writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall
be delivered at the office of Cleary, Gottlieb, Xxxxx & Xxxxxxxx, counsel for
the Underwriters, at Xxx Xxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, on the Closing
Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally through Xxxxxxx Xxxxx Barney Inc. on demand for all out-of-pocket
expenses (including reasonable fees and disbursements of counsel) that shall
have been incurred by them in connection with the proposed purchase and sale of
the Securities.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person who controls any Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement for the registration of
the Securities as originally filed or in any amendment thereof, or in the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission
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to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any Underwriter through the Representatives specifically for inclusion
therein. This indemnity agreement will be in addition to any liability which the
Company may otherwise have.
(b) Each Underwriter severally and not jointly agrees to
indemnify and hold harmless the Company, each of its directors, each of its
officers who signs the Registration Statement, and each person who controls the
Company within the meaning of either the Act or the Exchange Act, to the same
extent as the indemnity from the Company to each Underwriter set forth in
paragraph (a) of this Section 8, but only with reference to written information
relating to such Underwriter furnished to the Company by or on behalf of such
Underwriter through the Representatives specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which any Underwriter may otherwise have. The
Company acknowledges that the statements set forth in the last paragraph of the
cover page regarding delivery of the Securities and, under the heading
"Underwriting" or "Plan of Distribution", (i) the list of underwriters and their
respective participation in the sale of the Securities, (ii) the sentences
related to concessions and reallowances and (iii) the paragraphs related to
stabilization, syndicate covering transactions and penalty bids in the Basic
Prospectus, any Preliminary Final Prospectus and the Final Prospectus constitute
the only information furnished in writing by or on behalf of the several
Underwriters for inclusion in the Basic Prospectus, any Preliminary Final
Prospectus or the Final Prospectus.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) of this Section 8
unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) of this Section 8.
The indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or parties except as
set forth below); provided, however, that such counsel shall be satisfactory to
the indemnified party. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the indemnified
party shall have the right to employ separate counsel (including local counsel),
and the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (1) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict
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of interest, (2) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (3) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (4) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Underwriters severally
agree to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which the Company
and one or more of the Underwriters may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and by the Underwriters on the other from the offering of the Securities;
provided, however, that in no case shall any Underwriter (except as may be
provided in any agreement among underwriters relating to the offering of the
Securities) be responsible for any amount in excess of the underwriting discount
or commission applicable to the Securities purchased by such Underwriter
hereunder. If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the Company and the Underwriters severally shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
of the Underwriters on the other in connection with the statements or omissions
which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal to
the total net proceeds from the offering (before deducting expenses) received by
it, and benefits received by the Underwriters shall be deemed to be equal to the
total underwriting discounts and commissions, in each case as set forth on the
cover page of the Final Prospectus. Relative fault shall be determined by
reference to, among other things, whether any untrue or any alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information provided by the Company on the one hand or
the Underwriters on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Underwriters agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (d), 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. For purposes of
this Section 8, each person who controls an Underwriter within the meaning of
either the Act or the Exchange Act and each director, officer, employee and
agent of an Underwriter shall have the same rights to contribution as such
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Underwriter, and each person who controls the Company within the meaning of
either the Act or the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
9. Default by an Underwriter. If any one or more Underwriters
shall fail to purchase and pay for any of the Securities agreed to be purchased
by such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Securities set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Securities,
and if such nondefaulting Underwriters do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Underwriter or
the Company. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
five Business Days, as the Representatives shall determine in order that the
required changes in the Registration Statement and the Final Prospectus or in
any other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting Underwriter of its liability, if any, to
the Company and any nondefaulting Underwriter for damages occasioned by its
default hereunder.
10. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Representatives, by notice given
to the Company prior to delivery of and payment for the Securities, if at any
time prior to such time (i) trading in the Company's Common Stock shall have
been suspended by the Commission or the New York Stock Exchange, or trading in
securities generally shall have been suspended or limited or minimum prices
shall have been established on the New York Stock Exchange, (ii) a banking
moratorium shall have been declared by either Federal or New York State
authorities or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war, or
other calamity or crisis the effect of which on financial markets is such as to
make it, in the sole judgment of the Representatives, impractical or inadvisable
to proceed with the offering or delivery of the Securities as contemplated by
the Final Prospectus (exclusive of any supplement thereto).
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
the officers, directors, employees, agents or controlling persons referred to in
Section 8 hereof, and will survive delivery of and payment for the Securities.
The provisions of Sections 7 and 8 hereof shall survive the termination or
cancelation of this Agreement.
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12. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Representatives, will be
mailed, delivered or telefaxed to the Xxxxxxx Xxxxx Xxxxxx Inc. General Counsel
(fax no.: (000) 000-0000) and confirmed to the General Counsel, Xxxxxxx Xxxxx
Barney Inc., at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
General Counsel; or, if sent to the Company, will be mailed, delivered or
telefaxed to (000) 000-0000 and confirmed to it at HCC Insurance Holdings, Inc.,
00000 Xxxxxxxxx Xxxxxxx, Xxxxxxx, Xxxxx 00000, attention of the Legal
Department.
13. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents and controlling persons referred to in
Section 8 hereof, and no other person will have any right or obligation
hereunder.
14. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
15. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
16. Headings. The section headings used herein are for
convenience only and shall not affect the construction hereof.
17. Definitions. The terms which follow, when used in this
Agreement, shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Basic Prospectus" shall mean the prospectus referred to in
Section 1(a) hereof contained in the Registration Statement at the
Effective Date.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a legal holiday or a day on which banking institutions or
trust companies are authorized or obligated by law to close in New York
City.
"Commission" shall mean the Securities and Exchange
Commission.
"Effective Date" shall mean each date and time that the
Registration Statement, any post-effective amendment or amendments
thereto and any Rule 462(b) Registration Statement became or become
effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto.
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"Final Prospectus" shall mean the prospectus supplement
relating to the Securities that was first filed pursuant to Rule 424(b)
after the Execution Time, together with the Basic Prospectus.
"Material Adverse Effect" shall have the meaning set forth in
Section 1(c) above.
"Preliminary Final Prospectus" shall mean any preliminary
prospectus supplement to the Basic Prospectus which describes the
Securities and the offering thereof and is used prior to filing of the
Final Prospectus, together with the Basic Prospectus.
"Registration Statement" shall mean the registration statement
referred to in Section 1(a) hereof, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at
the Execution Time, in the form in which it shall become effective),
and, in the event any post-effective amendment thereto or any Rule
462(b) Registration Statement becomes effective prior to the Closing
Date, shall also mean such registration statement as so amended or such
Rule 462(b) Registration Statement, as the case may be. Such term shall
include any Rule 430A Information deemed to be included therein at the
Effective Date as provided by Rule 430A.
"Rule 415", "Rule 424", "Rule 430A" and "Rule 462" refer to
such rules under the Act.
"Rule 430A Information" shall mean information with respect to
the Securities and the offering thereof permitted to be omitted from
the Registration Statement when it becomes effective pursuant to Rule
430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b)
relating to the offering covered by the registration statement referred
to in Section 1(a) hereof.
"Subsidiary" shall mean the subsidiaries of the Company that
are "significant subsidiaries" as defined by Rule 1-02 of Regulation
S-X.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company and the several Underwriters.
Very truly yours,
HCC Insurance Holdings, Inc.
By:
-------------------------------------
Name:
Title:
24
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The foregoing Agreement is hereby
confirmed and accepted as of
February 28, 2001
Xxxxxxx Xxxxx Xxxxxx Inc.
Xxxxxx Brothers Inc.
Xxxxxxx Xxxxx & Associates, Inc.
Xxxxxxx Xxxxx & Company, L.L.C.
By: Xxxxxxx Xxxxx Xxxxxx Inc.
By:
------------------------------
Name:
Title:
For themselves and the
several Underwriters,
named in Schedule I to the
foregoing Agreement.
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SCHEDULE I
NUMBER OF
UNDERWRITERS UNDERWRITTEN SECURITIES TO BE PURCHASED
------------ ---------------------------------------
Xxxxxxx Xxxxx Xxxxxx Inc. 1,890,100
Xxxxxx Brothers Inc. 1,350,000
Xxxxxxx Xxxxx & Associates, Inc. 1,080,000
Xxxxxxx Xxxxx & Company, L.L.C. 1,080,000
Xxxxxxx, Xxxxxxx Securities LLC 85,700
Conning & Company 85,700
Xxxxxxx & Partners Securities, LLC 85,700
First Union Securities, Inc. 85,700
Xxxxxx Xxxxxxxxxx Xxxxx LLC 85,700
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated 85,700
Xxxxx XxxXxxxxx, a division of Xxxxx Fargo Investments, LLC 85,700
---------
Total 6,000,000
=========
27
EXHIBIT A
[LETTERHEAD OF OFFICER OR DIRECTOR OF HCC INSURANCE HOLDINGS, INC.]
HCC Insurance Holdings, Inc.
Public Offering of Common Stock
February __, 2001
Xxxxxxx Xxxxx Barney Inc.
Xxxxxx Xxxxxxxx
Xxxxxxx Xxxxx & Associates, Inc.
Xxxxxxx Xxxxx & Company, L.L.C.
As Representatives of the Several Underwriters,
c/o Xxxxxxx Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
This letter is being delivered to you in connection with the
proposed Underwriting Agreement (the "Underwriting Agreement"), between HCC
Insurance Holdings, Inc., a Delaware corporation (the "Company"), and each of
you as representatives of a group of Underwriters named therein, relating to an
underwritten public offering of Common Stock, $1.00 par value (the "Common
Stock"), of the Company.
In order to induce you and the other Underwriters to enter
into the Underwriting Agreement, the undersigned will not, without the prior
written consent of Xxxxxxx Xxxxx Barney Inc., offer, sell, contract to sell,
pledge or otherwise dispose of, (or enter into any transaction which is designed
to, or might reasonably be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash settlement or
otherwise) by the undersigned or any affiliate of the undersigned or any person
in privity with the undersigned or any affiliate of the undersigned), directly
or indirectly, including the filing (or participation in the filing) of a
registration statement with the Securities and Exchange Commission in respect
of, or establish or increase a put equivalent position or liquidate or decrease
a call equivalent position within the meaning of Section 16 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder with respect to, any
shares of capital stock of the Company or any securities convertible into or
exercisable or exchangeable for such capital stock, or publicly announce an
intention to effect any such transaction, for a period of 90 days after the date
of the Underwriting Agreement, other than shares of Common Stock disposed of as
bona fide gifts approved by Xxxxxxx Xxxxx Xxxxxx
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Inc. and other than the disposition to the Company of any shares of Common Stock
utilized in connection with the exercise of outstanding stock options.
If for any reason the Underwriting Agreement shall be
terminated prior to the Closing Date (as defined in the Underwriting Agreement),
the agreement set forth above shall likewise be terminated.
Yours very truly,
A-2
29
EXHIBIT B
HCC INSURANCE HOLDINGS, INC.
MANAGEMENT CERTIFICATE
The undersigned, Xxxxxxxxxxx X. Xxxxxx, the Secretary of HCC Insurance Holdings,
Inc., a Delaware corporation (the "Company"), in connection with the closing of
the transactions contemplated by the Underwriting Agreement, dated February 28,
2001 (the "Agreement"), by and among the Company and Xxxxxxx Xxxxx Xxxxxx Inc.,
Xxxxxx Brothers Inc., Xxxxxxx Xxxxx & Associates, Inc. and Xxxxxxx Xxxxx &
Company, L.L.C. (the "Representatives") as representatives of the several
underwriters named in Schedule 1 thereto; capitalized terms used but not defined
herein shall have the meanings ascribed to them in the Agreement, hereby
certifies that:
1. The only states in which the Company conducts business and
owns property are the following: (i) Texas; and (ii) Delaware.
Xxxxxx and Xxxxx, LLP is expressly authorized to rely on this
Management Certificate in rendering its opinion to the Representatives pursuant
to the Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Management
Certificate of HCC Insurance Holdings, Inc. as of the 6th day of March, 2001.
By:
---------------------------------------
Xxxxxxxxxxx X. Xxxxxx, Secretary
The undersigned, Xxxxx X. Xxxxxxxx, Executive Vice President of the
Company, hereby certifies that Xxxxxxxxxxx X. Xxxxxx is the duly elected
Secretary of the Company and is duly authorized to sign the Agreement, this
Certificate and all other agreements, documents, instruments or certificates to
be delivered pursuant to the Agreement on behalf of the Company. The undersigned
further certifies that the signature appearing above is the true and correct
signature of Xxxxxxxxxxx X. Xxxxxx.
IN WITNESS WHEREOF, the undersigned has executed this certificate to
the Management Certificate of HCC Insurance Holdings, Inc. as of the 6th day of
March, 2001.
By:
---------------------------------------
Xxxxx. X. Xxxxxxxx,
Executive Vice President
