Exhibit 1.1
Draft of May 15, 2006
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DARWIN PROFESSIONAL UNDERWRITERS, INC.
(A Delaware corporation)
_________________ Shares of Common Stock
PURCHASE AGREEMENT
Dated: __________, 2006
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DARWIN PROFESSIONAL UNDERWRITERS, INC.
(A Delaware corporation)
____________ Shares of Common Stock
(Par Value $0.01 Per Share)
PURCHASE AGREEMENT
__________, 2006
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Credit Suisse Securities (USA) LLC
as Representatives of the several Underwriters
X/X XXXXXXX XXXXX & XX.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
0 Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Darwin Professional Underwriters, Inc., a Delaware corporation (the
"Company"), confirms its agreement with Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch,
Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx"), Credit Suisse Securities
(USA) LLC ("Credit Suisse") and each of the other Underwriters named in Schedule
A hereto (collectively, the "Underwriters," which term shall also include any
underwriter substituted as hereinafter provided in Section 10 hereof), for whom
Xxxxxxx Xxxxx and Credit Suisse are acting as representatives (in such capacity,
the "Representatives"), with respect to (i) the sale by the Company of _________
shares of its Common Stock, par value $0.01 per share ("Common Stock") and the
purchase by the Underwriters, acting severally and not jointly, of the
respective numbers of shares of Common Stock set forth in Schedule A hereto and
(ii) the grant by the Company to the Underwriters, acting severally and not
jointly, of the option described in Section 2(b) hereof to purchase all or any
part of ________ additional shares of Common Stock to cover overallotments, if
any. The aforesaid _________ shares of Common Stock (the "Initial Securities")
to be purchased by the Underwriters and all or any part of the ________ shares
of Common Stock subject to the option described in Section 2(b) hereof (the
"Option Securities") are hereinafter called, collectively, the "Securities."
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
this Agreement has been executed and delivered.
The Company and the Underwriters agree that up to _________ shares of the
Securities to be purchased by the Underwriters (the "Reserved Securities") shall
be reserved for sale by the Underwriters to certain eligible employees,
directors, officers and persons having relationships with the Company (the
"Invitees"), as part of the distribution of the Securities by the Underwriters,
subject to the terms of this Agreement, the applicable rules, regulations and
interpretations of the National Association of Securities Dealers, Inc. and all
other applicable laws, rules and regulations. To the extent that such Reserved
Securities are not orally confirmed for purchase by Invitees by the end of the
first business day after the date of this Agreement, such Reserved Securities
may be offered to the public as part of the public offering contemplated hereby.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-132355), including
the related preliminary prospectus or prospectuses, covering the registration of
the Securities under the Securities Act of 1933, as amended (the "1933 Act").
Promptly after execution and delivery of this Agreement, the Company will
prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations. The information included in such prospectus that was
omitted from such registration statement at the time it became effective but
that is deemed to be part of such registration statement at the time it became
effective pursuant to paragraph (b) of Rule 430A is referred to as "Rule 430A
Information." Each prospectus used before such registration statement became
effective, and any prospectus that omitted the Rule 430A Information, that was
used after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the amendments thereto, the exhibits and any schedules
thereto, at the time it became effective, and including the Rule 430A
Information, is herein called the "Registration Statement." Any registration
statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein
referred to as the "Rule 462(b) Registration Statement," and after such filing
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. The final prospectus in the form first furnished to the Underwriters
for use in connection with the offering of the Securities is herein called the
"Prospectus." For purposes of this Agreement, all references to the Registration
Statement, any preliminary prospectus, the Prospectus or any amendment or
supplement to any of the foregoing shall be deemed to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system ("XXXXX").
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company represents
and warrants to each Underwriter as of the date hereof, the Applicable Time
referred to in Section 1(a)(i) hereof, as of the Closing Time referred to in
Section 2(c) hereof, and as of each Date of Delivery (if any) referred to in
Section 2(b) hereof, and agrees with each Underwriter, as follows:
(i) Compliance with Registration Requirements. Each of the
Registration Statement, any Rule 462(b) Registration Statement and any
post-effective amendment thereto has become effective under the 1933 Act
and no stop order suspending the effectiveness of the Registration
Statement, any Rule 462(b) Registration Statement or any post-effective
amendment thereto has been issued under the 1933 Act and no proceedings for
that purpose have been instituted or are pending or, to the knowledge of
the Company, are contemplated by the Commission, and any request on the
part of the Commission for additional information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery), the Registration Statement, the Rule
462(b) Registration Statement and any post-effective amendments thereto
complied and will comply in all material respects with the requirements of
the 1933 Act and the 1933 Act
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Regulations and did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Prospectus, any preliminary prospectus and any supplement thereto or
prospectus wrapper prepared in connection therewith, at their respective
times of issuance and at the Closing Time, complied and will comply in all
material respects with any applicable laws or regulations of foreign
jurisdictions in which the Prospectus and such preliminary prospectus, as
amended or supplemented, if applicable, are distributed in connection with
the offer and sale of Reserved Securities. Neither the Prospectus nor any
amendments or supplements thereto (including any prospectus wrapper), at
the time the Prospectus or any such amendment or supplement was issued and
at the Closing Time (and, if any Option Securities are purchased, at the
Date of Delivery), included or will include an untrue statement of a
material fact or omitted or will 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.
As of the Applicable Time (as defined below), neither (x) the Issuer
General Use Free Writing Prospectus(es) (as defined below) issued at or
prior to the Applicable Time and the Statutory Prospectus (as defined
below) as of the Applicable Time and the information included on Schedule B
hereto, all considered together (collectively, the "General Disclosure
Package"), nor (y) any individual Issuer Limited Use Free Writing
Prospectus, when considered together with the General Disclosure Package,
included any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
As used in this subsection and elsewhere in this Agreement:
"Applicable Time" means ___:00 [a/p]m (Eastern time) on [INSERT DATE]
or such other time as agreed by the Company and the Representatives.
"Issuer Free Writing Prospectus" means any "issuer free writing
prospectus," as defined in Rule 433 of the 1933 Act Regulations ("Rule
433"), relating to the Securities that (i) is required to be filed with the
Commission by the Company, (ii) is a "road show that is a written
communication" within the meaning of Rule 433(d)(8)(i) whether or not
required to be filed with the Commission or (iii) is exempt from filing
pursuant to Rule 433(d)(5)(i) because it contains a description of the
Securities or of the offering that does not reflect the final terms, in
each case in the form filed or required to be filed with the Commission or,
if not required to be filed, in the form required to be retained in the
Company's records pursuant to Rule 433(g).
"Issuer General Use Free Writing Prospectus" means any Issuer Free
Writing Prospectus that is intended for general distribution to prospective
investors (other than a Bona Fide Electronic Road Show (as defined below)),
as evidenced by its being specified in Schedule D hereto.
"Issuer Limited Use Free Writing Prospectus" means any Issuer Free
Writing Prospectus that is not an Issuer General Use Free Writing
Prospectus.
"Statutory Prospectus" as of any time means the prospectus relating to
the Securities that is included in the Registration Statement immediately
prior to that time, including any document incorporated by reference
therein.
The Company has made available a "bona fide electronic road show," as
defined in Rule 433, in compliance with Rule 433(d)(8)(ii) (the "Bona Fide
Electronic Road Show") such that no
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filing of any "road show" (as defined in Rule 433(h)) is required in
connection with the offering of the Securities.
Each Issuer Free Writing Prospectus, as of its issue date and at all
subsequent times through the completion of the public offer and sale of the
Securities or until any earlier date that the issuer notified or notifies
the Representatives as described in Section 3(e), did not, does not and
will not include any information that conflicted, conflicts or will
conflict with the information contained in the Registration Statement or
the Prospectus and any preliminary or other prospectus deemed to be a part
thereof that has not been superseded or modified.
The representations and warranties in this subsection shall not apply
to statements in or omissions from the Registration Statement, the
Prospectus or any Issuer Free Writing Prospectus made in reliance upon and
in conformity with written information furnished to the Company by any
Underwriter through any of the Representatives expressly for use therein.
Each preliminary prospectus (including the prospectus filed as part of
the Registration Statement as originally filed or as part of any amendment
thereto) complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectus delivered to
the Underwriters for use in connection with this offering was identical to
the electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S-T.
At the time of filing the Registration Statement, any 462(b)
Registration Statement and any post-effective amendments thereto and at the
date hereof, the Company was not and is not an "ineligible issuer," as
defined in Rule 405 of the 1933 Act Regulations.
(ii) Independent Accountants. KPMG LLP, the accountants who certified
the financial statements and supporting schedules included in the
Registration Statement are independent public accountants as required by
the 1933 Act and the 1933 Act Regulations.
(iii) Financial Statements. The financial statements included in the
Registration Statement, the General Disclosure Package and the Prospectus,
together with the related schedules and notes, present fairly the financial
position of the Company and its consolidated subsidiaries at the dates
indicated and the statement of operations, stockholders' equity and cash
flows of the Company and its consolidated subsidiaries for the periods
specified; said financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods involved. The supporting schedules included in
the Registration Statement present fairly in accordance with GAAP the
information required to be stated therein. The selected financial data and
the summary financial information included in the Prospectus present fairly
the information shown therein and have been compiled on a basis consistent
with that of the audited financial statements included in the Registration
Statement. The pro forma financial statements and the related notes thereto
included in the Registration Statement, the General Disclosure Package and
the Prospectus present fairly the information shown therein, have been
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and have been properly compiled
on the bases described therein, and the assumptions used in the preparation
thereof are reasonable and the adjustments used therein are appropriate to
give effect to the transactions and circumstances referred to therein. All
disclosures contained in the Registration Statement, the General Disclosure
Package or the Prospectus regarding "non-GAAP financial measures" (as such
term is defined by the rules and regulations of the Commission) comply with
Regulation G
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of the Securities Exchange Act of 1934 ("1934 Act") and Item 10 of
Regulation S-K of the 1933 Act, to the extent applicable.
(iv) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement, the
General Disclosure Package or the Prospectus, except as otherwise stated
therein, (A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business (a "Material
Adverse Effect"), (B) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary course
of business, which are material with respect to the Company and its
subsidiaries considered as one enterprise, and (C) except for quarterly
dividends on the Series B Convertible Preferred Stock of the Company paid
in accordance with the Series B Certificate of Designations, there has been
no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(v) Good Standing of the Company. The Company has been duly organized
and is validly existing as a corporation in good standing under the laws of
the State of Delaware and has corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
General Disclosure Package and the Prospectus and to enter into and perform
its obligations under this Agreement; and the Company is duly qualified as
a foreign corporation to transact business and is in good standing in each
other jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would not
reasonably be expected to result in a Material Adverse Effect.
(vi) Good Standing of Subsidiaries. Each "significant subsidiary" of
the Company (as such term is defined in Rule 1-02 of Regulation S-X) (each
a "Subsidiary" and, collectively, the "Subsidiaries") has been duly
organized and is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the General Disclosure Package and the Prospectus
and is duly qualified as a foreign corporation to transact business and is
in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in
good standing would not reasonably be expected to result in a Material
Adverse Effect; except as otherwise disclosed in the Registration
Statement, all of the issued and outstanding capital stock of each such
Subsidiary has been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity; and none of the outstanding shares of
capital stock of any Subsidiary was issued in violation of the preemptive
or similar rights of any securityholder of such Subsidiary. The only
subsidiaries of the Company are the subsidiaries listed on Exhibit 21 to
the Registration Statement.
(vii) Capitalization. The authorized, issued and outstanding capital
stock of the Company is as set forth in the General Disclosure Package and
the Prospectus in the column entitled "Pro Forma as of March 31, 2006"
under the caption "Capitalization" (except for quarterly dividends on the
Series B Convertible Preferred Stock of the Company paid in accordance with
the Series B Certificate of Designations, and except for subsequent
issuances, if any, pursuant to this Agreement, pursuant to reservations,
agreements or employee benefit plans referred to in the General Disclosure
Package and the Prospectus or pursuant to the exercise of
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convertible securities or options referred to in the General Disclosure
Package and the Prospectus). The shares of issued and outstanding capital
stock have been duly authorized and validly issued and are fully paid and
non-assessable; none of the outstanding shares of capital stock was issued
in violation of the preemptive or other similar rights of any
securityholder of the Company.
(viii) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(ix) Authorization and Description of Securities. The Securities to be
purchased by the Underwriters from the Company have been duly authorized
for issuance and sale to the Underwriters pursuant to this Agreement and,
when issued and delivered by the Company pursuant to this Agreement against
payment of the consideration set forth herein, will be validly issued and
fully paid and non-assessable; the Common Stock conforms to all statements
relating thereto contained in the General Disclosure Package and the
Prospectus and such description conforms to the rights set forth in the
instruments defining the same; no holder of the Securities will be subject
to personal liability by reason of being such a holder; and the issuance of
the Securities is not subject to the preemptive or other similar rights of
any securityholder of the Company.
(x) Absence of Defaults and Conflicts. Neither the Company nor any of
its subsidiaries is in violation of its charter or by-laws or in default
(nor, to the knowledge of the Company, is any counterparty in default) in
the performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which it or
any of them may be bound, or to which any of the property or assets of the
Company or any subsidiary is subject (collectively, "Agreements and
Instruments") except for such defaults that would not singly or in the
aggregate reasonably be expected to result in a Material Adverse Effect;
and the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein and in the
Registration Statement (including the issuance and sale of the Securities
and the use of the proceeds from the sale of the Securities as described in
the Prospectus under the caption "Use of Proceeds") and compliance by the
Company with its obligations hereunder have been duly authorized by all
necessary corporate action and do not and will not, whether with or without
the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined below)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any subsidiary
pursuant to, the Agreements and Instruments (except for such conflicts,
breaches, defaults or Repayment Events or liens, charges or encumbrances
that would not singly or in the aggregate reasonably be expected to result
in a Material Adverse Effect), nor will such action result in any violation
of (i) any applicable law, statute, rule, regulation, judgment, order, writ
or decree of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over the Company or any subsidiary or any
of their assets, properties or operations (except for such violations that
would not singly or in the aggregate reasonably be expected to result in a
Material Adverse Effect), or (ii) the provisions of the charter or by-laws
of the Company or any subsidiary. As used herein, a "Repayment Event" means
any event or condition which gives the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder's
behalf) the right to require the repurchase, redemption or repayment of all
or a portion of such indebtedness by the Company or any subsidiary.
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(xi) Absence of Labor Dispute. No labor dispute with the employees of
the Company or any subsidiary exists or, to the knowledge of the Company,
is imminent, and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or any subsidiary's principal
suppliers, manufacturers, customers or contractors, which, in either case,
would reasonably be expected to result in a Material Adverse Effect.
(xii) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Company, threatened, against or affecting the Company or any
subsidiary, which is required to be disclosed in the Registration Statement
(other than as disclosed therein), or which would reasonably be expected to
result in a Material Adverse Effect, or which would reasonably be expected
to materially and adversely affect the properties or assets thereof or the
consummation of the transactions contemplated in this Agreement or the
performance by the Company of its obligations hereunder; the aggregate of
all pending legal or governmental proceedings to which the Company or any
subsidiary is a party or of which any of their respective property or
assets is the subject which are not described in the Registration
Statement, including ordinary routine litigation incidental to the
business, would not reasonably be expected to result in a Material Adverse
Effect.
(xiii) Accuracy of Exhibits. There are no contracts or documents which
are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits thereto which have not been so
described and filed as required.
(xiv) Possession of Intellectual Property. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the business
now operated by them, except where the failure to own or possess or to be
able to acquire on reasonable terms such Intellectual Property would not,
singly or in the aggregate, reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor any of its subsidiaries has
received any notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of the
Company or any of its subsidiaries therein, and which infringement or
conflict (if the subject of any unfavorable decision, ruling or finding) or
invalidity or inadequacy, singly or in the aggregate, would reasonably be
expected to result in a Material Adverse Effect.
(xv) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company of its
obligations hereunder, in connection with the offering, issuance or sale of
the Securities hereunder or the consummation of the transactions
contemplated by this Agreement and in the Registration Statement (including
the use of the proceeds from the sale of the Securities as described in the
Prospectus under the heading "Use of Proceeds"), except (i) such as have
been already obtained or as may be required under the 1933 Act or the 1933
Act Regulations or state securities laws and (ii) such as have been
obtained under the laws and regulations of jurisdictions outside the United
States in which the Reserved Securities are offered.
(xvi) Absence of Manipulation. Neither the Company nor any affiliate
of the Company has taken, nor will the Company or any affiliate take,
directly or indirectly, any action
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which is designed to or which has constituted or which would be expected to
cause or result in stabilization or manipulation, as such terms are used in
Regulation M promulgated by the Commission and related interpretations, of
the price of any security of the Company to facilitate the sale or resale
of the Securities.
(xvii) Possession of Licenses and Permits. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them, except where the
failure so to possess would not, singly or in the aggregate, reasonably be
expected to result in a Material Adverse Effect; the Company and its
subsidiaries are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not,
singly or in the aggregate, reasonably be expected to result in a Material
Adverse Effect; all of the Governmental Licenses are valid and in full
force and effect, except when the invalidity of such Governmental Licenses
or the failure of such Governmental Licenses to be in full force and effect
would not, singly or in the aggregate, reasonably be expected to result in
a Material Adverse Effect; and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would reasonably be expected to result in a Material Adverse
Effect.
(xviii) Title to Property. Neither the Company nor any of its
subsidiaries own any real property. The Company and its subsidiaries have
good title to all material properties owned by them, in each case, free and
clear of all mortgages, pledges, liens, security interests, claims,
restrictions or encumbrances of any kind except such as (a) are described
in the General Disclosure Package and the Prospectus or (b) do not, singly
or in the aggregate, materially affect the value of such property and do
not interfere with the use made and proposed to be made of such property by
the Company or any of its subsidiaries; and all of the leases and subleases
material to the business of the Company and its subsidiaries, considered as
one enterprise, and under which the Company or any of its subsidiaries
holds properties described in the General Disclosure Package and the
Prospectus, are in full force and effect, and neither the Company nor any
subsidiary has any notice of any material claim of any sort that has been
asserted by anyone adverse to the rights of the Company or any subsidiary
under any of the leases or subleases mentioned above, or affecting or
questioning the rights of the Company or such subsidiary to the continued
possession of the leased or subleased premises under any such lease or
sublease.
(xix) Investment Company Act. The Company is not required, and upon
the issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the General
Disclosure Package and the Prospectus will not be required, to register as
an "investment company" under the Investment Company Act of 1940, as
amended (the "1940 Act").
(xx) Environmental Laws. Except as described in the General Disclosure
Package and the Prospectus and except as would not, singly or in the
aggregate, reasonably be expected to result in a Material Adverse Effect,
(A) neither the Company nor any of its subsidiaries is in violation of any
federal, state, local or foreign statute, law, rule, regulation, ordinance,
code, policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or administrative order,
consent, decree or judgment, relating to pollution or protection of human
health, the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata) or wildlife,
including, without limitation, laws and regulations relating to the release
or threatened release of chemicals, pollutants,
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contaminants, wastes, toxic substances, hazardous substances, petroleum or
petroleum products, asbestos-containing materials or mold (collectively,
"Hazardous Materials") or to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous
Materials (collectively, "Environmental Laws"), (B) the Company and its
subsidiaries have all permits, authorizations and approvals required under
any applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or threatened administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company or any of its
subsidiaries and (D) there are no events or circumstances that would
reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any of its
subsidiaries relating to Hazardous Materials or any Environmental Laws.
(xxi) Registration Rights. Except as disclosed in the General
Disclosure Package and the Prospectus with respect to Alleghany Corporation
("Alleghany"), there are no persons with registration rights or other
similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Company under the
1933 Act.
(xxii) Accounting Controls. The Company and each of its subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in accordance with
management's general or specific authorization; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain accountability for assets; (C) access
to assets is permitted only in accordance with management's general or
specific authorization; and (D) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences. Except as described in the
General Disclosure Package and the Prospectus, since the end of the
Company's most recent audited fiscal year, there has been (1) no material
weakness in the Company's internal control over financial reporting
(whether or not remediated) and (2) no change in the Company's internal
control over financial reporting that has materially adversely affected, or
is reasonably likely to materially adversely affect, the Company's internal
control over financial reporting.
(xxiii) Compliance with the Xxxxxxxx-Xxxxx Act. The Company has taken
all necessary actions to ensure that, upon the effectiveness of the
Registration Statement, it will be in compliance with all provisions of the
Xxxxxxxx-Xxxxx Act of 2002 and all rules and regulations promulgated
thereunder or implementing the provisions thereof (the "Xxxxxxxx-Xxxxx
Act") that are then in effect and which the Company is then required to
comply with as of the effectiveness of the Registration Statement, and is
actively taking steps to ensure that it will be in compliance with other
provisions of the Xxxxxxxx-Xxxxx Act that will become applicable to the
Company at the time that such other provisions of the Xxxxxxxx-Xxxxx Act
become applicable to the Company.
(xxiv) Payment of Taxes. To the Company's knowledge, all United States
federal income tax returns of the U.S. federal consolidated group of which
the Company and its subsidiaries have been and/or are members that are
required by law to be filed have been filed and all taxes shown by such
returns or otherwise assessed, which are due and payable, have been paid,
except assessments against which appeals have been or will be promptly
taken and as to which adequate reserves have been provided. To the
Company's knowledge, the United States federal income tax returns of the
U.S. federal consolidated group of which the Company and its subsidiaries
have been and/or are members through the taxable year ended December 31,
2001
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have been settled and no assessment in connection therewith has been made
against the Company or other group members. The Company and its
subsidiaries have performed each and every obligation under the Amended Tax
Sharing Agreement dated as of January 1, 2005 by and between Alleghany
Insurance Holdings LLC and the Company. The Company and its subsidiaries
have filed all tax returns other than the United States federal income tax
returns of the U.S. federal consolidated group of which the Company and its
subsidiaries have been and/or are members that are required to have been
filed by them pursuant to applicable foreign, state, local or other law
except insofar as the failure to file such returns would not reasonably be
expected to result in a Material Adverse Effect, and has paid all taxes due
pursuant to such returns or pursuant to any assessment received by the
Company and its subsidiaries, except for such taxes, if any, as are being
contested in good faith and as to which adequate reserves have been
provided. The charges, accruals and reserves on the books of the Company in
respect of any income and corporation tax liability for any years not
finally determined are adequate to meet any assessments or re-assessments
for additional income tax for any years not finally determined, except to
the extent of any inadequacies that would not singly or in the aggregate
reasonably be expected to result in a Material Adverse Effect.
(xxv) Insurance. The Company and its subsidiaries carry or are
entitled to the benefits of insurance, with financially sound and reputable
insurers, in such amounts and covering such risks as is generally
maintained by companies of established repute engaged in the same or
similar business, and all of such insurance is in full force and effect.
The Company has no reason to believe that it or any subsidiary will not be
able to (x) with regard to insurance coverage currently in effect for the
Company and its subsidiaries on a "stand-alone" basis, either renew such
coverage as and when such policies expire, or obtain comparable coverage
from similar institutions, at a cost that would not reasonably be expected
to result in a Material Adverse Effect, and (y) with regard to coverage
that is currently provided under insurance policies maintained by Alleghany
for the benefit of Alleghany and the subsidiaries of Alleghany (including
the Company and its subsidiaries), replace such coverage on a "stand-alone"
basis at a cost that would not reasonably be expected to result in a
Material Adverse Effect.
(xxvi) Statistical and Market-Related Data. Any statistical and
market-related data included in the Registration Statement, the General
Disclosure Package and the Prospectus are based on or derived from sources
that the Company believes to be reliable and accurate, and the Company is
not aware of any necessary written consent to the use of such data from
such sources, except such as have been obtained.
(xxvii) Foreign Corrupt Practices Act. Neither the Company nor, to the
knowledge of the Company, any director, officer, agent, employee, affiliate
or other person acting on behalf of the Company or any of its subsidiaries
is aware of or has taken any action, directly or indirectly, that would
result in a violation by such persons of the Foreign Corrupt Practices Act
of 1977, as amended, and the rules and regulations thereunder (the "FCPA"),
including, without limitation, making use of the mails or any means or
instrumentality of interstate commerce corruptly in furtherance of an
offer, payment, promise to pay or authorization of the payment of any
money, or other property, gift, promise to give, or authorization of the
giving of anything of value to any "foreign official" (as such term is
defined in the FCPA) or any foreign political party or official thereof or
any candidate for foreign political office, in contravention of the FCPA
and the Company has conducted its business in compliance with the FCPA and
has instituted and maintains policies and procedures designed to ensure,
and which are reasonably expected to continue to ensure, continued
compliance therewith.
10
(xxviii) Money Laundering Laws. The operations of the Company are and
have been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering
statutes of all jurisdictions, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered
or enforced by any governmental agency (collectively, the "Money Laundering
Laws") and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company with respect to the Money Laundering Laws is pending or, to the
best knowledge of the Company, threatened.
(xxix) OFAC. Neither the Company nor, to the knowledge of the Company,
any director, officer, agent, employee, affiliate or person acting on
behalf of the Company is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Treasury
Department ("OFAC"); and the Company will not directly or indirectly use
the proceeds of the offering, or lend, contribute or otherwise make
available such proceeds to any subsidiary, joint venture partner or other
person or entity, for the purpose of financing the activities of any person
currently subject to any U.S. sanctions administered by OFAC.
(xxx) Insurance Regulatory Matters. Each of the Company and each of
its subsidiaries that is engaged in the business of insurance (each, an
"Insurance Subsidiary"), and each of Capitol Indemnity Corporation, Capitol
Specialty Insurance Corporation and Platte River Insurance Company (the
"Capitol Companies"), is duly licensed or registered as a holding company
or as an insurer, as the case may be, under the insurance laws (including
laws that relate to companies that control insurance companies) and the
rules, regulations and interpretations of the insurance regulatory
authorities thereunder (collectively, "Insurance Laws"), of each
jurisdiction in which the conduct of its business as described in the
General Disclosure Package and the Prospectus requires such licensing (each
such license, an "Insurance License") or registration, except, in the case
of the Capitol Companies, for such jurisdictions in which the failure to be
so licensed would not, singly or in the aggregate, reasonably be expected
to result in a Material Adverse Effect. Each of the Company, its Insurance
Subsidiaries and the Capitol Companies has made all required filings under
applicable holding company statutes or other Insurance Laws in each
jurisdiction where such filings are required, except, in the case of the
Capitol Companies, for such jurisdictions in which the failure to be so
licensed would not, singly or in the aggregate, reasonably be expected to
result in a Material Adverse Effect. Each of the Insurance Subsidiaries and
Capitol Companies has all other necessary authorizations, approvals,
orders, consents, certificates, permits, registrations and qualifications
of and from all insurance regulatory authorities (together with the
Insurance Licenses, the "Insurance Licenses and Authorizations") necessary
to conduct its business as described in the General Disclosure Package and
the Prospectus and all of the foregoing are in full force and effect,
except, in the case of the Capitol Companies, where the failure to have
such authorizations, approvals, orders, consents, certificates, permits,
registrations or qualifications or their failure to be in full force and
effect would not, singly or in the aggregate, reasonably be expected to
result in a Material Adverse Effect. Each of the Insurance Subsidiaries
and, to the knowledge of the Company, the Capitol Companies has fulfilled
and performed all obligations necessary to maintain the Insurance Licenses
and Authorizations. There is no pending or, to the knowledge of the
Company, threatened action, suit, proceeding or investigation that would
result in the revocation, termination or suspension of any of the Insurance
Licenses and Authorizations that would, singly or in the aggregate,
reasonably be expected to result in a Material Adverse Effect. None of the
Company, any of its Insurance Subsidiaries or, to the knowledge of the
Company, any of the Capitol Companies has received any notification from
any insurance regulatory authority or other governmental authority to the
effect that any additional Insurance Licenses and Authorizations
11
are needed to be obtained by either the Company, any of its Insurance
Subsidiaries or any of the Capitol Companies (to the extent related to the
Company's business). Except as otherwise described in the General
Disclosure Package or the Prospectus, no insurance regulatory authority has
issued to the Company or any of its Insurance Subsidiaries any order
impairing, restricting or prohibiting (A) the payment of dividends by the
Company or any of the Insurance Subsidiaries, (B) the making of a
distribution on any Insurance Subsidiary's capital stock, (C) the repayment
to the Company of any loans or advances to any Insurance Subsidiary from
the Company or (D) the transfer of any Insurance Subsidiary's property or
assets to the Company or any other subsidiary of the Company.
(xxxi) Insurance Reserving Practices. Except as disclosed in the
General Disclosure Package and the Prospectus, the Company and its
Insurance Subsidiaries have made no material change in their insurance
reserving practices since December 31, 2005.
(xxxii) Reinsurance. All reinsurance treaties, contracts and
arrangements to which any Insurance Subsidiary is a party are in full force
and effect and no Insurance Subsidiary is (nor, to the knowledge of the
Company, is any counterparty) in material violation of, or in default in
the performance, observance or fulfillment of, any material obligation,
agreement, covenant or condition contained therein. No Insurance Subsidiary
has received any notice that any of the other parties to such treaties,
contracts or arrangements intends not to, or will be unable to, perform
such treaty, contract or arrangement in any material respect, and the
Company has no reason to believe that any of the other parties to such
treaties or arrangements will be unable to materially perform such treaty,
contract or arrangement except to the extent adequately and properly
reserved for in the audited historical financial statements of the Company
included in the Prospectus.
(xxxiii) Statutory Financial Statements. All statutory financial
statements of the Insurance Subsidiaries have been prepared for each
relevant period in conformity with statutory accounting principles or
practices required or permitted by the National Association of Insurance
Commissioners and by the Insurance Laws of the jurisdiction of domicile of
each Insurance Subsidiary (and the statutory financial statements of the
Insurance Subsidiaries are not required to be prepared pursuant to the
Insurance Laws of any other jurisdiction), and such statutory financial
statements fairly represent the financial position and the results of
operations of the relevant Insurance Subsidiary as of the dates and for the
periods to which such financial statements relate in accordance with
Statutory Accounting Principles.
(xxxiv) Rating. The Company has no knowledge of any threatened or
pending downgrading of the financial strength rating of Darwin National
Assurance Company ("DNA") of "A-" (Excellent) by A.M. Best Company, Inc.
("A.M. Best") or of the financial strength rating on a reinsured basis of
Darwin Select Insurance Company ("DSI") of "A-" (Excellent) by A.M. Best.
Neither DNA nor DSI has received any notice from A.M. Best of any intended
or potential decrease in such rating or any notice of a possible change in
such rating that does not indicate the direction of the possible change.
(b) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Representatives or to
counsel for the Underwriters shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered thereby.
12
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Company, at
the price per share equal to $________ (being an amount equal to the initial
public offering price per share set forth in Schedule B less $________ per
share), that proportion of the total number of Initial Securities which the
number of Initial Securities set forth in Schedule A opposite the name of such
Underwriter, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof, bears to the total number of Initial Securities, subject, in
each case, to such adjustments among the Underwriters as the Representatives in
their sole discretion shall make to eliminate any sales or purchases of
fractional shares.
(b) Option Securities. In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company hereby grants an option to the Underwriters, severally and
not jointly, to purchase up to an additional __________ shares of Common Stock,
at the price per share equal to $_________ (being an amount equal to the initial
public offering price per share set forth in Schedule B less $_________ per
share), less an amount per share equal to any dividends or distributions
declared by the Company and payable on the Initial Securities but not payable on
the Option Securities. The option hereby granted will expire 30 days after the
date hereof and may be exercised in whole or in part from time to time only for
the purpose of covering overallotments which may be made in connection with the
offering and distribution of the Initial Securities upon notice by the
Representatives to the Company setting forth the number of Option Securities as
to which the several Underwriters are then exercising the option and the time
and date of payment and delivery for such Option Securities. Any such time and
date of delivery (a "Date of Delivery") shall be determined by the
Representatives, but shall not be earlier than two or later than seven full
business days after the exercise of said option, nor in any event prior to the
Closing Time, as hereinafter defined. If the option is exercised as to all or
any portion of the Option Securities, each of the Underwriters, acting severally
and not jointly, will purchase that proportion of the total number of Option
Securities then being purchased which the number of Initial Securities set forth
in Schedule A opposite the name of such Underwriter bears to the total number of
Initial Securities, subject in each case to such adjustments as the
Representatives in their sole discretion shall make to eliminate any sales or
purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
LeBoeuf, Lamb, Xxxxxx & XxxXxx LLP, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, or at such other place as shall be agreed upon by the Representatives and
the Company, at 9:00 A.M. (Eastern time) on the third (fourth, if the pricing
occurs after 4:30 P.M. (Eastern time) on any given day) business day after the
date hereof (unless postponed in accordance with the provisions of Section 10),
or such other time not later than ten business days after such date as shall be
agreed upon by the Representatives and the Company (such time and date of
payment and delivery being herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Company, on each Date of Delivery as specified in the notice from the
Representatives to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company against delivery to
the Representatives for the respective accounts of the Underwriters of
certificates for the Securities to be purchased by them. It is understood that
each
13
Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Initial Securities and the Option Securities, if any, which it has agreed to
purchase. Either of the Representatives, individually and not as representative
of the Underwriters, may (but shall not be obligated to) make payment of the
purchase price for the Initial Securities or the Option Securities, if any, to
be purchased by any Underwriter whose funds have not been received by the
Closing Time or the relevant Date of Delivery, as the case may be, but such
payment shall not relieve such Underwriter from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such denominations and registered
in such names as the Representatives may request in writing at least one full
business day before the Closing Time or the relevant Date of Delivery, as the
case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representatives in The City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time or the relevant Date of Delivery,
as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b), will comply with the requirements of Rule
430A, and will notify the Representatives promptly, (i) when any post-effective
amendment to the Registration Statement shall become effective, or any
supplement to the Prospectus or any amended Prospectus shall have been filed,
(ii) of the receipt of any comments relating to the Registration Statement and
the General Disclosure Package from the Commission, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information, (iv) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes or of any examination
pursuant to Section 8(e) of the 1933 Act concerning the Registration Statement
and (v) if the Company becomes the subject of a proceeding under Section 8A of
the 1933 Act in connection with the offering of the Securities. The Company will
effect the filings required under Rule 424(b), in the manner and within the time
period required by Rule 424(b) (without reliance on Rule 424(b)(8)), and will
take such steps as it deems necessary to ascertain promptly whether the form of
prospectus transmitted for filing under Rule 424(b) was received for filing by
the Commission and, in the event that it was not, it will promptly file such
prospectus. The Company will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) Filing of Amendments and Exchange Act Documents. The Company will give
the Representatives notice of its intention to file or prepare any amendment to
the Registration Statement (including any filing under Rule 462(b)) or any
amendment, supplement or revision to either the prospectus included in the
Registration Statement at the time it became effective or to the Prospectus, and
will furnish the Representatives with copies of any such documents a reasonable
amount of time prior to such proposed filing or use, as the case may be, and
will not file or use any such document to which the Representatives or counsel
for the Underwriters shall reasonably object. The Company has given the
Representatives notice of any filings made pursuant to the 1934 Act or the rules
and regulations of the Commission thereunder (the "1934 Act Regulations") within
48 hours prior to the Applicable Time; the Company will give the Representatives
notice of its intention to make any such filing from the Applicable Time to the
Closing Time and will furnish the Representatives with copies of any such
documents a
14
reasonable amount of time prior to such proposed filing, as the case may be, and
will not file or use any such document to which the Representatives or counsel
for the Underwriters shall reasonably object.
(c) Delivery of Registration Statements. The Company has furnished or will
deliver to the Representatives and counsel for the Underwriters, without charge,
signed copies of the Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith) and signed copies of all
consents and certificates of experts, and will also deliver to the
Representatives, without charge, a conformed copy of the Registration Statement
as originally filed and of each amendment thereto (without exhibits) for each of
the Underwriters. The copies of the Registration Statement and each amendment
thereto furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX, except
to the extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably requested, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required (or but for the exemption in Rule 172 would be required)
to be delivered under the 1933 Act, such number of copies of the Prospectus (as
amended or supplemented) as such Underwriter may reasonably request. The
Prospectus and any amendments or supplements thereto furnished to the
Underwriters will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply with
the 1933 Act and the 1933 Act Regulations so as to permit the completion of the
distribution of the Securities as contemplated in this Agreement and in the
Prospectus. If at any time when a prospectus is required (or but for the
exemption in Rule 172 would be required) by the 1933 Act to be delivered in
connection with sales of the Securities, any event shall occur or condition
shall exist as a result of which it is necessary, in the opinion of counsel for
the Underwriters or for the Company, to amend the Registration Statement or
amend or supplement the Prospectus in order that the Prospectus will not include
any untrue statements of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to amend
the Registration Statement or amend or supplement the Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations, the
Company will promptly prepare and file with the Commission, subject to Section
3(b), such amendment or supplement as may be necessary to correct such statement
or omission or to make the Registration Statement or the Prospectus comply with
such requirements, and the Company will furnish to the Underwriters such number
of copies of such amendment or supplement as the Underwriters may reasonably
request. If at any time following issuance of an Issuer Free Writing Prospectus
there occurred or occurs an event or development as a result of which such
Issuer Free Writing Prospectus conflicted or would conflict with the information
contained in the Registration Statement relating to the Securities or included
or would include an untrue statement of a material fact or omitted or would omit
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances, prevailing at that subsequent time, not
misleading, the Company will promptly notify the Representatives and will
promptly amend or supplement, at its own expense, such Issuer Free Writing
Prospectus to eliminate or correct such conflict, untrue statement or omission.
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities for offering and
sale under the applicable securities laws of such states and other jurisdictions
(domestic or foreign) as the Representatives may designate and to maintain such
qualifications in effect for a period of not less than one year from the later
of the effective date of the
15
Registration Statement and any Rule 462(b) Registration Statement; provided,
however, that the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to subject
itself to taxation in respect of doing business in any jurisdiction in which it
is not otherwise so subject.
(g) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide to the Underwriters the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Prospectus under
"Use of Proceeds."
(i) Listing. The Company will use its best efforts to effect the listing of
the Common Stock (including the Securities) on the NYSE Arca exchange.
(j) Restriction on Sale of Securities. During a period of 180 days from the
date of the Prospectus, the Company will not, without the prior written consent
of the Representatives, (i) directly or indirectly, 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 any share of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or file any registration
statement under the 1933 Act with respect to any of the foregoing or (ii) enter
into any swap or any other agreement or any transaction that transfers, in whole
or in part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to any
offering, sale, issuance or registration of (A) the Securities to be sold
hereunder, (B) any shares of Common Stock issued by the Company upon the
exercise of an option outstanding on the date hereof pursuant to the existing
employee benefit plans of the Company referred to in the Prospectus, (C) any
shares of Common Stock issued or options to purchase Common Stock granted
pursuant to existing employee benefit plans of the Company referred to in the
Prospectus or (D) any shares of Common Stock issued pursuant to the Stock and
Unit Plan for Non-Employee Directors described in the Prospectus.
Notwithstanding the foregoing, if (1) during the last 17 days of the 180-day
restricted period the Company issues an earnings release or material news or a
material event relating to the Company occurs or (2) prior to the expiration of
the 180-day restricted period, the Company announces that it will release
earnings results or becomes aware that material news or a material event will
occur during the 16-day period beginning on the last day of the 180-day
restricted period, the restrictions imposed in this clause (j) shall continue to
apply until the expiration of the 18-day period beginning on the issuance of the
earnings release or the occurrence of the material news or material event. For
the avoidance of doubt, the preceding sentence shall not be deemed to require
more than one extension of the 180-day restricted period.
(k) Reporting Requirements. The Company, during the period when the
Prospectus is required (or but for the exemption in Rule 172 would be required)
to be delivered under the 1933 Act, will file all documents required to be filed
with the Commission pursuant to the 1934 Act within the time periods required by
the 1934 Act and the 1934 Act Regulations.
(l) Issuer Free Writing Prospectuses. The Company represents and agrees
that, unless it obtains the prior consent of the Representatives, and each
Underwriter represents and agrees that, unless it obtains the prior consent of
the Company and the Representatives, it has not made and will not make any offer
relating to the Securities that would constitute an "issuer free writing
prospectus," as defined in Rule 433, or that would otherwise constitute a "free
writing prospectus," as defined in Rule 405, required to be filed
16
with the Commission. Any such free writing prospectus consented to by the
Representatives or by the Company and the Representatives, as the case may be,
is hereinafter referred to as a "Permitted Free Writing Prospectus." The Company
represents that it has treated or agrees that it will treat each Permitted Free
Writing Prospectus as an "issuer free writing prospectus," as defined in Rule
433, and has complied and will comply with the requirements of Rule 164 and Rule
433 applicable to any Permitted Free Writing Prospectus, including timely filing
with the Commission where required, legending and record keeping. The Company
represents that it has satisfied and agrees that it will satisfy the conditions
in Rule 433 to avoid a requirement to file with the Commission any electronic
road show.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay or cause to be paid all expenses
incident to the performance of its obligations under this Agreement, including
(i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, (ii) the preparation, printing and delivery to the
Underwriters of this Agreement, any Agreement among Underwriters and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Securities, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriters, including
any stock or other transfer taxes and any stamp or other duties payable upon the
sale, issuance or delivery of the Securities to the Underwriters, (iv) the fees
and disbursements of the Company's counsel, accountants and other advisors, (v)
the qualification of the Securities under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, any Permitted Free Writing Prospectus and of the
Prospectus and any amendments or supplements thereto, (vii) the preparation,
printing and delivery to the Underwriters of copies of the Blue Sky Survey and
any supplement thereto, (viii) the fees and expenses of any transfer agent or
registrar for the Securities, (ix) the costs and expenses of the Company
relating to investor presentations on any "road show" undertaken in connection
with the marketing of the Securities, including without limitation, expenses
associated with the production of road show slides and graphics, fees and
expenses of any consultants engaged in connection with the road show
presentations, travel and lodging expenses of the representatives and officers
of the Company and any such consultants, and one-half the cost of aircraft and
other transportation chartered in connection with the road show (notwithstanding
the foregoing, group luncheons held while on the road show shall be paid for by
the Underwriters), (x) the filing fees incident to, and the reasonable fees and
disbursements of counsel to the Underwriters in connection with, the review by
the National Association of Securities Dealers, Inc. (the "NASD") of the terms
of the sale of the Securities, (xi) the fees and expenses incurred in connection
with the listing of the Securities on the NYSE Arca exchange, (xii) all costs
and expenses of the Underwriters, including the fees and disbursements of
counsel for the Underwriters, in connection with matters related to the Reserved
Securities which are designated by the Company for sale to Invitees and (xiii)
the costs and expenses (including without limitation any damages or other
amounts payable in connection with legal or contractual liability) associated
with the reforming of any contracts for sale of the Securities made by the
Underwriter caused by a breach of the representation contained in the third
paragraph of Section 1(a)(i). None of the foregoing items (i) through (xiii)
shall include any internal time charges or overhead or internal expense
allocation of any Underwriter.
(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5, Section 9(a)(i)
or Section 11 hereof, the Company shall reimburse the Underwriters for all
out-of-pocket expenses reasonably incurred by the Underwriters in connection
with the transactions contemplated by the Registration Statement, including the
reasonable fees and disbursements of counsel for the Underwriters.
17
SECTION 5. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any subsidiary of the Company
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:
(a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the Underwriters. A prospectus containing
the Rule 430A Information shall have been filed with the Commission in the
manner and within the time frame required by Rule 424(b) without reliance on
Rule 424(b)(8) or a post-effective amendment providing such information shall
have been filed and declared effective in accordance with the requirements of
Rule 430A.
(b) Opinions of Counsel for Company. At Closing Time, the Representatives
shall have received (i) the favorable opinion, dated as of Closing Time, of
Xxxxx Xxxxxxxxxx LLP, counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, together with signed or reproduced
copies of such letter for each of the other Underwriters to the effect set forth
in Exhibit A-1 hereto; (ii) the favorable opinion, dated as of Closing Time, of
Dechert LLP, special tax counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, together with signed or reproduced
copies of such letter for each of the other Underwriters to the effect set forth
in Exhibit A-2 hereto; (iii) the favorable opinions, dated as of Closing Time,
of special local counsel for each of the Insurance Subsidiaries, in form and
substance satisfactory to counsel for the Underwriters, together with signed or
reproduced copies of each such letter for each of the other Underwriters to the
effect set forth in Exhibit A-3 hereto. In giving each such opinion, such
counsel may rely, as to all matters governed by the laws of jurisdictions other
than the law of the State of New York, the federal law of the United States and
the General Corporation Law of the State of Delaware, upon the opinions of
counsel satisfactory to the Representatives. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company and its
subsidiaries and certificates of public officials.
(c) Opinion of Counsel for Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of LeBoeuf, Lamb, Xxxxxx & XxxXxx LLP, counsel for the Underwriters, in
form and substance satisfactory to the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters. In giving
such opinion such counsel may rely, as to all matters governed by the laws of
jurisdictions other than the law of the State of New York, the federal law of
the United States and the General Corporation Law of the State of Delaware, upon
the opinions of counsel satisfactory to the Representatives. Such counsel may
also state that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of the
Company and its subsidiaries and certificates of public officials.
(d) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus or the General Disclosure Package, any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, and
the Representatives shall have received a certificate of the President or a Vice
President of the Company and of the chief financial or chief accounting officer
of the Company, dated as of Closing Time, to the effect that (i) there has been
no such material adverse change, (ii) the representations and warranties in
Section 1(a) hereof are true and correct with the same
18
force and effect as though expressly made at and as of Closing Time, (iii) the
Company has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied at or prior to Closing Time, and (iv) no stop
order suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or are pending or, to
their knowledge, contemplated by the Commission.
(e) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from KPMG LLP a letter dated
such date, in form and substance satisfactory to the Representatives, together
with signed or reproduced copies of such letter for each of the other
Underwriters containing statements and information 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, the General Disclosure Package and the Prospectus.
(f) Bring-down Comfort Letter. At Closing Time, the Representatives shall
have received from KPMG LLP a letter, dated as of Closing Time, to the effect
that they reaffirm the statements made in the letter furnished pursuant to
subsection (e) of this Section, except that the specified date referred to shall
be a date not more than three business days prior to Closing Time.
(g) Approval of Listing. At Closing Time, the Securities shall have been
approved for listing on the NYSE Arca exchange, subject only to official notice
of issuance.
(h) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(i) Lock-up Agreements. At the date of this Agreement, the Representatives
shall have received an agreement substantially in the form of Exhibit B-1 hereto
signed by the persons listed on Schedule C-1 hereto, and an agreement
substantially in the form of Exhibit B-2 signed by the persons listed on
Schedule C-2 hereto.
(j) Maintenance of Rating. Since the execution of this Agreement, there
shall not have been any decrease in the rating of the financial strength rating
of DNA of "A-" (Excellent) by A.M. Best or of the financial strength rating on a
reinsured basis of DSI of "A-" (Excellent) by A.M. Best. Neither DNA nor DSI
shall have received any notice from A.M. Best of any intended or potential
decrease in such rating or any notice of a possible change in such rating that
does not indicate the direction of the possible change.
(k) Conditions to Purchase of Option Securities. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Securities, the representations and warranties
of the Company contained herein and the statements in any certificates furnished
by the Company and any subsidiary of the Company hereunder shall be true and
correct as of each Date of Delivery and, at the relevant Date of Delivery, the
Representatives shall have received:
(i) Officers' Certificate. A certificate, dated such Date of Delivery,
of the President or a Vice President of the Company and of the chief
financial or chief accounting officer of the Company confirming that the
certificate delivered at the Closing Time pursuant to Section 5(e) hereof
remains true and correct as of such Date of Delivery.
(ii) Opinion of Counsel for Company. The favorable opinion of Xxxxx
Xxxxxxxxxx LLP, counsel for the Company, in form and substance satisfactory
to counsel for the Underwriters, dated such Date of Delivery, relating to
the Option Securities to be purchased on
19
such Date of Delivery and otherwise to the same effect as the opinion
required by Section 5(b) hereof.
(iv) Opinion of Counsel for Underwriters. The favorable opinion of
LeBoeuf, Lamb, Xxxxxx & XxxXxx LLP, counsel for the Underwriters, dated
such Date of Delivery, relating to the Option Securities to be purchased on
such Date of Delivery and otherwise to the same effect as the opinion
required by Section 5(c) hereof.
(vi) Bring-down Comfort Letter. A letter from KPMG LLP, in form and
substance satisfactory to the Representatives and dated such Date of
Delivery, substantially in the same form and substance as the letter
furnished to the Representatives pursuant to Section 5(f) hereof, except
that the "specified date" in the letter furnished pursuant to this
paragraph shall be a date not more than five days prior to such Date of
Delivery.
(l) Additional Documents. At Closing Time and at each Date of Delivery
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Underwriters.
(m) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option Securities
on a Date of Delivery which is after the Closing Time, the obligations of the
several Underwriters to purchase the relevant Option Securities, may be
terminated by the Representatives by notice to the Company at any time at or
prior to Closing Time or such Date of Delivery, as the case may be, and such
termination shall be without liability of any party to any other party except as
provided in Section 4 and except that Sections 1, 6, 7 and 8 shall survive any
such termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Company agrees to indemnify and
hold harmless each Underwriter, its affiliates, as such term is defined in Rule
501(b) under the 1933 Act (each, an "Affiliate"), its selling agents and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information or the
omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading
or arising out of any untrue statement or alleged untrue statement of a
material fact included in any preliminary prospectus, any Issuer Free
Writing Prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or
20
of any claim whatsoever based upon any such untrue statement or omission,
or any such alleged untrue statement or omission; provided that (subject to
Section 6(d) below) any such settlement is effected with the written
consent of the Company;
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by the Representatives),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or (ii)
above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through any of the Representatives expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information, or any preliminary prospectus, any Issuer Free Writing Prospectus
or the Prospectus (or any amendment or supplement thereto).
(b) Indemnification of Company, Directors and Officers. Each Underwriter
severally agrees to indemnify and hold harmless the Company, its directors, each
of its officers who signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto), including the Rule 430A Information or any
preliminary prospectus, any Issuer Free Writing Prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such Underwriter through the
Representatives expressly for use therein.
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. Upon such notification, the indemnifying party will assume the
defense of such action or proceeding and will employ counsel reasonably
satisfactory to the indemnified party and will pay the reasonable fees and
expenses of such counsel. Notwithstanding the preceding sentence, the
indemnified party will be entitled to employ counsel separate from counsel for
the indemnifying party and from any other party in such action but reasonably
satisfactory to the indemnifying party if the indemnified party reasonably
determines that a conflict of interest exists which makes representation by
counsel chosen by the indemnifying party inadvisable, if the indemnified party
reasonably determines that one or more legal defenses may be available to it
that are different from or additional to those available to the indemnifying
party or if the indemnifying party fails to assume the defense of the action or
proceeding in a timely manner. In such event, the reasonable fees and
disbursements of such separate counsel will be paid by the indemnifying party.
In no event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to any local counsel) separate from the
indemnifying parties' own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or
21
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 6 or Section 7 hereof (whether
or not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim 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 any
indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have properly requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a)(ii) or settlement of any claim in connection
with any violation referred to in Section 6(e) effected without its written
consent if (i) such settlement is entered into more than 45 days after receipt
by such indemnifying party of the aforesaid request for reimbursement, (ii) such
indemnifying party shall have received notice of the terms of such proposed
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement.
(e) Indemnification for Reserved Securities. In connection with the offer
and sale of the Reserved Securities, the Company agrees to indemnify and hold
harmless the Underwriters, their Affiliates and selling agents and each person,
if any, who controls any Underwriter within the meaning of either Section 15 of
the 1933 Act or Section 20 of the 1934 Act, from and against any and all loss,
liability, claim, damage and expense (including, without limitation, any legal
or other expenses reasonably incurred in connection with defending,
investigating or settling any such action or claim), as incurred, (i) arising
out of the violation of any applicable laws or regulations of foreign
jurisdictions where Reserved Securities have been offered; (ii) arising out of
any untrue statement or alleged untrue statement of a material fact contained in
any prospectus wrapper or other material prepared by or with the consent of the
Company for distribution to Invitees in connection with the offering of the
Reserved Securities 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; (iii) caused by the failure of any Invitee to
pay for and accept delivery of Reserved Securities which have been orally
confirmed for purchase by any Invitee by the end of the first business day after
the date of the Agreement; or (iv) related to, or arising out of or in
connection with, the offering of the Reserved Securities.
SECTION 7. Contribution. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other hand from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and of the Underwriters on the
other hand in connection with the statements or omissions, or in connection with
any violation of the nature referred to in Section 6(e) hereof, which resulted
in such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company
and the total underwriting discount
22
received by the Underwriters, in each case as set forth on the cover of the
Prospectus bear to the aggregate initial public offering price of the Securities
as set forth on the cover of the Prospectus.
The relative fault of the Company on the one hand and the Underwriters on
the other hand shall be determined by reference to, among other things, whether
any such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission or any violation of the nature referred to in Section 6(e) hereof.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 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 above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities 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 any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act and each Underwriter's Affiliates and selling agents shall have the
same rights to contribution as such Underwriter, and each director of the
Company, each officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company. The Underwriters' respective obligations to
contribute pursuant to this Section 7 are several in proportion to the number of
Initial Securities set forth opposite their respective names in Schedule A
hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive. All
representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries submitted
pursuant hereto, shall remain operative and in full force and effect regardless
of (i) any investigation made by or on behalf of any Underwriter or its
Affiliates or selling agents, any person controlling any Underwriter, its
officers or directors or any person controlling the Company and (ii) delivery of
and payment for the Securities.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representatives may terminate this Agreement,
by notice to the Company, at any time at or prior to Closing Time (i) if there
has been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the Prospectus or General
23
Disclosure Package, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the Representatives, impracticable or inadvisable to market the
Securities or to enforce contracts for the sale of the Securities, or (iii) if
trading in any securities of the Company has been suspended or materially
limited by the Commission or the NYSE Arca exchange, or if trading generally on
the American Stock Exchange or the New York Stock Exchange or in the Nasdaq
National Market has been suspended or materially limited, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices have been
required, by any of said exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc. or any other
governmental authority, or (iv) a material disruption has occurred in commercial
banking or securities settlement or clearance services in the United States, or
(v) if a banking moratorium has been declared by either Federal or New York
authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7 and 8 shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters. If one or more of
the Underwriters shall fail at Closing Time or a Date of Delivery to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representatives shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:
(i) if the number of Defaulted Securities does not exceed 10% of the
number of Securities to be purchased on such date, each of the
non-defaulting Underwriters shall be obligated, severally and not jointly,
to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Underwriters, or
(ii) if the number of Defaulted Securities exceeds 10% of the number
of Securities to be purchased on such date, this Agreement or, with respect
to any Date of Delivery which occurs after the Closing Time, the obligation
of the Underwriters to purchase and of the Company to sell the Option
Securities to be purchased and sold on such Date of Delivery shall
terminate without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Company to sell the relevant Option Securities,
as the case may be, either the (i) Representatives or (ii) the Company shall
have the right to postpone Closing Time or the relevant Date of Delivery, as the
case may be, for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or Prospectus or in any other
documents or
24
arrangements. As used herein, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 10.
SECTION 11. Default by the Company. If the Company shall fail at Closing
Time or at the Date of Delivery to sell and deliver the number of Securities
that it is obligated to sell hereunder, then this Agreement shall terminate
without any liability on the part of any nondefaulting party; provided, however,
that the provisions of Sections 1, 4, 6, 7 and 8 shall remain in full force and
effect. No action taken pursuant to this Section shall relieve the Company from
liability, if any, in respect of such default.
SECTION 12. Tax Disclosure. Notwithstanding any other provision of this
Agreement, immediately upon commencement of discussions with respect to the
transactions contemplated hereby, the Company (and each employee, representative
or other agent of the Company) may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the transactions
contemplated by this Agreement and all materials of any kind (including opinions
or other tax analyses) that are provided to the Company relating to such tax
treatment and tax structure. For purposes of the foregoing, the term "tax
treatment" is the purported or claimed federal income tax treatment of the
transactions contemplated hereby, and the term "tax structure" includes any fact
that may be relevant to understanding the purported or claimed federal income
tax treatment of the transactions contemplated hereby.
SECTION 13. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at 4 World Financial
Center, Xxxxx Xxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, attention of Xxxxxx
X. Xxxxxxxxx, Director; and notices to the Company shall be directed to it at 0
Xxxx Xxxxxxx Xxxx, attention of the Chief Financial Officer, with a copy to the
attention of the General Counsel.
SECTION 14. No Advisory or Fiduciary Relationship. The Company acknowledges
and agrees that (a) the purchase and sale of the Securities pursuant to this
Agreement, including the determination of the public offering price of the
Securities and any related discounts and commissions, is an arm's-length
commercial transaction between the Company, on the one hand, and the several
Underwriters, on the other hand, (b) in connection with the offering
contemplated hereby and the process leading to such transaction each Underwriter
is and has been acting solely as a principal and is not the agent or fiduciary
of the Company, or its stockholders, creditors, employees or any other party,
(c) no Underwriter has assumed or will assume an advisory or fiduciary
responsibility in favor of the Company with respect to the offering contemplated
hereby or the process leading thereto (irrespective of whether such Underwriter
has advised or is currently advising the Company on other matters) and no
Underwriter has any obligation to the Company with respect to the offering
contemplated hereby except the obligations expressly set forth in this
Agreement, (d) the Underwriters and their respective affiliates may be engaged
in a broad range of transactions that involve interests that differ from those
of the Company, and (e) the Underwriters have not provided any legal,
accounting, regulatory or tax advice with respect to the offering contemplated
hereby and the Company has consulted its own legal, accounting, regulatory and
tax advisors to the extent it deemed appropriate.
SECTION 15. Parties. This Agreement shall each inure to the benefit of and
be binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive
25
benefit of the Underwriters and the Company and their respective successors, and
said controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Securities from any Underwriter shall be deemed to be a successor
by reason merely of such purchase.
SECTION 16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 17. TIME. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 18. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
SECTION 19. Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction hereof.
26
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Underwriters and the Company in accordance with its terms.
Very truly yours,
DARWIN PROFESSIONAL UNDERWRITERS, INC.
By
-------------------------------------
Title:
---------------------------------
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
CREDIT SUISSE SECURITIES (USA) LLC
By: XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By
-------------------------------------
Authorized Signatory
By: CREDIT SUISSE SECURITIES (USA) LLC
By
-------------------------------------
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
27
