EXHIBIT 1.1
EXECUTION COPY
HCC Insurance Holdings, Inc.
$125,000,000 1.30% Convertible Senior Notes Due 2023*
Underwriting Agreement
New York, New York
March 25, 2003
Xxxxxxx Xxxxx Xxxxxx Inc.
Xxxxxxx Xxxxx & Associates, Inc.
Xxxxx Fargo Securities, LLC
Xxxxxxx Xxxxx & Company, L.L.C.
Advest, Inc.
As Representatives of the several Underwriters
c/o Xxxxxxx Xxxxx Barney Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
HCC Insurance Holdings, Inc., a corporation organized under the laws
of the State of Delaware (the "Company"), proposes to sell to the several
underwriters named in Schedule I hereto (the "Underwriters"), for whom you (the
"Representatives") are acting as representatives, $125,000,000 principal amount
of its 1.30% Convertible Senior Notes due 2023 (the "Underwritten Securities"),
to be issued under an indenture dated as of August 23, 2001, as supplemented by
the second supplemental indenture dated as of the Closing Date (as defined in
Section 3 below) (collectively, the "Indenture"), between the Company and
Wachovia Bank, National Association (as successor to First Union National Bank),
as trustee (the "Trustee"). The Company also proposes to grant to the
Underwriters an option to purchase up to $18,750,000 additional principal amount
of such Notes to cover over-allotments (the "Option Securities"; the Option
Securities, together with the Underwritten Securities, being hereinafter called
the "Securities"). The Securities are convertible into shares of Common Stock,
par value $1.00 per share (the "Common Stock"), of the Company at the conversion
price set forth therein.
To the extent there are no additional Underwriters listed on
Schedule I hereto other than you, the term Representatives as used herein shall
mean you, as Underwriters, and the terms Representatives and Underwriters shall
mean either the singular or plural as the context requires.
Any reference herein to the Registration Statement, the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus shall be
deemed to refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 which were filed
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* Plus an option to purchase up to $18,750,000 additional principal amount
from the Company to cover over-allotments.
under the Exchange Act on or before the Effective Date of the Registration
Statement or the issue date of the Basic Prospectus, such Preliminary Final
Prospectus or the Final Prospectus, as the case may be; and any reference herein
to the terms "amend," "amendment" or "supplement" with respect to the
Registration Statement, the Basic Prospectus, any Preliminary Final Prospectus
or the Final Prospectus shall be deemed to refer to and include the filing of
any document under the Exchange Act after the Effective Date of the Registration
Statement or the issue date of the Basic Prospectus, such Preliminary Final
Prospectus or the Final Prospectus, as the case may be, deemed to be
incorporated therein by reference. Certain terms used herein are defined in
Section 17 hereof.
1. Representations and Warranties. The Company represents and
warrants to, and agrees with, each Underwriter as set forth below in this
Section 1.
(a) The Company meets the requirements for use of Form S-3 under the
Act and has prepared and filed with the Commission registration
statements, file numbers 333-58350 and 333-76122, on Form S-3, including a
related basic prospectus, for registration under the Act of the offering
and sale of the Securities. The Company may have filed one or more
amendments thereto, including a Preliminary Final Prospectus, each of
which has previously been furnished to you. The Company will next file
with the Commission one of the following: (1) after the Effective Date of
such registration statement, a final prospectus supplement relating to the
Securities in accordance with Rules 430A and 424(b); (2) prior to the
Effective Date of such registration statement, an amendment to such
registration statement (including the form of final prospectus
supplement); or (3) a final prospectus in accordance with Rules 415 and
424(b). In the case of clause (1), the Company has included in such
registration statement, as amended at the Effective Date, all information
(other than Rule 430A Information) required by the Act and the rules
thereunder to be included in such registration statement and the Final
Prospectus. As filed, such final prospectus supplement or such amendment
and form of final prospectus supplement shall contain all Rule 430A
Information, together with all other such required information, and,
except to the extent the Representatives shall agree in writing to a
modification, shall be in all substantive respects in the form furnished
to you prior to the Execution Time or, to the extent not completed at the
Execution Time, shall contain only such specific additional information
and other changes (beyond that contained in the Basic Prospectus and any
Preliminary Final Prospectus) as the Company has advised you, prior to the
Execution Time, will be included or made therein. The Registration
Statement, at the Execution Time, meets the requirements set forth in Rule
415(a)(1)(x).
(b) On the Effective Date, the Registration Statement did or will,
and when the Final Prospectus is first filed (if required) in accordance
with Rule 424(b) and on the Closing Date (as defined in Section 3 below)
and on any date on which Option Securities are purchased, if such date is
not the Closing Date (a "settlement date"), the Final Prospectus (and any
supplements thereto) will, comply in all material respects with the
applicable requirements of the Act and the Exchange Act and the respective
rules thereunder; on the Effective Date and at the Execution Time, the
Registration Statement did not or will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date, the Final Prospectus, if not filed
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pursuant to Rule 424(b), will not, and on the date of any filing pursuant
to Rule 424(b) and on the Closing Date and any settlement date, the Final
Prospectus (together with any supplement thereto) will not, include any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the Company makes no representations or warranties as to the
information contained in or omitted from the Registration Statement or the
Final Prospectus (or any supplement thereto) in reliance upon and in
conformity with information furnished in writing to the Company by or on
behalf of any Underwriter through the Representatives specifically for
inclusion in the Registration Statement or the Final Prospectus (or any
supplement thereto).
(c) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or organized
with full corporate power and authority to own or lease, as the case may
be, and to operate its properties and conduct its business as described in
the Final Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction
which requires such qualification and where the failure to be so qualified
could reasonably be expected, individually or in the aggregate, to have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect").
(d) All the outstanding shares of capital stock of each subsidiary
have been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Final Prospectus,
all outstanding shares of capital stock of the subsidiaries are owned by
the Company either directly or through wholly owned subsidiaries free and
clear of any perfected security interest or any other security interests,
claims, liens or encumbrances.
(e) The Company's authorized equity capitalization is as set forth
in the Final Prospectus; the capital stock of the Company conforms in all
material respects to the description thereof contained in the Final
Prospectus; and the outstanding shares of Common Stock have been duly and
validly authorized and issued and are fully paid and nonassessable.
(f) The Securities have been duly authorized, and, when executed and
authenticated in accordance with the provisions of the Indenture and
issued and delivered to and paid for by the Underwriters pursuant to this
Agreement, will constitute the legal, valid and binding obligations of the
Company entitled to the benefits of the Indenture (subject, as to the
enforcement of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting creditors' rights generally
from time to time in effect and to general principles of equity) and will
be convertible into Common Stock in accordance with their terms; the
Common Stock into which the Securities are convertible will, prior to
issuance, be duly listed, and admitted and authorized for trading, subject
to official notice of issuance, on the New York Stock Exchange; the
certificates for the Securities are in valid and sufficient form; the
shares of Common Stock initially issuable upon conversion of the
Securities when issued upon conversion against payment
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of the conversion price and in accordance with the terms of the Indenture
and the Securities, will be validly issued, fully paid and nonassessable;
the Board of Directors of the Company has duly and validly adopted
resolutions reserving such shares of Common Stock for issuance upon
conversion; and the holders of the outstanding shares of capital stock of
the Company are not entitled to any preemptive or other rights to
subscribe for the Securities or the shares of the Common Stock issuable
upon conversion thereof; and, except as set forth in the Final Prospectus,
no options, warrants or other rights to purchase, agreements or other
obligations to issue, or rights to convert any obligations into or
exchange any securities for, shares of capital stock of or ownership
interests in the Company are outstanding.
(g) There is no franchise, contract or other document of a character
required to be described in the Registration Statement or Final
Prospectus, or to be filed as an exhibit thereto, which is not described
or filed as required or to be filed as an exhibit thereto, which is not
described or filed as required; and the statements included or
incorporated by reference in the Final Prospectus under the headings
"Certain Legal Matters," "Business--Legal Proceedings," and "Legal
Matters" fairly summarize the matters therein described.
(h) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding obligation of the
Company.
(i) The Indenture has been duly authorized and, assuming due
authorization, execution and delivery thereof by the Trustee, when
executed and delivered by the Company, will constitute a legal, valid and
binding instrument enforceable against the Company in accordance with its
terms (subject, as to the enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium or other laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity);
(j) The Company is not and, after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof as
described in the Final Prospectus, will not be an "investment company" as
defined in the Investment Company Act of 1940, as amended.
(k) No consent, approval, authorization, filing with or order of any
court or governmental agency or body is required in connection with the
transactions contemplated herein, except such as have been obtained under
the Act and such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the
Securities by the Underwriters in the manner contemplated herein and in
the Final Prospectus.
(l) Neither the issue and sale of the Securities nor the
consummation of any other of the transactions contemplated herein,
including the issuance of the Common Stock upon the conversion of the
Securities, nor the fulfillment of the terms hereof will conflict with,
result in a breach or violation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, (i) the charter or by-laws of the Company or any
of its subsidiaries, (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan
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agreement or other agreement, obligation, condition, covenant or
instrument to which the Company or any of its subsidiaries is a party or
bound or to which its or their property is subject, or (iii) any statute,
law, rule, regulation, judgment, order or decree applicable to the Company
or any of its subsidiaries of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or any of its subsidiaries or any of its or
their properties.
(m) No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement.
(n) The consolidated historical financial statements and schedules
of the Company and its consolidated subsidiaries included in the Final
Prospectus and the Registration Statement present fairly in all material
respects the financial condition, results of operations and cash flows of
the Company and its consolidated subsidiaries as of the dates and for the
periods indicated, comply as to form with the applicable accounting
requirements of the Act and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as otherwise noted therein). The
summary financial and operating data set forth under the caption "Summary
Financial and Operating Data" in the Final Prospectus fairly present, on
the basis stated in the Final Prospectus, the information included
therein. No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries or its or their property is pending or,
to the best knowledge of the Company, threatened that (i) could reasonably
be expected to have a material adverse effect on the performance of this
Agreement or the consummation of any of the transactions contemplated
hereby or (ii) could reasonably be expected to have a Material Adverse
Effect, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Final Prospectus
(exclusive of any supplement thereto).
(o) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries or its or their property is pending or,
to the best knowledge of the Company, threatened that (i) could reasonably
be expected to have a Material Adverse Effect on the performance of this
Agreement or the consummation of any of the transactions contemplated
hereby or (ii) could reasonably be expected to have a Material Adverse
Effect, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Final Prospectus
(exclusive of any supplement thereto).
(p) Each of the Company and each of its subsidiaries owns or leases
all such properties as are necessary to the conduct of its operations as
presently conducted.
(q) Neither the Company nor any subsidiary is in violation or
default of (i) any provision of its charter or bylaws, (ii) the terms of
any indenture, contract, lease, mortgage, deed of trust, note agreement,
loan agreement or other agreement, obligation, condition, covenant or
instrument to which it is a party or bound or to which its property is
subject, or (iii) except where any such violation or default could not
reasonably be
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expected, individually or in the aggregate, to have a Material Adverse
Effect, any statute, law, rule, regulation, judgment, order or decree of
any court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company or such
subsidiary or any of its properties, as applicable.
(r) PricewaterhouseCoopers LLP, who have certified certain financial
statements of the Company and its consolidated subsidiaries and delivered
their report with respect to the audited consolidated financial statements
and schedules included or incorporated by reference in the Final
Prospectus, are independent public accountants with respect to the Company
within the meaning of the Act and the applicable published rules and
regulations thereunder.
(s) The Company has filed all foreign, federal, state and local tax
returns that are required to be filed or has requested extensions thereof
(except in any case in which the failure so to file would not have a
Material Adverse Effect, whether or not arising from transactions in the
ordinary course of business, except as set forth in or contemplated in the
Final Prospectus (exclusive of any supplement thereto) and has paid all
taxes required to be paid by it and any other assessment, fine or penalty
levied against it, to the extent that any of the foregoing is due and
payable, except for any such assessment, fine or penalty that is currently
being contested in good faith or as would not have a Material Adverse
Effect, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Final Prospectus
(exclusive of any supplement thereto).
(t) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(u) The Company is not required to be licensed as an insurance
company in any state. Houston Casualty Company ("HCC"), U.S. Specialty
Insurance Company ("USSIC"), HCC Life Insurance Company ("HCCLIC"), Avemco
Insurance Company ("AIC"), National Insurance Underwriters, HCC Specialty
Insurance Company, HCC Reinsurance Company, Ltd., Houston Casualty Company
Europe, Seguros y Reaseguros S.A. and Centris Insurance Company, the
("Insurance Subsidiaries") are the only subsidiaries of the Company which
are insurance companies. Each of HCC and USSIC is duly licensed as an
insurer under the insurance laws and regulations of Texas. Each of HCCLIC
and AIC is duly licensed as an insurer under the insurance laws and
regulations of Indiana and Maryland, respectively. HCC operates a branch
office in London, England which is subject to regulation by regulatory
authorities in the United Kingdom. Since January 1, 2001, the Company and
each of its Insurance Subsidiaries have filed all material reports,
registrations and statements, together with any amendments required to be
made with respect thereto, that they were required to file with any state
or foreign
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insurance commission, agency or authority. As of their respective dates,
such reports, registrations and statements complied in all material
respects with all of the laws, statutes, rules and regulations of each
such jurisdiction, including, without limitation, those rules and
regulations promulgated by the applicable insurance commission, agency or
authority in any such state.
(v) No loss experience has occurred since December 31, 2001, which
would require or make it necessary or appropriate for the Company to
change, alter, modify or amend the Company's methodology or assumptions
relating to losses.
(w) The Company has delivered to the Underwriters, for the year
2001, copies of the statutory Annual Statements and for the period January
1, 2002, through September 30, 2002, Quarterly Statements (collectively,
the "Statutory Statements") of HCC and USSIC filed with the Texas
Department of Insurance, and HCCLIC and AIC filed with the Indiana
Department of Insurance and the Maryland Insurance Administration,
respectively. The statutory financial statements contained in each
Statutory Statement fairly present the statutory financial condition of
each of the respective corporations at the date of each such statement,
and the statutory results of operations and other data contained therein
for each of the periods then ended, have been prepared in accordance with
the prescribed or permitted statutory insurance accounting requirements
and practices, and in accordance with accounting practices prescribed or
permitted by the National Association of Insurance Commissioners, and have
been applied on a consistent basis except as expressly set forth or
disclosed in the notes, exhibits or schedules thereto. The exhibits and
schedules included in each Statutory Statement fairly present the data
purported to be shown thereby.
(x) Except as set forth in the Final Prospectus, all reinsurance
treaties, contracts, agreements and arrangements to which the Company or
any of the Insurance Subsidiaries is a party and as to which any of them
reported recoverables, premiums due or other amounts in its most recent
Statutory Statement are in full force and effect and none of the Company
or any of its Insurance Subsidiaries is in violation of, or in default in
the performance, observance or fulfillment of, any material obligation,
agreement, covenant or condition contained therein, which violation or
default would, singly or in the aggregate, have a Material Adverse Effect.
(y) Each of the Insurance Subsidiaries holds all licenses,
certificates and permits from insurance departments and other governmental
authorities ("Insurance Licenses") necessary to conduct its business as
presently conducted, except where the failure to hold any such Insurance
Licenses would not have a Material Adverse Effect. Each of the Insurance
Subsidiaries has fulfilled and performed all material obligations
necessary to maintain its Insurance Licenses, and no event or events have
occurred which would result in the impairment, modification, termination
or revocation of such Insurance Licenses, except where such impairment,
modification, termination or revocation would not have a Material Adverse
Effect.
(z) A.M. Best Company, Inc. ("A.M. Best") has not taken any
action to, or to the Company's knowledge, threatened to: (i) downgrade
the ratings or any of the
7
Insurance Company Subsidiaries or (ii) publicly announce or otherwise
indicate to the Company that its ratings of any of the Insurance
Subsidiaries are under review.
Any certificate signed by any officer of the Company and delivered
to the Representatives or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by the
Company, as to matters covered thereby, to each Underwriter.
2. Purchase and Sale. (a) Subject to the terms and conditions and in
reliance upon the representations and warranties set forth herein, the Company
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company, at a purchase price of 97.75% of the
principal amount thereof, plus accrued interest, if any, from March 28, 2003, to
the Closing Date, the principal amount of Underwritten Securities set forth
opposite such Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties set forth herein, the Company hereby grants an
option to the several Underwriters to purchase, severally and not jointly, the
Option Securities at the same purchase price as the Underwritten Securities.
Said option may be exercised only to cover over-allotments in the sale of the
Underwritten Securities by the Underwriters. Said option may be exercised in
whole or in part at any time (but not more than once) on or before the 30th day
after the date of the Final Prospectus upon written or telegraphic notice by the
Representatives to the Company setting forth the number of shares of the Option
Securities as to which the several Underwriters are exercising the option and
the settlement date. The principal amount of Option Securities to be purchased
by each Underwriter shall be the same percentage of the principal amount of the
Option Securities to be purchased by the several Underwriters as such
Underwriter is purchasing of the Underwritten Securities, subject to such
adjustments as you in your absolute discretion shall make to eliminate any
fractional securities.
3. Delivery and Payment. Delivery of and payment for the
Underwritten Securities and the Option Securities (if the option provided for in
Section 2(b) hereof shall have been exercised on or before the third Business
Day prior to the Closing Date) shall be made on March 28, 2003, at 10:00 a.m.
New York City time, or at such time on such later date not more than three
Business Days after the foregoing date as the Representatives shall designate,
which date and time may be postponed by agreement between the Representatives
and the Company or as provided in Section 9 hereof (such date and time of
delivery and payment for the Securities being called herein the "Closing Date").
Delivery of the Securities shall be made to the Representatives for the
respective accounts of the several Underwriters against payment by the several
Underwriters through the Representatives of the purchase price thereof to or
upon the order of the Company by wire transfer payable in same-day funds to an
account specified by the Company. Delivery of the Underwritten Securities and
the Option Securities shall be made through the facilities of The Depository
Trust Company unless the Representatives shall otherwise instruct.
If the option provided for in Section 2(b) hereof is exercised after
the third Business Day prior to the Closing Date, the Company will deliver the
Option Securities (at the expense of the Company) to the Representatives, at 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, xx the date specified by the
Representatives (which shall be within three Business Days
8
after exercise of said option) for the respective accounts of the several
Underwriters, against payment by the several Underwriters through the
Representatives of the purchase price thereof to or upon the order of the
Company by wire transfer payable in same-day funds to an account specified by
the Company. If settlement for the Option Securities occurs after the Closing
Date, the Company will deliver to the Representatives on the settlement date for
the Option Securities, and the obligation of the Underwriters to purchase the
Option Securities shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions, certificates
and letters delivered on the Closing Date pursuant to Section 6 hereof.
4. Offering by Underwriters. It is understood that the
several Underwriters propose to offer the Securities for sale to the public
as set forth in the Final Prospectus.
5. Agreements. The Company agrees with the several
Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement, if not effective at the Execution Time, and any amendment
thereof, to become effective. Prior to the termination of the offering of
the Securities, the Company will not file any amendment of the
Registration Statement or supplement (including the Final Prospectus or
any Preliminary Final Prospectus) to the Basic Prospectus or any Rule
462(b) Registration Statement unless the Company has furnished you a copy
for your review prior to filing and will not file any such proposed
amendment or supplement to which you reasonably object. Subject to the
foregoing sentence, if the Registration Statement has become or becomes
effective pursuant to Rule 430A, or filing of the Final Prospectus is
otherwise required under Rule 424(b), the Company will cause the Final
Prospectus, properly completed, and any supplement thereto to be filed
with the Commission pursuant to the applicable paragraph of Rule 424(b)
within the time period prescribed and will provide evidence satisfactory
to the Representatives of such timely filing. The Company will promptly
advise the Representatives (1) when the Registration Statement, if not
effective at the Execution Time, shall have become effective, (2) when the
Final Prospectus, and any supplement thereto, shall have been filed (if
required) with the Commission pursuant to Rule 424(b) or when any Rule
462(b) Registration Statement shall have been filed with the Commission,
(3) when, prior to termination of the offering of the Securities, any
amendment to the Registration Statement shall have been filed or become
effective, (4) of any request by the Commission or its staff for any
amendment of the Registration Statement, or any Rule 462(b) Registration
Statement, or for any supplement to the Final Prospectus or for any
additional information, (5) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (6) of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the institution or threatening of any proceeding for such
purpose. The Company will use its best efforts to prevent the issuance of
any such stop order or the suspension of any such qualification and, if
issued, to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Final Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein in the light of the
9
circumstances under which they were made not misleading, or if it shall be
necessary to amend the Registration Statement or supplement the Final
Prospectus to comply with the Act or the Exchange Act or the respective
rules thereunder, the Company promptly will (1) notify the Representatives
of any such event, (2) prepare and file with the Commission, subject to
the second sentence of paragraph (a) of this Section 5, an amendment or
supplement which will correct such statement or omission or effect such
compliance and (3) supply any supplemented Final Prospectus to you in such
quantities as you may reasonably request.
(c) As soon as practicable, the Company will make generally
available to its security holders and to the Representatives an earnings
statement or statements of the Company and its subsidiaries which will
satisfy the provisions of Section 11(a) of the Act and Rule 158 under the
Act.
(d) The Company will furnish to the Representatives and counsel for
the Underwriters, without charge, signed copies of the Registration
Statement (including exhibits thereto) and to each other Underwriter a
copy of the Registration Statement (without exhibits thereto) and, so long
as delivery of a prospectus by an Underwriter or dealer may be required by
the Act, as many copies of each Preliminary Final Prospectus and the Final
Prospectus and any supplement thereto as the Representatives may
reasonably request. The Company will pay the expenses of printing or other
production of all documents relating to the offering.
(e) The Company will arrange, if necessary, for the qualification of
the Securities for sale under the laws of such jurisdictions as the
Representatives may designate, will maintain such qualifications in effect
so long as required for the distribution of the Securities and will pay
any fee of the National Association of Securities Dealers, Inc., in
connection with its review of the offering, if required; provided, that in
no event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action that
would subject it to service of process in suits, other than those arising
out of the offering or sale of the Securities, in any jurisdiction where
it is not now so subject.
(f) The Company will not, without the prior written consent of
Xxxxxxx Xxxxx Xxxxxx Inc., offer, sell, contract to sell, pledge, or
otherwise dispose of (or enter into any transaction which is designed to,
or might reasonably be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash
settlement or otherwise) by the Company or any affiliate of the Company or
any person in privity with the Company or any affiliate of the Company),
directly or indirectly, including the filing (or participation in the
filing) of a registration statement with the Commission in respect of, or
establish or increase a put equivalent position or liquidate or decrease a
call equivalent position within the meaning of Section 16 of the Exchange
Act, any shares of capital stock of the Company or any securities
convertible into, or exercisable or exchangeable for, shares of such
capital stock (other than the Securities), or publicly announce an
intention to effect any such transaction, for a period of 45 days after
the date of the Final Prospectus, provided, however, that the Company may
(i) issue and sell Common Stock pursuant to any employee stock option
plan, stock ownership plan or dividend reinvestment plan of the Company in
effect at the Execution
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Time and (ii) issue Common Stock issuable upon the conversion of
securities or the exercise of warrants or options outstanding at the
Execution Time.
(g) The Company will reserve and keep available at all times, free
of preemptive rights, the full number of shares of Common Stock issuable
upon conversion of the Securities.
(h) The Company will not take, directly or indirectly, any action
that constitutes or that is designed to or might reasonably be expected to
cause or result in, under the Exchange Act or otherwise, stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Securities.
(i) The Company has furnished or will furnish to the Representatives
"lock-up" letters substantially in the form of Exhibit A hereto, signed by
each of its current officers and directors, pursuant to which each such
person shall agree not to offer, sell, contract to sell or otherwise
dispose of, or grant any options or warrants to purchase, any shares of
capital stock of the Company or any securities convertible into, or
exercisable or exchangeable for, shares of such capital stock, for a
period of 45 days after the date of this Agreement without the prior
written consent of Xxxxxxx Xxxxx Xxxxxx Inc., other than shares of Common
Stock disposed of as bona fide gifts approved by Xxxxxxx Xxxxx Barney Inc.
and other than the disposition to the Company of any shares of Common
Stock utilized in connection with the exercise of outstanding stock
options.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Underwritten Securities and the
Option Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company contained herein as of
the Execution Time, the Closing Date and any settlement date pursuant to Section
3 hereof, to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions:
(a) If the Registration Statement has not become effective prior to
the Execution Time, unless the Representatives agree in writing to a later
time, the Registration Statement will become effective not later than (i)
6:00 PM New York City time on the date of determination of the public
offering price, if such determination occurred at or prior to 3:00 PM New
York City time on such date or (ii) 9:30 AM on the Business Day following
the day on which the public offering price was determined, if such
determination occurred after 3:00 PM New York City time on such date; if
filing of the Final Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b), the Final Prospectus, and any such supplement,
will be filed in the manner and within the time period required by Rule
424(b); and no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
have been instituted or threatened.
(b) The Company shall have requested and caused Xxxxxx and Xxxxx,
LLP, counsel for the Company, to have furnished to the Representatives
their opinion, dated the Closing Date and addressed to the
Representatives, to the effect that:
11
(i) each of the Company and the Subsidiaries has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction in which it is chartered
or organized, with full corporate power and authority to own or
lease, as the case may be, and to operate its properties and conduct
its business as described in the Final Prospectus, and the Company
is duly qualified to do business as a foreign corporation and is in
good standing under the laws of each jurisdiction specified in the
Management Certificate attached hereto as Exhibit B;
(ii) all the outstanding shares of capital stock of each
Subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable, and, except as otherwise set forth in
the Final Prospectus, all outstanding shares of capital stock of the
Subsidiaries are owned by the Company either directly or through
wholly owned subsidiaries free and clear of any perfected security
interest and, to the knowledge of such counsel, after due inquiry,
any other security interest, claim, lien or encumbrance, except for
such security interest, claim, lien or encumbrance arising out of
the Company's existing credit facilities;
(iii) the Company's authorized equity capitalization is as set
forth in the Final Prospectus; the capital stock of the Company
conforms in all material respects to the description thereof
contained in the Final Prospectus; and the outstanding shares of
Common Stock have been duly and validly authorized and issued and
are fully paid and nonassessable;
(iv) the Securities have been duly authorized, and, when
executed and authenticated in accordance with the provisions of the
Indenture and issued and delivered to and paid for by the
Underwriters pursuant to this Agreement, will constitute the legal,
valid and binding obligations of the Company entitled to the
benefits of the Indenture (subject, as to the enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors' rights generally from
time to time in effect and to general principles of equity) and will
be convertible into Common Stock in accordance with their terms; the
Common Stock into which the Securities are convertible has been duly
listed, and admitted and authorized for trading, subject to official
notice of issuance, on the New York Stock Exchange; the certificates
for the Securities are in valid and sufficient form; the shares of
Common Stock initially issuable upon conversion of the Securities
when issued upon conversion against payment of the conversion price
and in accordance with the terms of the Indenture and the
Securities, will be validly issued, fully paid and nonassessable;
the Board of Directors of the Company has duly and validly adopted
resolutions reserving such shares of Common Stock for issuance upon
conversion; and the holders of the outstanding shares of capital
stock of the Company are not entitled to any preemptive or other
rights to subscribe for the Securities or the shares of the Common
Stock issuable upon conversion thereof; and, except as set forth in
the Final Prospectus, no options, warrants or other rights to
purchase, agreements or other obligations to issue, or rights to
convert any obligations into or exchange any securities for, shares
of capital stock of or ownership interests in the Company are
outstanding;
12
(v) to the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving
the Company or any of its subsidiaries or its or their property of a
character required to be disclosed in the Registration Statement
which is not adequately disclosed in the Final Prospectus, and there
is no franchise, contract or other document of a character required
to be described in the Registration Statement or the Final
Prospectus, or to be filed as an exhibit thereto, which is not
described or filed as required; and the statements included or
incorporated by reference in the Final Prospectus under the heading
"Legal Proceedings," insofar as such statements summarize legal
matters, agreements, documents, or proceedings discussed therein,
are accurate and fair summaries of such legal matters, agreements,
documents or proceedings.
(vi) the Registration Statement has become effective under the
Act; any required filing of the Basic Prospectus, any Preliminary
Final Prospectus and the Final Prospectus, and any supplements
thereto, pursuant to Rule 424(b) has been made in the manner and
within the time period required by Rule 424(b); to the knowledge of
such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued, no proceedings for that
purpose have been instituted or threatened, and the Registration
Statement and the Final Prospectus (other than the financial
statements and other financial information contained therein, as to
which such counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of the Act and
the Exchange Act and the respective rules thereunder; and such
counsel has no reason to believe that on the Effective Date or the
date the Registration Statement was last deemed amended the
Registration Statement contained any untrue statement of a material
fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading
or that the Final Prospectus as of its date and on the Closing Date
included or includes any untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading (in each case, other than the
financial statements and other financial information contained
therein, as to which such counsel need express no opinion);
(vii) this Agreement has been duly authorized, executed and
delivered by the Company;
(viii) the Indenture has been duly authorized and, assuming
due authorization, execution and delivery thereof by the Trustee,
when executed and delivered by the Company, will constitute a legal,
valid and binding instrument enforceable against the Company in
accordance with its terms (subject, as to the enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors' rights generally from
time to time in effect and to general principles of equity);
(ix) the Company is not and, after giving effect to the
offering and sale of the Securities and the application of the
proceeds thereof as described in the
13
Final Prospectus, will not be an "investment company" as defined in
the Investment Company Act of 1940, as amended;
(x) no consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in
connection with the transactions contemplated herein, except such as
have been obtained under the Act and such as may be required under
the blue sky laws of any jurisdiction in connection with the
purchase and distribution of the Securities by the Underwriters in
the manner contemplated in this Agreement and in the Final
Prospectus and such other approvals (specified in such opinion) as
have been obtained;
(xi) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions contemplated herein,
including the issuance of the Common Stock upon the conversion of
the Securities, nor the fulfillment of the terms hereof will
conflict with, result in a breach or violation of or imposition of
any lien, charge or encumbrance upon any property or assets of the
Company or its subsidiaries pursuant to, (i) the charter or by-laws
of the Company or its subsidiaries, (ii) the terms of any indenture,
contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant or
instrument to which the Company or its subsidiaries is a party or
bound or to which its or their property is subject, or (iii) any
statute, law, rule, regulation, judgment, order or decree applicable
to the Company or its subsidiaries of any court, regulatory body,
administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Company or its subsidiaries
or any of its or their properties; and
(xii) no holders of securities of the Company have rights to
the registration of such securities under the Registration
Statement.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
general corporate law of the State of Delaware or the Federal laws of the
United States, to the extent they deem proper and specified in such
opinion, upon the opinion of other counsel of good standing whom they
believe to be reliable and who are satisfactory to counsel for the
Underwriters and (B) as to matters of fact, to the extent they deem
proper, on certificates of responsible officers of the Company and public
officials. References to the Final Prospectus in this paragraph (b)
include any supplements thereto at the Closing Date.
(c) The Representatives shall have received from Xxxxxxxxxxx X.
Xxxxxx, Esq., Executive Vice President and General Counsel of the Company,
his opinion, dated the Closing Date and addressed to the Representatives,
to the effect that each of the Subsidiaries is duly qualified to do
business as a foreign corporation and is in good standing under the laws
of each jurisdiction which requires such qualification and where the
failure to be so qualified could reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect.
14
(d) The Representatives shall have received from Cleary, Gottlieb,
Xxxxx & Xxxxxxxx, counsel for the Underwriters, such opinion or opinions,
dated the Closing Date and addressed to the Representatives, with respect
to the issuance and sale of the Securities, the Registration Statement,
the Final Prospectus (together with any supplement thereto) and other
related matters as the Representatives may reasonably require, and the
Company shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters.
(e) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the Final
Prospectus, any supplements to the Final Prospectus and this Agreement and
that:
(i) the representations and warranties of the Company in this
Agreement are true and correct on and as of the Closing Date with
the same effect as if made on the Closing Date and the Company has
complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the Closing
Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included or incorporated by reference in the Final Prospectus
(exclusive of any supplement thereto), there has been no material
adverse effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth
in or contemplated in the Final Prospectus (exclusive of any
supplement thereto).
(f) The Company shall have requested and caused
PricewaterhouseCoopers LLP to have furnished to the Representatives, at
the Closing Date, a letter (which may refer to letters previously
delivered to one or more of the Representatives), dated as of the Closing
Date, in form and substance satisfactory to the Representatives,
confirming that they are independent accountants within the meaning of the
Act and the Exchange Act and the respective applicable rules and
regulations adopted by the Commission thereunder and stating in effect,
that:
(i) In their opinion the audited financial statements and
financial statement schedules included or incorporated by reference
in the Registration Statement and the Final Prospectus and reported
on by them comply as to form in all material respects with the
applicable accounting requirements of the Act and the Exchange Act
and the related rules and regulations adopted by the Commission.
(ii) For purposes of these letters they have read minutes of
the meetings of the
15
stockholders, the Board of Directors of the Company and the Audit
Committee as set forth in the minute books at March 25, 2003,
officials of the Company having advised them that (a) there are no
minutes maintained with respect to the Company's Investment
Committee and (b) with the exception of the March 20, 2003, Board of
Directors' meeting, the minutes of all such meetings through that
date were set forth therein; and they have carried out other
procedures to March 25, 2003, as follows (their work did not extend
to the period from March 26, 2003, to March 28, 2003, inclusive):
(1) With respect to the three-month period ended March 31,
2002, the three- and six- month periods ended June 30,
2002 and the three- and nine-month periods ended
September 30, 2002 and each of the corresponding periods
in 2001, they have -
(I) performed the procedures specified by the American
Institute of Certified Public Accountants for a
review of interim financial information as
described in SAS No. 71 or SAS 100, "Interim
Financial Information", on the unaudited condensed
consolidated balance sheets as of the end of each
such period and the unaudited condensed
consolidated statements of income, retained
earnings (shareholders' equity), and cash flows
for each of such periods included or incorporated
by reference in the Registration Statement and the
Final Prospectus; and
(II) inquired of certain officials of the Company who
have responsibility for accounting and financial
matters whether the unaudited condensed
consolidated financial statements referred to in
(I) above comply as to form in all material
respects with the applicable accounting
requirements of the Act and the related published
rules and regulations.
(2) Company officials have advised them that no such
financial statements as of any date or for any period
subsequent to December 31, 2002 were available.
(3) As mentioned in 2(3), Company officials have advised
them that no financial statements as of any date or for
any period subsequent to December 31, 2002, are
available; accordingly, the procedures carried out by
them with respect to changes in financial statement
items after December 31, 2002, have, of necessity, been
even more limited than those with respect to the periods
referred to in (1) and (2) above. They have inquired of
certain officials of the Company who have responsibility
for financial and
16
accounting matters whether
(I) at March 25, 2003, there was any change in the
total debt of the Company and its subsidiaries or
decreases in total assets of the Company and its
subsidiaries or shareholders' equity of the
Company as compared with the amounts shown on the
December 31, 2002, unaudited condensed
consolidated balance sheet included or
incorporated by reference in the Registration
Statement and the Final Prospectus, or
(II) for the period from December 31, 2002, to March
25, 2003, there were any decreases, as compared
with the corresponding period in the preceding
year, in total revenue, earnings before income tax
provision, net earnings and basic and diluted
earnings per share of the Company and its
subsidiaries.
Those officials stated that
(x) at March 25, 2003, total debt increased to
approximately $241,527,000, and to the best of
their knowledge they do not believe that there
were decreases in total assets or shareholders'
equity of the Company as compared with the amounts
shown on the December 31, 2002, unaudited
condensed consolidated balance sheet included or
incorporated by reference in the Registration
Statement and the Final Prospectus; and
(y) to the best of their knowledge they do not believe
there were decreases for the period from January
1, 2003 to March 25, 2003, as compared with the
corresponding period in the preceding year, in
total revenue, earnings before income tax
provision, net earnings and basic and diluted
earnings per share of the Company and its
subsidiaries.
(iii) On the basis of the foregoing nothing came to their
attention which caused them to believe that:
(1) any unaudited condensed consolidated financial
statements referred to in (ii)(1) above do not
comply as to form in all material respects with
applicable accounting requirements of the Act and
with the related rules and regulations adopted by
the Commission with respect to financial
17
statements included or incorporated by reference
in quarterly reports on Form 10-Q under the
Exchange Act; and said unaudited financial
statements are not in conformity with generally
accepted accounting principles applied on a basis
substantially consistent with that of the audited
financial statements included or incorporated by
reference in the Registration Statement and the
Final Prospectus, except for the implementation of
SAS No. 142 entitled "Goodwill and Other
Intangible Assets"; or
(2) the information included or incorporated by
reference in the Registration Statement and Final
Prospectus in response to Regulation S-K, Item 301
(Selected Financial Data), Item 302 (Supplementary
Financial Information) and Item 402 (Executive
Compensation) is not in conformity with the
applicable disclosure requirements of Regulation
S-K.
(iv) They have performed certain other specified procedures as
a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its subsidiaries) set
forth or incorporated by reference in the Registration Statement and
the Final Prospectus, including the information set forth under the
captions "Summary Financial Data" and "Recent Developments" in the
Final Prospectus, the information included or incorporated by
reference in Items 1, 2, 6, 7 and 11 of the Company's Annual Report
on Form 10-K, incorporated by reference in the Registration
Statement and the Final Prospectus, and the information included in
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" included in the Final Prospectus or included
in the Company's Quarterly Reports on Form 10-Q or Current Report on
Form 8-K dated February 20, 2003, incorporated by reference in the
Registration Statement and the Final Prospectus agrees with the
accounting records of the Company and its subsidiaries, excluding
any questions of legal interpretation.
References to the Final Prospectus in this paragraph (f) include any
supplement thereto at the date of the letter.
(g) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Final Prospectus (exclusive of any supplement
thereto), there shall not have been (i) any change or decrease specified
in the letter or letters referred to in paragraph (e) of this Section 6 or
(ii) any change, or any development involving a prospective change, in or
affecting the condition (financial or otherwise), earnings, business or
properties of the Company and its subsidiaries taken as a whole, whether
or not arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Final Prospectus (exclusive
of any supplement thereto) the effect of which, in any case referred to in
clause (i) or (ii) above, is, in the sole judgment of the Representatives,
so material and adverse as to make it impractical or inadvisable to
proceed with the offering or
18
delivery of the Securities as contemplated by the Registration Statement
(exclusive of any amendment thereof) and the Final Prospectus (exclusive
of any supplement thereto).
(h) At the Execution Time, the Company shall have furnished to the
Representatives a letter substantially in the form of Exhibit A hereto
from each officer and director of the Company addressed to the
Representatives.
(i) Prior to the Closing Date, the Company shall have furnished to
the Representatives such further information, certificates and documents
as the Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of such
cancellation shall be given to the Company in writing or by telephone or
facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the office of Cleary, Gottlieb, Xxxxx & Xxxxxxxx, counsel for the
Underwriters, at Xxx Xxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, on the Closing
Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally through Xxxxxxx Xxxxx Barney Inc. on demand for all out-of-pocket
expenses (including reasonable fees and disbursements of counsel) that shall
have been incurred by them in connection with the proposed purchase and sale of
the Securities.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person who controls any Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement for the registration of
the Securities as originally filed or in any amendment thereof, or in the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
agrees to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company
19
will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Underwriter through the Representatives
specifically for inclusion therein. This indemnity agreement will be in addition
to any liability which the Company may otherwise have.
(b) Each Underwriter severally and not jointly agrees to indemnify
and hold harmless the Company, each of its directors, each of its officers who
signs the Registration Statement, and each person who controls the Company
within the meaning of either the Act or the Exchange Act, to the same extent as
the indemnity from the Company to each Underwriter set forth in paragraph (a) of
this Section 8, but only with reference to written information relating to such
Underwriter furnished to the Company by or on behalf of such Underwriter through
the Representatives specifically for inclusion in the documents referred to in
the foregoing indemnity. This indemnity agreement will be in addition to any
liability which any Underwriter may otherwise have. The Company acknowledges
that the statements set forth in the last paragraph of the cover page regarding
delivery of the Securities and, under the heading "Underwriting" or "Plan of
Distribution," (i) the list of underwriters and their respective participation
in the sale of the Securities, (ii) the sentences related to concessions and
reallowances and (iii) the paragraphs related to stabilization, syndicate
covering transactions and penalty bids in the Basic Prospectus, any Preliminary
Final Prospectus and the Final Prospectus constitute the only information
furnished in writing by or on behalf of the several Underwriters for inclusion
in the Basic Prospectus, any Preliminary Final Prospectus or the Final
Prospectus.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) of this Section 8
unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) of this Section 8.
The indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or parties except as
set forth below); provided, however, that such counsel shall be satisfactory to
the indemnified party. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the indemnified
party shall have the right to employ separate counsel (including local counsel),
and the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (1) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (2) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (3) the
indemnifying
20
party shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of the
institution of such action or (4) the indemnifying party shall authorize the
indemnified party to employ separate counsel at the expense of the indemnifying
party. An indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Underwriters severally
agree to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which the Company
and one or more of the Underwriters may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and by the Underwriters on the other from the offering of the Securities;
provided, however, that in no case shall any Underwriter (except as may be
provided in any agreement among underwriters relating to the offering of the
Securities) be responsible for any amount in excess of the underwriting discount
or commission applicable to the Securities purchased by such Underwriter
hereunder. If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the Company and the Underwriters severally shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
of the Underwriters on the other in connection with the statements or omissions
which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal to
the total net proceeds from the offering (before deducting expenses) received by
it, and benefits received by the Underwriters shall be deemed to be equal to the
total underwriting discounts and commissions, in each case as set forth on the
cover page of the Final Prospectus. Relative fault shall be determined by
reference to, among other things, whether any untrue or any alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information provided by the Company on the one hand or
the Underwriters on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Underwriters agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person who controls an Underwriter within the meaning of
either the Act or the Exchange Act and each director, officer, employee and
agent of an Underwriter shall have the same rights to contribution as such
Underwriter, and each person who controls the Company within the meaning of
either the Act or the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
21
9. Default by an Underwriter. If any one or more Underwriters shall
fail to purchase and pay for any of the Securities agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Securities set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Securities,
and if such nondefaulting Underwriters do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Underwriter or
the Company. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
five Business Days, as the Representatives shall determine in order that the
required changes in the Registration Statement and the Final Prospectus or in
any other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting Underwriter of its liability, if any, to
the Company and any nondefaulting Underwriter for damages occasioned by its
default hereunder.
10. Termination. This Agreement shall be subject to termination in
the absolute discretion of the Representatives, by notice given to the Company
prior to delivery of and payment for the Securities, if at any time prior to
such time (i) trading in the Company's Common Stock shall have been suspended by
the Commission or the New York Stock Exchange, or trading in securities
generally shall have been suspended or limited or minimum prices shall have been
established on the New York Stock Exchange, (ii) a banking moratorium shall have
been declared by either Federal or New York State authorities or (iii) there
shall have occurred any outbreak or escalation of hostilities, declaration by
the United States of a national emergency or war, or other calamity or crisis
the effect of which on financial markets is such as to make it, in the sole
judgment of the Representatives, impractical or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the Final Prospectus
(exclusive of any supplement thereto).
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
the officers, directors, employees, agents or controlling persons referred to in
Section 8 hereof, and will survive delivery of and payment for the Securities.
The provisions of Sections 7 and 8 hereof shall survive the termination or
cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Representatives, will be
mailed, delivered or telefaxed to the Xxxxxxx Xxxxx Xxxxxx Inc. General
Counsel (fax no.: (000) 000-0000) and confirmed to the General Counsel,
Xxxxxxx Xxxxx Barney Inc., at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: General Counsel; or, if sent to the Company, will be mailed,
delivered or
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telefaxed to (000) 000-0000 and confirmed to it at HCC Insurance Holdings, Inc.,
00000 Xxxxxxxxx Xxxxxxx, Xxxxxxx, Xxxxx 00000, attention of the General Counsel.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents and controlling persons referred to in
Section 8 hereof, and no other person will have any right or obligation
hereunder.
14. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
15. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
16. Headings. The section headings used herein are for
convenience only and shall not affect the construction hereof.
17. Definitions. The terms which follow, when used in this
Agreement, shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Basic Prospectus" shall mean the prospectus referred to in Section
1(a) hereof contained in the Registration Statement at the Effective Date.
"Business Day" shall mean any day other than a Saturday, a Sunday or
a legal holiday or a day on which banking institutions or trust companies
are authorized or obligated by law to close in New York City.
"Commission" shall mean the Securities and Exchange Commission.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any Rule
462(b) Registration Statement became or become effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Final Prospectus" shall mean the prospectus supplement relating to
the Securities that was first filed pursuant to Rule 424(b) after the
Execution Time, together with the Basic Prospectus.
"Material Adverse Effect" shall have the meaning set forth in
Section 1(c) above.
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"Preliminary Final Prospectus" shall mean any preliminary prospectus
supplement to the Basic Prospectus which describes the Securities and the
offering thereof and is used prior to filing of the Final Prospectus,
together with the Basic Prospectus.
"Registration Statement" shall mean the registration statement
referred to in Section 1(a) hereof, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective), and, in
the event any post-effective amendment thereto or any Rule 462(b)
Registration Statement becomes effective prior to the Closing Date, shall
also mean such registration statement as so amended or such Rule 462(b)
Registration Statement, as the case may be. Such term shall include any
Rule 430A Information deemed to be included therein at the Effective Date
as provided by Rule 430A.
"Rule 415," "Rule 424," "Rule 430A" and "Rule 462" refer to such
rules under the Act.
"Rule 430A Information" shall mean information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b)
relating to the offering covered by the registration statement referred to
in Section 1(a) hereof.
"Subsidiary" shall mean the subsidiaries of the Company that are
"significant subsidiaries" as defined by Rule 1-02 of Regulation S-X.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
HCC Insurance Holdings, Inc.
By: /s/ XXXXXX X. XXXXX, XX.
----------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: Executive Vice President and
Chief Financial Officer
The foregoing Agreement is hereby
confirmed and accepted as of
March 25, 2003
Xxxxxxx Xxxxx Xxxxxx Inc.
Xxxxxxx Xxxxx & Associates, Inc.
Xxxxx Fargo Securities, LLC
Xxxxxxx Xxxxx & Company, L.L.C.
Advest, Inc.
By: Xxxxxxx Xxxxx Barney Inc.
By: /s/ XXX XXXXXX
------------------------
Name: Xxx Xxxxxx
Title: Director
For themselves and the
several Underwriters,
named in Schedule I to the
foregoing Agreement.
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